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Get iXBRL to work for us
Ever since HMRC announced that it planned to make online filing of company accounts mandatory in the iXBRL format, most of the comments on AccountingWEB.co.uk have centred around the mechanics of the system. Jennifer Adams urges members to raise their sights and considers the potential uses and benefits of electronic accounts data.
Whether you are on the side of those who believe that HMRC rushed its implementation and should have taken it slower or not, there is no choice. iXBRL is here to stay, so we might as well make it work for us. We need to know its capabilities.
HMRC and Companies House are already very well aware of what it can do for them. Page 4 of the HMRC iXBRL Guide (PDF download) comments, “Computers... can recognise the information in an iXBLR document and present it automatically for other users, select it, analyse it, store it, exchange it with other computers.” To them it is manna from Heaven.
The idea behind iXBRL is simple - it provides an identifying tag in a standard computer readable format for each individual item of data such that the output produces accounts that are directly comparable. John Stokdyk recently suggested in Any Answers and elsewhere that iXBRL can make it possible to compare business accounts against industry benchmarks.
HMRC’s financial analysts will be using such systems to extract, analyze and process this data using IDEA software that helps them to identify of patterns of business activity. HMRC will be able to hone in on those businesses that are possibly slightly outside industry norms, enabling investigators to focus on business accounts that are more likely to produce results.
Larger firms of accountants may also have access to similar analytical tools, but this is unlikely to be the case for smaller firms. AccountingWEB.co.uk is suggesting that members join together via the website and do the same thing.
Here is an idea for a starter - you need to be able to compare the amount of drawings by owners of similar businesses. A simple analysis of iXBRL accounts could be done with no names or identifying marks being used - for example Bournemouth accountants preparing accounts for bed and breakfast hotels in the area could test their figures for drawings against an iXBRL norm from of similar hotels to see if they are outside the norm.
This kind of comparison might be a few years off, but as John Stokdyk has already asked, what kinds of automated tests and analysis would you like to see?