Well well well… Some sense at last, with the FAF becoming responsible for maintenance of the US GAAP taxonomy. From the very beginning of the process, the FAF (Financial Accounting Foundation and parent of the FASB, the Financial Accounting Standards Board) was expected to be involved in the development of the taxonomy, but for reasons that I’ll not go into, the FAF did not seem to be fully engaged.
This news certainly explains the cryptic comment by Jeffrey Naumenn of the SEC in the recent AICPA/SEC webcast, in which he reminded viewers in no uncertain terms that the SEC’s version of the US GAAP taxonomy was the only valid version, and that filers should look to the SEC first to ensure they are using the current taxonomy.
That left a potential gap for companies, and a potential nightmare for consumers of XBRL instance documents. Imagine the situation, FASB issues a new or revised pronouncement, yet the taxonomy elements are not ready by the next filing period. Suddenly potentially thousands of companies would be required to create extension elements, each creating an element for the same new accounting concept.
Now with the FAF becoming responsible for the taxonomy, that potential gap should be closed.
Of course this will mean a realignment of the focus of XBRL US Inc, although clearly this realignment has been underway for some time now. The XBRL ‘space’ with the myriad of potential applications of XBRL as a standard for business information leaves many options for XUS.
Some sectors that come to mind immediately include the Public Sector with local, state and federal reporting. With hundreds, no, thousands of disparate systems across the government all not speaking to each other, the opportunities are endless. After all, one of the greatest benefits of the FDIC Call Report project was the normalization of elements across three federal agencies.
Then there is healthcare, where normalization of reporting information could deliver massive benefits to insurance companies (let’s make sure we keep the beneficiaries front and center), doctors, hospitals, pharmaceutical companies and yes, patients.
And of course, close to my heart, there is the incredible range of Sustainability, ESG (Environmental, Social and Governance) and CSR (Corporate Social Responsibility) reporting of non-financial information that could augment existing corporate reporting, regardless of the regulator. Good quality, broad spectrum Sustainability information is just crying out to be provided to investors and stakeholders in XBRL, a boundary standard that will streamline reporting and consumption, enable truly effective analysis of company performance beyond what shows up on the balance sheet and income statements.
As the creator of a major taxonomy, XUS has demonstrated that it can build taxonomies, a key objective to enable adoption of XBRL. With the burden of maintenance of the US GAAP taxonomy passed to the FAF, the opportunities for XUS to blossom are huge. Here’s hoping they grasp these opportunities, for the benefit of all business reporting.
