XBRL International Forms Joint Working Group with GLEIF to Address Legal Identity in Digital Business Reporting

The working group will develop recommendations about the consistent use of Legal Entity Identifiers within XBRL taxonomies and instance documents

---

---

On 10 June 2016, XBRL International announced that the XBRL International Best Practices Board, in cooperation with the Global Legal Entity Identifier Foundation (GLEIF), is forming a working group to examine and make concrete recommendations about the best ways to create consistency in referencing legal identity within XBRL documents. The group will be tasked to develop recommendations about the consistent use of Legal Entity Identifiers (LEIs) within XBRL taxonomies and instance documents.

XBRL is the international standard for digital reporting of financial, performance, risk and compliance information, although it is also used for many other types of reporting. The open XBRL specifications are freely licensed to anyone seeking to use the standard. XBRL allows the creation of reusable, authoritative definitions, called taxonomies, that capture the meaning contained in all of the reporting terms used in a business report, as well as the relationships between all of the terms. Taxonomies are developed by regulators, accounting standards setters, government agencies and other groups that need to clearly define information that needs to be reported upon. XBRL does not limit what kind of information is defined: it is a language that can be used and extended as needed.

The LEI enables clear and unique identification of legal entities participating in financial transactions. (For detailed information on the LEI, refer to the ‘related links’ below.)

XBRL International comments: “The LEI framework is expected, over time, to become the primary identity mechanism in use around the world, so this effort is an interoperability initiative between XBRL International and GLEIF. (…) There is now an opportunity to develop guidance for the application of the LEI within XBRL documents. This is likely to be of particular assistance to financial regulators, securities regulators and business registrars, but could also help other groups using the XBRL standard in both the regulatory and enterprise spheres.”

GLEIF very much looks forward to cooperating with XBRL International with a view to facilitate the increased use of the LEI in digital business reporting.

The remit of the new ‘Legal Identity in XBRL Working Group (LIX WG)’ with GLEIF representatives

The following information was published by XBRL International with its draft Charter of the new ‘Legal Identity in XBRL Working Group (LIX WG)’, a joint working group with GLEIF representatives (see ‘related links’ below):

The LIX WG will address the following topics:

• Analyse the main identity requirements in existing XBRL implementations across multiple regions, covering the use cases amongst existing implementations, including at least financial and securities regulators and business registrars.
• Identify the core components of identity required in XBRL disclosures, including disclosures about (a) the identity of the reporting entity; and (b) where needed, the identity of subsidiary, parent or otherwise related entities that must be disclosed, including the nature of those relationships.
• Develop a modular global identity taxonomy or other framework for representing reporting entities as well as entity to entity relationships using the LEI standard.
• Evaluate the opportunities for validation of LEIs included in XBRL reports, and make recommendations for the inclusion of any such validation in XBRL implementations.
• Recommend the requirements for a mechanism that can enforce the use of LEIs within XBRL reports as the fundamental entity identifier. This may take the form of an additional XBRL specification, but other mechanisms should be considered.
• Recommend the requirements for the utilisation of relationship information disclosed within XBRL documents using LEIs.

The LIX WG will develop a white paper or briefing note that introduces the use of LEIs within the XBRL framework and describes ways that the output of the LIX WG can be adopted. It is expected that the LIX WG will complete its work within a 12-month period or sooner.

The joint working group will be comprised of volunteers who are either XBRL International participants, or GLEIF members or their nominated delegates.

An introduction to XBRL

The following information appears on the XBRL International website:

XBRL is the open international standard for digital business reporting, managed by a global not for profit consortium, XBRL International. XBRL International is committed to improving reporting in the public interest. XBRL is used around the world, in more than 50 countries. Millions of XBRL documents are created every year, replacing older, paper-based reports with more useful, more effective and more accurate digital versions.

In a nutshell, XBRL provides a language in which reporting terms can be authoritatively defined. Those terms can then be used to uniquely represent the contents of financial statements or other kinds of compliance, performance and business reports. XBRL lets reporting information move between organisations rapidly, accurately and digitally.

The change from paper, PDF and HTML based reports to XBRL ones is a little bit like the change from film photography to digital photography, or from paper maps to digital maps. The new format allows you to do all the things that used to be possible, but also opens up a range of new capabilities because the information is clearly defined, platform-independent, testable and digital. Just like digital maps, digital business reports, in XBRL format, simplify the way that people can use, share, analyse and add value to the data.

Often termed ‘bar codes for reporting’, XBRL makes reporting more accurate and more efficient. It allows unique tags to be associated with reported facts, allowing:

• People publishing reports to do so with confidence that the information contained in them can be consumed and analysed accurately.
• People consuming reports to test them against a set of business and logical rules, in order to capture and avoid mistakes at their source.
• People using the information to do so in the way that best suits their needs, including by using different languages, alternative currencies and in their preferred style.
• People consuming the information to do so confident that the data provided to them conforms to a set of sophisticated pre-defined definitions.

Comprehensive definitions and accurate data tags allow the preparation, validation, publication, exchange, consumption; and analysis of business information of all kinds. Information in reports prepared using the XBRL standard is interchangeable between different information systems in entirely different organizations. This allows for the exchange of business information across a reporting chain. People that want to report information, share information, publish performance information and allow straight through information processing all rely on XBRL.

In addition to allowing the exchange of summary business reports, like financial statements, and risk and performance reports, XBRL has the capability to allow the tagging of transactions that can themselves be aggregated into XBRL reports. These transactional capabilities allow system-independent exchange and analysis of significant quantities of supporting data and can be the key to transforming reporting supply chains.

The international XBRL consortium is supported by more than 600 member organisations, from both the private and public sectors. The standard has been developed and refined over more than a decade and supports almost every kind of conceivable reporting, while providing a wide range of features that enhance the quality and consistency of reports, as well as their usability. XBRL is used in many different ways, for many different purposes, including by regulators, companies, governments, data providers, analysts, investors and accountants.

---