With the recent news that the European Securities and Markets Authority (ESMA) has published a feedback statement setting out the use of Inline XBRL as the digital format which public companies in the European Union (EU) must use to report their company information to investors worldwide from January 1, 2020. Over the years the IMA has championed the use of XBRL as a machine-readable data format for financial reporting to promote greater transparency and accountability to support economic growth and new jobs in the capital markets.
ESMA states in its disclosed press release that it has concluded that Inline XBRL is the most suitable technology to meet the EU requirement for issuers to report their annual financial reports in a single electronic format because it enables both machine and human readability in one document.
The digital format will allow users such as investors, analysts and auditors to carry out software supported analysis and comparison of large amounts of financial information. Access to annual financial reports for both professional and retail investors is essential for creating robust capital markets across the EU.
Will the US Securities and Exchange Commission follow suit and move towards mandating Inline XBRL for public company financial reporting?
As reported in FCW -- One of the final rules that could make it through before the end of US SEC Chair White's tenure at the US securities regulator is a proposal to require the use of inline XBRL in the submission of financial data for US public company disclosures. Inline XBRL is embedded directly into web documents. It lends itself to machine-readable -- automated analysis of financial information to better protect investors and workers whose pension plans include stck of public companies. Inline XBRL filings will contain less errors since investors can see the public document behind the tagged data point. In June 2016 the US SEC said companies can voluntarily file their financial statements using Inline XBRL.
All eyes now turn to see if SEC Chairman Mary Jo White -- will she mandate Inline XBRL for public company financial statement disclosure before President Obama leaves office and she resigns her position Chair and follow the ESMA mandate for EU public companies and other regulators such as UK Companies House.
Will this action translate to DATA Act reporting by federal government agencies? Machine-readable reporting and immediate data analytics is the way to go. Most securities regulatory observers and tech geeks believe this will happen. Stay tuned.
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