The education standard of 21st Century places emphasis on skill, professionalism and having content knowledge. Advancement in the technology such as “eXtensible Business Reporting Technology” (XBRL) have created a revolution in sharing the information and the method involved in conducting business (Hoitash and Hoitash 2017). In the modern era, speed forms the essence and lack of accuracy, inadequate transparency and difficulties involved in analysis is largely becoming obvious risks. The essay introduces the concept the XBRL as the phenomenon, which represents the future of the international accounting education.
The essay discusses the concept and the need of XBRL in the field of education and accounting profession. XBRL is regarded as the worldwide inventiveness that is undertaken to revolutionize the financial reporting by creating an efficient method of communicating financial information in a manner, which enables faster reliable analysis (Malhotra 2015). Particularly the objective of this study is to present XBRL as a tool having greater degree of comparability by requiring professionals to map the mutual taxonomy of information within their financial statements.
The essay discovers that few contextual and accessibility qualities of the financial reports have increasingly improved following the adoption of the XBRL format. More importantly, the quality of the XBRL-formatted financial reports that is uploaded in the database has been increasingly improving year after year. The onslaught arising out of the information revolution has thoughtful consequences for the preparers and reporters of the corporate reporting information (Chychyla and Kogan 2014). The essay recommends that greater degree of partnership amid all the participants of financial information should be promoted such as supply chain, public sector accountants, educationist, and academics.
The era of twenty first century has seen a transforming world where individuals, learn, live and work in an innovative manner. Innovative methods of teaching, learning, and assessment is arising with innovating insights from the research is emerging all the time. The education standard of twenty first century is characterized by placing focus on the skill that is underlined by the knowledge and professionalism. It placing emphasis on creating deep understanding of the subject instead of having a shallow knowledge (Boyas and Teeter 2017). The next stage of looking forward is business or education in accounting as the move of becoming professionals and removing the traditional method of accounting by using paper in the business workflows. The reason behind this is that sharing of information is gaining greater grounds and with the rise of internet business have increasingly shown their reliance on the technology in order to reduce their cost and promote efficiencies together with the effectiveness.
The growing burden of paper reporting could not shoulder the irritable financial analysis to meet the needs of the investors and users of information that possess the feature of real time in nature. The introduction of Extensible Business Reporting Language has turned out to be worldwide language for administering and manipulating information more effortlessly. XBRL is regarded as the game changer in the field of accounting education and professions since it helps in resolving the paper related concerns of reporting. XBRL has presented a new international format in UK because of its ability of transforming the ways in which accountants of UK communicate information. According to Markelevich, Riley and Shaw (2015), XBRL is changing the topography of accounting education in UK as well as all over the world. For professional’s accountants and business practitioners, it would not anymore be the business as usual since change turn out to be the necessary advancement shift.
As stated by Troshani, Parker and Lymer (2015), in the modern world of business accounting is regarded as the discipline of study where people irrespective of the position of job must be possessing some knowledge. Having an understanding of the accounting education is considered to be vital for corporate stakeholders. For example, secretaries in UK must be having the accounting skills to administer the chequebook of the company and orders. Additionally, the auditors are required to study the financial report to assess the accuracy and integrity of the business whereas the executives are under the obligation of judging the success of the business by using the present the past accounting statements.
Over the years, it has become imperative for students and people in the business across the world to be more responsible relating to their financial practice. This is because of the past fraudulent and illegal accounting practices together with the avoidance of the future misstatement occurring unintentionally (Marshall 2016). Accounting education is considered useful in decision-making, determining interest rates etc. and the introduction of XBRL is considered as the arrival of larger transparency in the financial reporting that has always been desired by the accounting professionals. The consortium of large group of companies is regarded as success since it was able to persuade several countries across the world along with UK to adopt the XBRL.
In the words of Sun (2017), even though there has been numerous calls by several academic researchers for bringing changes in the curriculum however the changes has been extremely slow. Although there has been a course of accounting information system in most of institutions but the study generally deals with the issues relating to technology in the realm of accounting.
