Treasury paper on options for Standard Business Reporting (SBR)

SBR could completely change the face of financial reporting.

It is based on an international taxonomy, XBRL, or eXtensible Business Reporting Language, and is already used in many countries for financial and statistical returns to government.  A more elaborate version, iXBRL also has the facility for producing human-readable reports as well as just coded data.

In its options paper, Treasury is canvassing making SBR mandatory in Australia for the lodgement of financial reports.  It is currently optional and few organisations have chosen to do it and the potential benefits are untested in Australia.  With the increasing complexity of financial information, a core of audited tagged data that can then be used by regulators, analysts and other users, is the way of the future and so our submission and detailed answers to the Treasury's questions support mandating SBR for listed entities.

Current practice has demonstrated that SBR does not provide preparers of financial information with sufficient benefits to cause them to voluntarily adopt its use and so far analysts have not provided sufficient demand to cause preparers to adopt SBR.  Presently the only likely pressure for the adoption of SBR will come from analysts (principally those with experience of its use in the UK and USA). If compulsion is seen as good policy, providing the means by which Australian companies maintain their access to global capital markets, then SBR should be mandated for listed companies or companies seeking listing. There is presently no commercial rationale for the compulsory use of SBR by unlisted companies.

If the real drivers for the use of SBR are the efficient operation of government bodies, the only way to achieve adoption at present will be through compulsion. That compulsion needs to be aligned with the creation of software accessible and affordable to the range of businesses that will be affected by SBR based lodgement.