Streamlining Data Mobility and Saving Costs: A Submission to Industry Canada's Digital Economy Strategy Consultation By XBRL Canada

Submitted by XBRL Canada 2010–07–14 08:19:48 EDT

Theme(s): Digital Infrastructure

Executive Summary

This submission sets out the case for the Government of Canada to take a leadership role in the development of programs that would require the use of XBRL for the filing of information with government departments and agencies. Such programs are often referred to as Standard Business Reporting (SBR). The submission summarizes the growing numbers of countries around the world that are implementing or have implemented such programs, including the UK, the Netherlands, Australia, most EU countries, Singapore and others. It also points to the considerable savings that can be achieved — 25% or more of the cost to business of compliance with government filing requirements. Moreover it highlights the savings to government of utilizing technology to actually process those filings to a much greater extent, thus saving the time of human resources and enabling their attention to be directed to the more important issues rather than administrative processing routines. The submission also offers some broad guidance as to how to formulate an initiative towards such programs.

Submission

Executive Summary

This submission sets out the case for the Government of Canada to take a leadership role in the development of programs that would require the use of XBRL for the filing of information with government departments and agencies. Such programs are often referred to as Standard Business Reporting (SBR). The submission summarizes the growing numbers of countries around the world that are implementing or have implemented such programs, including the UK, the Netherlands, Australia, most EU countries, Singapore and others. It also points to the considerable savings that can be achieved - 25% or more of the cost to business of compliance with government filing requirements. Moreover it highlights the savings to government of utilizing technology to actually process those filings to a much greater extent, thus saving the time of human resources and enabling their attention to be directed to the more important issues rather than administrative processing routines. The submission also offers some broad guidance as to how to formulate an initiative towards such programs.

Who We Are

XBRL Canada is a not-for-profit consortium of numerous companies, government departments (including CRA and the Office of the Comptroller General of Canada) and other organizations formed to support and encourage the use of XBRL in Canada. XBRL (Extensible Business Reporting Language) is an open standard based on XML that is specifically designed for use in reporting business and financial information. It is widely used around the world. XBRL Canada is supported and administered by the Canadian Institute of Chartered Accountants.

The Centricity of Data

Much of the modern world is driven by the availability and mobility of data, whether in the form of reports or individual data items. Business depends on data, such as performance metrics, financial statements, budgets, and the like to facilitate management and investment decisions. A hallmark of the modern age is that the sheer volume of data has grown exponentially, making it increasingly difficult for companies to develop and manage the data needed by them and their stakeholders. Perhaps more importantly, it has become more difficult and expensive for them to absorb the data that is available to them.

Governments have similar issues. They obtain more and more data from businesses and yet processing the data becomes more and more time consuming, requiring human resources that they do not have and that their budgets will not allow.

On the technology side, companies must file the data with governments and regulators using systems that are developed by and required by those other bodies. This means the companies filing the information must support and maintain all of those numerous systems in order to present the data in many different formats. This process is very expensive, time consuming and inefficient.

Responses Around the World

Numerous governments around the world have made significant changes to implement XBRL as an enabler to streamline their data flows and make them more cost-effective. For the most part, this has been accomplished by adopting a strategy known as Standard Business Reporting (SBR), which essentially involves developing standard tags for the data collected by the various departments and using those tags for all departments. Therefore filers do not have to re-tag items several times over. One tag will do. This simple approach saves business a great deal of money and time.

More completely, SBR has been defined as a multi-agency program to reduce the reporting burden by 25% or more by:

• removing unnecessary/duplicated information from government forms
• adopting a common reporting language (XBRL), based on international standards and best practice providing business with a single secure online sign-on to the agencies involved
• utilising business software to automatically pre-fill government forms
• providing an electronic interface to enable business to report to government agencies directly from their accounting software, which will provide validation and confirm receipt of reports

Some significant XBRL based programs around the world include:

• Govt of Netherlands SBR Project
• Danish Commerce and Companies Agency (DCCA),
• Govt of New Zealand SBR
• Govt of Australia SBR. SBR is expected to save Australian business an estimated $800 million per year after its implementation in July 2010.
• Singapore SBR
• Government of Ireland eGov policy
• Government of Poland
• United Kingdom HMRC/Companies House joint filing
• Ministry of Corporate Affairs India (emerging)
• European Commission driving SBR "joint filings" projects in EU countries- Belgium, Denmark, Ireland, UK, Estonia, Luxembourg, Poland and Italy.

Further details on global initiatives are available in Exhibit I attached.