An argument put forward by Geiger, North and Selby (2014), XBRL must be integrated throughout the accounting curriculum. The reason behind the adoption of XBRL in accounting education is that XBRL possess the fundamental ramifications to address all the parts of the accounting discipline. XBRL is anticipated to create a significant operational impact on the profession of accounting. With the introduction of XBRL, efficiencies will arise with faster and reliable collection of data and generation of report. Such kind of benefit can be gained because of the automation that is made possible through the data tagging, particularly as the accounting software vendors are introducing XBRL in their products.
According to Liu, Luo and Wang (2017), it is believed that this automation would help in promoting transparency and would make more difficult for the managers to create a misleading or deceptive financial information. Efficiencies would be enhanced since companies would be better able to report under the different set of accounting standards. Some of the researchers have even cited that the adoption of XBRL in the profession of accounting would help in improving the audit efficiency. Over the years, the process of auditing have shifted away from the manual process and more in the direction of automated one. Arguable it is probable that XBRL would enable the companies to move in the direction of continuous audit, which would ultimately result in continuous financial reporting.
The impact of XBRL in the profession of accounting and education is emphasised by numerous laws with greater number of regulatory requirements stipulating the use of XBRL for business and financial reporting. XBRL is regarded as the vital element in addressing the current corporate communication and information processing failures (Wang and Wang 2015). The wider implications of the adoption of XBRL in accounting education and profession is the unprecedented level of associations among the individuals, organizations, regulators and other stakeholders that ultimately leads to greater and efficient information sharing. The internal and external reporting of corporate firms have taken a turn for the best since XBRL has provided possibilities in collection and publication of information. The introduction of XBRL has provided the presentation of core data in more than one format and it is sufficiently considered flexible to accommodate the report and other contents.
Regardless of the type of computer or the use of software made, information under the XBRL is considered same since it enables the receivers of the financial information to assess and make a precise use of the information instantly with no need of re-key or converting the data in other formats (Millo, Barman and Hall 2016). The need for human intervention at the time of moving the financial and business reporting information from one system to another system is reduced. Different from the traditional reporting standards, XBRL efficiently frees the information from constrains of time and place by providing the users with the clarity of the information.
Preparers of the information would be better able to channel the information in the financial information without any form of distortion, directly in the myriad of the assessment tool of their investors and other stakeholders under one single format (Fang 2016). There are certain prominent advantage of adopting XBRL for dissemination of information is the lower cost of preparation, lowered preparation time, simple worldwide access, wider availability of information and more informed decisions relating to investment.
XBRL is able to perform functions such as internet based communications, diversity in using the data from the single source by separating the information from its presentation style, re-using the data by separating the data from the application logic and better efficiency at reduced cost (Blankespoor, Miller and White 2014). The impact of adopting XBRL in the field of accounting profession can be witnessed through improved digital signatures since it enables the users to authenticate the source and integrity of the information that is presented. XBRL promotes data validations by complying with the pre-set rules, linkages to the supplementary relevant internal and external content.
Overall, the effectiveness that is created by the adoption of XBRL would lead to a positive impact on the bottom line. As bought forward in the essay the financial reporting procedure would be enhanced and rationalised. This would result in lower cost of audit with savings of cost in the creation and dissemination of report. As stated by Collier (2015), indirect savings is also anticipated to rise as such efficiencies provided by the XBRL would probably free up the personnel engaged in financial reporting and computer resources, which could be, used somewhere else within the organization.
With the introduction of XBRL in the education and accounting profession, the accountants and auditors would be better able to reduce the information asymmetry, which is regarded as the primary goal of the profession. Auditors would be under the obligation of adopting to the approach of incorporating the XBRL document audit in the usual financial statement audits (Cohen et al. 2014). The accounting approach for both accountants and auditors would be changed, as auditors would be increasingly relying on the internal control at the time of carrying out the audit. Presently, some of the biggest companies in world such as UK are obliged to make the use of XBRL for financial reporting. Several other countries such as Germany and India have begun following the trend. Consequently, gaining attention has been drawn from various sector such as business market, research and academic sectors towards the use of XBRL.
