Practical Experiences of Introducing XBRL for taxation to the Jeff Smith

Practical Experiences of
Introducing XBRL for taxation to the
Business Community in the UK
Jeff Smith
Customer Champion
Business Customer Unit, 6th May 2008
A brief history
•
HMRC first became aware of XBRL in 2001.
– What attracted us:
1 vision of streamlining the end to end financial reporting
process - linking business, accounting and tax software.
2 access to data - rather than everything on paper.
3 picking up an external initiative - origins within the
financial community, not Government driven.
4 possible data standard in a wider government context.
A brief history
•
March 2003 – e-filing service goes live (designed at the outset to
become XBRL based):
– XML based Company Tax return form + tax computations +
accounts (as pdf’s).
– Enabled proving of the basic service before adding XBRL.
•
February 2006 – XBRL capability added:
– Allows computations to be submitted in XBRL format
– Taxonomy for computational items created by HMRC.
– Accounts as and when suitable taxonomies become available (UK
GAAP & IFRS) and XBRL accounts are produced.
External review of HMRC online services
•
July 2005 - UK Government
asked Lord Carter to advise on
measures to increase the use of
HMRC’s key online services, in
order to ensure sustainable and
efficient service delivery for
taxpayers, while continuing to
support compliance.
•
March 2006 - UK Government
accepts recommendations in full.
Key recommendations (for XBRL):
•
“All companies should be required to file their company tax returns
online, using XBRL …….. for returns due after 31 March 2010.”
•
“Our view is that HMRC should not require online submission of
company tax returns until XBRL has been implemented and has
bedded down.”
•
“We also recommend that they [HMRC & Companies House] should
work towards providing a joint filing facility so that companies and
their agents only have to submit the same information once.”
Ongoing work
•
Getting XBRL “bedded down”
1. Improving taxonomies
–
funding of further work on UK GAAP (including IFRS convergence).
–
Discussions with tax software developers and accountants about
level of detail required in the tax computation is ongoing.
2. Rendering – a basic requirement
–
Stylesheet not practical for complex accounts or computations.
–
Getting the issue on the XBRL agenda.
–
Encouraging technical debate.
–
Deciding which solution(s) to support.
3. Developing “joint filing facility” with Companies House
Ongoing work – building the business benefits case
•
Very important to HMRC that companies and accountants
support the move to XBRL – discussions ongoing with
professional bodies.
–
Not generally accepted that external business benefits can be realised yet –
although XBRL is seen as a good idea in principle.
–
Why should software developers enhance products when customers aren’t
asking for XBRL?
–
Need to demonstrate that XBRL is a good thing for business.
–
Remarkably few business cases have been published that demonstrate in
costed terms how external (non-governmental) entities benefit from XBRL.
–
Finding examples; checking the facts.
–
Generalised phrases, such as “steamlining the financial reporting process”,
aren’t enough.
Ongoing work – building the business benefits case
•
Deloitte Australia have produced the most compelling business benefits case
that I have seen so far, but please tell me if you know of other examples.
•
The following slides are extracted from a fuller presentation, which Deloitte
Australia have kindly given me permission to use.
•
HMRC are talking to Deloitte about the applicability of this process in a UK
context.
XBRL enabling financial
reporters
SBR / XBRL International Conference – Brisbane November 2007
Why we’re excited!
Moving on from Luca Pacioli
•
Ease of aggregation
•
Retire or rejuvenate legacy systems
•
Our people are engaged and enthusiastic
•
Better analysis of client information
•
Less time spent on ‘data drudgery’
The pilot system
A new approach
Map client trial
balance
Calculate
&
validate
report
data
Import
data &
generate
report
Map client trial
Validate
balance to the
instance,
Import instance
Deloitte
compute
document into
Taxonomy to
missing fact
report template
produce a first values and store
run instance revised instance
Publish
report
Review
Add missing fact
values such as
Submit for
Director details,
Partner review
select notes and
and finalise for
publish to
client sign off
Deloitte
specification
Lodge
Lodge instance
to regulator
Lessons learnt
Jumping hurdles
Hurdle #1: Client accounting systems that can not produce XBRL instances
– Re-key or
– Convert
Result: we built a conversion tool
Hurdle #2: We need a financial report that is human (partner) friendly
– Re-key into MS Word and/or MS Excel or
– Automate
Result: we built a publishing tool
Hurdle #3: There is no published Australian Taxonomy
– Sit and wait or
– Get in and create one
Result: we created our own taxonomy
Financial reporting under “data drudgery”
16%
Administration of client engagement
including setting budget, engagement
terms and risk review
Financial reporting under “data drudgery”
63%
To prepare a financial report ready
for review by the partner
20%
Review
1%
Lodge
Financial reporting under “XBRL”
Map client
trial
balance
Calculat
e&
validate
report
data
Import
data &
generat
e report
Publish
report
Review
Lodge
-86%
To prepare a financial report ready for
review by the partner
This reduction in processing time alone represents a
saving of 54% in total time
More information?
Peter Williams
CEO
Deloitte Digital
pewilliams@deloitte.com.au
+61 3 9208 7629
Bevan McLeod
Account Director
Deloitte Growth Solutions
bmcleod@deloitte.com.au
+61 3 9208 7767
Ongoing work
•
Standardised Business Reporting
1. HMRC supports the concept but too early to predict what (if
anything) may happen in the UK.
–
Some very high-level analysis of the potential scope has been
done.
–
Work with Companies House on joint filing is a step in the right
direct – ensuring that we adopt consistent standards and
approach – sticking to XBRL standards and no proprietary
solutions!
2. In close contact with Netherlands and Australian project
teams.
Questions?