Keywords

1 Introduction

Financial reporting has been developing during the entire period of its preparation [15]. In recent decades, new accounting objects connected with “intellectual economy” have emerged, that leads to the growth and significance of intangible assets, which are not provided for in traditional financial reporting. New non-GAAP indicators (not formally defined in the standards) are actively using by investors and other capital providers. They also show increasing interest in corporate reporting, especially in the area of long-term sustainability.

The significance of long-term development aspects and the need to analyze environmental risks in the process of making investment and financial decisions led to the emergence of a new type of accounting - accounting for sustainability with its new accounting objects [1]. As a result, more and more public companies began to disclose not only financial, but also non-financial (ESG) indicators material for interested parties.

The influence of technology is growing throughout the cycle of formation, promotion, and use of financial statements in the decision-making process.

All these very significant trends cannot affect the financial statements. Nevertheless, financial statements remain the most important source of information for investment decisions that are based on expected estimation of future cash flows. In turn, the likelihood of obtaining expected cash flows from business or individual assets is highly dependent on the influence of interested parties and the associated non-financial risks and opportunities (ESG risks and opportunities). In this regard, interested users of financial statements need a system of interconnected financial and non-financial information, which comprehensively characterizes both current financial results and cash flows, as well as their forecast. The probabilistic nature of future cash flows necessitates the development of mechanisms for the disclosure of significant risks and opportunities and professional judgments in close connection with the disclosed financial reporting information [12].

According to research results [13], investors do not seek to reduce the information disclosed because they have the technology to analyze them. Investors require a better use of technology capabilities for the formation of integrated reporting information and its disclosure [4, 14]. At the same time, determining how to efficiently collect, aggregate and disaggregate data, taking into account user information requests, presenting and analyzing interconnected financial and non-financial data, is a matter that investors view as one of the most important [3, 6]. Thus, the problem should be focused on how technology can be used to reform the entire process of generating financial and related non-financial reporting as a single process from beginning to end, and not just submitting it to the regulatory authorities. The solution of the problem is seen in the use of the international reporting format - XBRL (eXtensible Business Reporting Language), which provides issuers and users with a standard reporting algorithm and allows to present and to use the information in various ways depending on requests from regulators, capital providers and other interested parties.

2 Literature Review and Current State of the Issue Assessment

From the position of financial capital providers, a number of issues connected with providing financial reports to interested parties remain unresolved or insufficiently developed. These matters include emerging trends in technology and connectivity, the inability of the existing accounting model to provide investors with sufficient decision-useful information in a new economy, and the lack of a measurement framework that can inform the disclosures necessary to make such measurements meaningful [3].

Among the most significant financial drivers of value creation, investors tend to include non-GAAP indicators: EBIT, EDITDA, FCF, and their modifications. These indicators are the basis for calculating the most important financial multipliers, such as EV/EBITDA, Net Debt/EBITDA. The numerous techniques used by companies to calculate them, on the one hand, make it impossible their comparative analysis and, on the other hand, the manipulation of these indicators for the purpose to increase investment attractiveness. The lack of transparency in the disclosure of the methodology for calculating these key indicators represents one of the most important problems of investment analysis [4].

Stock exchanges are actively involved in the process of integrating ESG factors into the disclosure requirements of listed companies. In 2018, the World Federation of Exchanges (WFE) issued an updated version of Exchange Guidance and Recommendations on Sustainability [23], confirming that investors are the target audience for listed company ESG disclosures. In turn, global rating agencies (Fitch Ratings, Moody’s Investor Services, S & P Global Rating) published information on how ESG-factors are taken into account in the framework of investment or credit analysis. A well-known practice is when the ESG aspects have changed the initial rating or forecast regarding companies’ rating. Thus, it becomes generally accepted that ESG-factors should be integrated into issuer reporting and investment decision-making system [9].

Despite the growth of disclosed information, the research conducted on the satisfaction of the investment community with its quality [4, 14] indicates serious problems and frustration in the usefulness of the data provided.

Investors and other interested parties confirm the growing volume of information that companies publish in various reports. At the same time, users note that companies use different methods of collecting and disclosing non-GAAP and ESG data due to it is difficult to quickly navigate and use in the analysis process.

The complaints from the investment community are caused primarily by the lack of comparability of disclosed non-GAAP indicators and, moreover, non-financial information, differences in approaches to the formation of financial and non-financial reporting in terms of principles, requirements, periodicity and other aspects [4]. Thus, improving the practice of both the request from the investment community and the system disclosure of ESG data on a comparable basis from reporting companies remains a highly relevant task [8]. Experts see the solution in the more active use of IT technologies from both the investment community and companies.