Although the adoption of XBRL provides several benefits, it is equipped with several challenges for education and accounting profession. There are challenges related to quality of data, effort of adoption and uncertainty (Apostolou et al. 2014). There are issues of authenticity since data can be changed easily without leaving a trace and the exchange of information is required to be secured. For example, the data security, problems of authentication, validity and integrity issues might originate due to the inconsistencies of the validation software reports that might result the stakeholders to raise questions regarding the reliability and quality of the XBRL data without examining the figures.
Regarding the adoption effort, application of XBRL requires significant effort, which includes building knowledge such as acquiring necessary information relating to intangible assets and software tools (Reformat and Yager 2015). Additionally there is an increased cost of software and direct auditing costs. Uncertainty challenges would result the realization of XBRL benefits very difficult. For instance, XBRL difficulty, inadequate expertise and threats posed by free XBRL-enabled applications would lead to restricted offerings of the XBRL tools. Finally, there are issues related to standardizations since the practice of disclosure and lawful aspects tends to vary among the nations and industries. Hence, there is a significant need for increased coordination to meet the increasing demand for standardization the field of capital markets.
Conclusions and recommendations:
XBRL plays a vital role in business reporting and redefining of the standards for communicating internationally both in terms of present and in future. The application of XBRL is regarded as contingent in the creation and development of consistent taxonomy among the profession of accounting, regulators and reporting firms. Presently it is found that there is lower level of awareness and usage of XBRL among the people. With the ultimate adoption of the XBRL reporting, programs of educations particularly those in the field of finance and accounting is required to incorporate more sophisticated method of data analysis software in curriculum.
The incorporation of new data in the XBRL framework would provide more sophisticated and meaningful analysis of the business and financial result. Concerning the greater importance of the XBRL in the future reporting and accounting education in UK the essay provides recommendations that are appropriate by the research. This includes using the META (Model, Extend, Tag and Approve) methodology. The model helps in analysing the financial report pertaining to the XBRL filing. The modelling decisions under this step is critical in conpleti8ng the extended taxonomy and produces the XBRL extension taxonomy which forms the prerequisite in tagging. The results derived in the generation of the XBRL instance document helps in completing the filing deliverables and allows the approval to ensue. It is recommended that professional accounting bodies, academic institutions and research organizations must embrace the innovation, distribution and adoption of the META method of XBRL reporting. There is a requirement of constant support from all the stakeholders’ institutions to join the XBRL group in order to design and adopt universal XBRL taxonomies, which would be useful for accounting profession and education.
Reference List:
Apostolou, B., Dorminey, J.W., Hassell, J.M. and Rebele, J.E., 2014. A summary and analysis of education research in accounting information systems (AIS). Journal of Accounting Education, 32(2), pp.99-112.
Blankespoor, E., Miller, B.P. and White, H.D., 2014. Initial evidence on the market impact of the XBRL mandate. Review of Accounting Studies, 19(4), pp.1468-1503.
Boyas, E. and Teeter, R., 2017. Teaching Financial Ratio Analysis using XBRL. Developments in Business Simulation and Experiential Learning, 44(1).
Chychyla, R. and Kogan, A., 2014. Using XBRL to conduct a large-scale study of discrepancies between the accounting numbers in Compustat and SEC 10-K filings. Journal of Information Systems, 29(1), pp.37-72.
Cohen, E.E., Debreceny, R., Farewell, S. and Roohani, S., 2014. Issues with the communication and integrity of audit reports when financial reporting shifts to an information-centric paradigm. International Journal of Accounting Information Systems, 15(4), pp.400-422.
Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.
Fang, J., 2016. Path construction for group companies accounting information transferring based on XBRL and cloud computing technology. RISTI (Revista Iberica de Sistemas e Tecnologias de Informacao), (E7), pp.66-73.
Geiger, M.A., North, D.S. and Selby, D.D., 2014. Releasing Information in XBRL: Does It Improve Information Asymmetry for Early US Adopters?. Academy of Accounting and Financial Studies Journal, 18(4), p.66.
Hoitash, R. and Hoitash, U., 2017. Measuring Accounting Reporting Complexity with XBRL. The Accounting Review.
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Malhotra, R., 2015. IMPACT OF INFORMATION TECHNOLOGY ON VALUE RELEVANCE OF LISTED COMPANIES-A CONCEPTUAL FRAMEWORK. Indian Journal of Management Science, 5(1), p.62.
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