Words: Cameron Cooper

As pressure mounts for Australian and New Zealand companies to switch to digital financial reporting, they need only look overseas to understand the benefits.

XBRL (eXtensible Business Reporting Language) is currently used in 65 countries, including the US, the UK, China and India. In the US, thousands of companies have filed billions of financial facts since 2009 through XBRL, as part of a regime to improve investor protections and market transparency, while also lowering the cost of capital for companies. South Korea has used XBRL to improve the visibility of its corporations in international markets and benefit from a more sophisticated way of accessing, comparing and analysing financial reports.

Although Australian companies have had the option to file digitally since 2010, no ASX-listed company has opted to do so, prompting calls for mandatory digital reporting. Voluntary digital reporting is not currently available in New Zealand.

John Turner, CEO of XBRL International, recently visited Australia on an awareness-raising tour and believes the time for change is overdue. “Australia and some other countries still have an analogue mindset associated with reporting,” he says, “but things are coming to a head now, and the impact of AI and other advanced technologies really make this much more important than ever.”

Turner featured on an expert panel at a Sydney think tank hosted by CA ANZ and Deloitte, highlighting the advantages of mandatory digital financial reporting. The event brought together key business leaders and covered practical steps for advancing the Australian digital reporting landscape.

CA ANZ has consistently championed the switch to digital reporting for disclosing entities as a means of improving corporate performance analysis.

Setting the standard

With mandatory climate-related disclosures and ever-changing reporting standards ramping up the complexity of corporate reporting, XBRL is increasingly replacing traditional paper or PDF-based disclosures with machine-readable formats.

XBRL makes business data machine-readable by attaching unique digital tags to individual pieces of information such as revenue, net income or emissions data. This tagging process allows software to automatically process and analyse the data, instead of requiring manual review by recipients.

The automation reduces manual errors in data handling and reporting, speeds up regulatory compliance by eliminating tedious data entry, and enables faster analysis and comparison across companies and industries. Investors benefit from quicker access to structured data that analytical tools can instantly process, leading to more informed decision making.

Turner says the Australian and New Zealand capital markets risk becoming invisible because of their outdated reporting approaches, adding that it is important for all markets around the world to ensure their corporate disclosures are discoverable, accessible and digital.

In good company

The advantages of digital reporting and XBRL are becoming ever clearer, with various case studies highlighting the benefits.

For example, Nordic countries Denmark, Finland and Sweden report in XBRL format. The digital reporting regimes are using application programming interfaces (APIs) to exchange structured data across jurisdictions, while respecting local accounting practice nuances. Through alignment on data standards and reduced administrative headaches, it is estimated that by the end of 2025 the Nordic XBRL model will deliver savings of about €500 million (A$890 million) for small and medium enterprises.

Turner says South Korea’s adoption of XBRL also highlights the standard’s flexibility and innovation. In the past, most Korean companies reported their financial results in the local language, Hangul, making the information relatively hard to access for international investors, corporations and regulators.

“[XBRL has] lowered the cost of capital in South Korea because people have better access to financial information and they’re better able to compare the performance of Korean companies with those in other markets,” he says.

Intersecting with AI

The rise of AI and how it complements digital reporting is emerging as the next frontier. Turner says there is hope among some C-suite executives that generative AI will become so smart that it negates the need for digital reporting technology such as XBRL.

“There’s open optimism along the lines of, ‘Oh, I've got AI now, I can let it do all the work for me’. Well, you can, but it will get it wrong. That’s because AI is a statistical engine and it’s guessing the most likely thing you mean when you put some words on the page. And, by definition, especially for public companies, disclosures are all different.”

However, Turner and his team believe a new approach using model context protocol (MCP) servers will plug AI tools directly into XBRL data sources to deliver accurate information. The analysis that is produced will be grounded in regulator-governed numbers with full traceability.

“We need a single version of the digital truth that management is accountable for, rather than many versions of the truth generated by many,” says Turner, who adds that competing AI platforms that analyse PDF-based reports can each make slightly different guesses about what the company is reporting.

Making the transition

For companies making the switch to digital reporting through XBRL, the process is relatively simple, with the cost of implementation depending on company size, complexity and jurisdiction.

XBRL itself is a freely licensed, open standard available to all companies. Turner notes that adopters could incur costs for software tools that help automate tagging and ensure regulatory compliance. Implementation costs could also vary, depending on whether a company handles the preparation and filing of XBRL reports internally (lowering costs, but requiring at least some in-house technical expertise) or outsources it to an external service provider (simplifying the process, but adding recurring vendor costs).

Turner says most countries that have adopted digital reporting use Inline XBRL, or iXBRL, a free filing format that combines the benefits of a human-readable HTML file with a machine-readable XBRL file. The iXBRL documents can be viewed with a standard web browser, making the data more accessible and visually appealing to users.

Given the sophistication of the technology and its ease of use, Turner is confident Australia and New Zealand will embrace XBRL sooner rather than later, and benefit from productivity gains and increased exposure to national and international investors.

“Ensuring that the fundamental information in financial reports is accessible and usable is just extraordinarily important.”