To close this gap, Lubin and Esty [16] described “new approach to sustainability reporting”. Seele [19] argued that XBRL in particular can help to close this “sustainability gap”. This unified and interlinked reporting concept will also allow companies to integrate practices within “operations and measuring and reporting on those integrated practices in an aggregated, machine-readable, XBRL format” [22].

This approach is close to Eccles and Armbrester’ concept, who categorize the transformation brought about by integrated reporting and computing as “disruptive ideas” that “enable companies to make much more informed decisions about how they are using financial, natural and human resources to meet both financial and nonfinancial performance objectives” [7].

A first application field in which to apply XBRL to sustainability reporting was reporting of the energy performance of buildings. Gräning and Kienegger [17], inspired by Basel II and financial reporting, suggested that XBRL can be used “as a mean of standardization for the reporting concerning the energy performance of buildings” and discuss the generalization of XBRL and the possibility of applying it to other domains. Another aspect has been described as “inter-organizational sustainability reporting” [20]. Seele [19] proposed a new concept called “digitally unified reporting” that combines digital data management of sustainability performance with digitally standardized sustainability reporting. Finally, GRI in collaboration with Deloitte Netherlands had developed one of the first XBRL taxonomies for sustainability reporting. These XBRL taxonomies had intended to help investors, auditors and analysts to access information in sustainability reports faster, and more simply. By tagging the data once, the GRI says organizations can gain better control over the quality and integrity of their sustainability performance data. This will help investors, auditors and other report users to access and compare GRI data without the need for excessive manual workFootnote 1.

3 The Main Body

3.1 Approach

The paper examined the ways that XBRL technology may potentially improve company reporting system to fully meet stakeholder information requests. We investigated the existing system of separate preparation and presentation of financial and non-financial information and the ways that XBRL technology may potentially improve or when necessary to transform that process.

As a part of the study we used the companies’ interviews and investor surveys. We also used a systematic literature review method to accumulate reporting development research results.

At last we assessed how XBRL may potentially transform the financial and non-financial reporting production, delivery and consumption processes to make them more effective and transparent for investors. For this purpose, we analyzed the financial statements of major Russian companies as well as their non-financial reports, registered in the National Register of corporate reports. We focused on the financial and non-financial reporting relationship and interactions to assess their usefulness for capital providers and other interested parties.

3.2 Statement of Basic Materials

The study made it possible to identify the following basic properties of the XBRL format, which provide the advantages of its use and are significant for the integration of financial and non-financial reporting. The following Table 1 gives a summary of the identified positions.

Table 1. The advantages of XBRL.
Full size table

As follows from Table 1, the above properties of XBRL allow to solve the problems that the last decades have been especially important for accounting:

  • elimination of redundancy and duplication of reporting data through the creation of a unified system for collecting and processing of reports;

  • improving the reliability and quality of reporting data through the unification and automation of processes;

  • increasing the transparency and openness of financial information;

  • improving the accuracy of decision making due to either identifying business problems or identifying ways to solve them and create mechanisms to prevent their occurrence in the future.

Using semantic tools XBRL allows to submit a system of financial and non-financial indicators in accordance with generally accepted requirements of international standards in electronic form. Software products with XBRL technology contain the process of collecting, selecting and pre-processing information to further provide the results to different users. Sources of XBRL data can serve as data of the accounting system, as well as other company’s information systems (Fig. 1).

Fig. 1.
figure 1

Formation of various reporting types based on XBRL

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According to Fig. 1 XBRL provides enhanced ability to customize reporting to meet the specific needs of information users such as investors and analysts. Since the goal of the XBRL format is the preparation of analytical materials, a single data warehouse allows to process large amounts of data with the necessary analytics.

XBRL reports are dimensional and for that they can be transformed and automated in the Multidimensional Data Model (MDM) so they can be analyzed by business users in the most effective ways [18].

On-Line Analytical Processing (OLAP) - multidimensional data analysis technologies that provide interactive work with information in real time and allow to aggregate, drill down data, change analytical sections, calculate derived indicators, and perform advanced graphical analysis [13]. OLAP tools give capacity to the user to analyze multidimensional data from multiple perspectives. All the OLAP tools are built upon three basic analytical operations:

  • Consolidation: performs data aggregation that can be computed in many dimensions.

  • Drill down: a contrasting technique to consolidation that allows users to navigate through data details in a reverse approach to consolidation.

  • Slicing and dicing: a technique in which users take out (slice) a set of data called OLAP cube and then further dice the data cube (slice) from different viewpoints.