Response in Canada

Canada has been slow to respond to these challenges. While there has been considerable investment in technology, no serious consideration has yet been given to the implementation of SBR in Canada by the government. Yet it could yield significant savings for business and government, making business more efficient and competitive.

Digital Economy Consultation

In the discussion document provided in the Digital Economy Consultation Website, the following comment was made:

The use of XBRL for government filings as called for in this paper fits exactly with this call to action.

We fully agree that Canada must become a nation of technology leaders. The unfortunate fact at this time is that, as demonstrated by the extensive list of other countries that are acting on XBRL programs, Canada cannot be viewed as a technology leader - at least in the reporting/filing arena. The result is that we will continue to be dragged into the use of new technologies like XBRL through our relationships with these other countries and because of our need to complete globally. Certainly a more pro-active approach should be taken. And the Government of Canada is well positioned to take the lead.

The governments can not only assist but, as suggested above, should take the lead.

Some of the questions posed in the Consultation Paper, together with our comments, are as follows:

• Should Canada focus on increasing innovation in some key sectors or focus on providing the foundation for innovation across the economy? - Both are necessary. The adoption of an XBRL based SBR approach in government will work best if it is focused on the areas where successful implementation is most likely to be quickly achieved. At the same time, a broad based initiative will provide an enabler for others to innovate.
• Which conditions best incent and promote adoption of ICT by Canadian businesses and public sectors? - We have found through our own experience and that of other countries we have talked to that XBRL based SBR programs are most likely to succeed with strong government and/or regulator leadership. Voluntary programs do not work well because the companies who must bear the initial cost of implementation often do not see the benefits right away. In addition, of course, most are already constricted by their budgets and their own previously established priority projects. Experience has also shown, however, that once they are started in a program, they quickly see the benefits including the cost reductions and increased ease of compliance.
• What would a successful digital strategy look like for your firm or sector? What are the barriers to implementation? - a successful digital strategy is one that makes strongest use of the power of technology to carry as much of the understanding of the data with it as possible. This can be achieved by using XBRL tags that carry with them informative metadata about the data. This means that wherever the data goes, it can be understood in other systems by reading and interpreting the metadata.
• How can Canada use its regulatory and policy regime to promote Canada as a favourable environment for e-commerce? - A favourable environment for e-commerce is one in which as much as possible of the data that must be used is usable by various systems. This facilitates the interchangability of data and promotes the level of efficiency in data usage that is required in order to have a truly data rich e-commerce environment. Moreover, the ability to automatically file detailed reports is an essential element of e-commerce.

Implementation of SBR using XBRL

In order for the Government of Canada to implement SBR, it would require the involvement and agreement of the departments and agencies that would participate. This would ideally include Revenue Canada, Statscan, Industry Canada and perhaps others like OSFI and CDIC. FDIC in the US has been using XBRL for its filings for several years, with considerable success.

As wide a participation as possible will maximise the savings that will be enjoyed by both government and business.

Beyond that initial agreement, there would be a need for cooperative action to develop the necessary strategies and also develop the taxonomies that would be needed - essentially lists of the data needed by the different organizations along with key metadata about those data to form the tags that would be attached to the data for consumption by the departments. Then there would be a need for systems to receive the data, not difficult, as XBRL is an application of XML, and most departments have used XML in one way or another. Tools are already available in the marketplace for the generation of instance documents that would be used for filing. Instance documents are simply the reports that government needs expressed in XBRL format. Such documents can be received by the systems and processed without the need for human intervention except on an exception basis.

There would be a cost to these development activities, but the cost would be considerably less than the savings to be realized.

XBRL Canada Can Help

As mentioned previously, XBRL Canada is a not-for-profit consortium sponsored by the Canadian Institute of Chartered Accountants. Its interest is in increasing awareness of the benefits of tagging information using XBRL tags. XBRL Canada can help in any SBR project by directing interested people to the resources they need to implement a good SBR program. Also, it can provide the names of individuals who can help with an SBR program, people who have been involved in similar programs in other countries.

Please contact us at any time by emailing gtrites@XBRL.ca or calling 1-416-602-3931.

Respectfully yours,

Wasim Thaha, Chair,

XBRL Canada

If the following document is not accessible to you, please contact the person below for assistance in obtaining the documents in the appropriate format.

Guylaine Verner
Industry Canada | Industrie Canada
300 Slater Street, Ottawa ON K1A 0C8 | 300, rue Slater, Ottawa ON K1A 0C8
Guylaine.Verner@ic.gc.ca
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