The OLAP analysis process is a set of analytical operations with multidimensional data: their detailing, consolidation, formation of slice and rotation. Consolidation operations represent a transition from a separate presentation of information to an aggregated one or more dimensions, and in the case of drill down, a large data set is divided into separate parts. A cube slice is formed by fixing the value (or values) of a particular dimension. The rotation operation consists in changing the position of the measurements - the axes of the cube. The “point of view” on the data changes upon completion of the rotation.

OLAP provides the user with an intuitive multi-dimensional data structure by collecting them into an OLAP cube or hypercube [13].

$$ {\text{G}} = {<}{\text{D}},{\text{F}}{>} $$
(1)

  • a model of the logical multidimensional representation of data, characterized by two sets of parameters: indicators and measurements.

    $$ {\text{F}} ={<}{\text{f}}1,{\text{f}}2, \ldots ,{\text{fn}}{>} $$
    (2)

  • indicators (measures) of the hypercube: each indicator has many values that quantitatively characterize the analyzed process.

    $$ {\text{D}} ={<}{\text{d}}1,{\text{d}}2, \ldots ,{\text{dm}}{>} $$
    (3)

  • hypercube dimensions: each dimension is an ordered set of values ​​of a certain type. Dimensions can be organized as an ordered hierarchical structure. Many dimensions form the faces of a hypercube.

An example of a cube based on which further analysis can be carried out is shown in Fig. 2.

Fig. 2.
figure 2

OLAP cube example

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Figure 2 shows the analytical capabilities of the technology. For stakeholders, the use of OLAP technology means high flexibility of solutions, as it allows to present the necessary information to the extent of aggregation or detail, as necessary for interested parties. This makes it possible to generate various types of reporting (financial, non-financial, managerial) on the basis of a single massive data, which ensures their compliance and mutual complementation. Thus, XBRL in combination with MDM technologies creates an opportunity to solve the most relevant and important problem at the present stage of development of accounting and reporting - the creation of a single enterprise accounting and reporting and a global network of reporting data that can easily be transformed into any reporting format depending on the needs of external and internal users.

Issues surrounding XBRL technology proliferation in Russia.

Example of Russia demonstrates that transition of companies’ reports to XBRL is an important trend affecting not only the accounting functions, but also whole financial markets of a country. Commencing with January 1, 2017, following decision of the Bank of Russia, non-credit financial institutions began transition to a Unified chart of accounts (UCA) and industry accounting standards, accompanied by the introduction of XBRL.

It was expected that the introduction of digital technologies in the form of XBRL would result in – mutual understanding between organizations and the regulator, transition to a unified business reporting. Moreover, the preparation was expected to be “quick and easy”. However, problems were encountered on the way that resulted in contraction of the financial market. An examination of these issues is important taking into account that in Russia insurance brokers, microfinance institutions should introduce XBRL in 2019. Then it will be the turn of pawnshops, credit consumer cooperatives, leasing companies. The study [interviews] of IT companies’ specialists identified the following issues:

  1. (a)

    the difficulty of acquiring the right IT solutions;

  2. (b)

    lack of qualified professionals;

  3. (c)

    absence of a methodology for transition to XBRL;

  4. (d)

    continuous changes in IFRS.

Analysis of these issues demonstrated:

  1. (a)

    Many companies postpone acquiring XBRL software, continue to input data manually, or acquire cheap software. Lacking necessary functionality, inexpensive software often does not work well. Due to absence of appropriate IT-specialists in some companies choosing proper IT-solutions is difficult. In addition, there are not many well performing and universal software products on the offer. Usually companies acquire an off-the-shelf product that requires significant adjustment to the company’s business. Such tuning is expensive, but own experts are non-existent.

  2. (b)

    Operating of XBRL requires not only IT specialists, but also specialists in IFRS, since industry accounting standards closely follow IFRS. The Unified Chart of accounts for non-credit financial institutions (Russia) is largely similar the chart of accounts for credit institutions. It is designed for detailed accounting of various operations and objects. The Unified Chart of accounts systematizes and prepares information for the use of XBRL. Accounting and reporting under IFRS requires significant volumes of raw data. This is especially true for first time reporting (preparation of initial report). The costs of information gathering, specialists training for IFRS, or outsourcing to third party experts, can be significant.

    Usually there is a lack of expertise in IFRS in non-credit organizations implementing XBRL due to inadequate accounting education in Russia.

  3. (c)

    Many companies do not develop the concept and methodology of their accounting system. The introduction of XBRL demands a new approach to the accounting system, - requires development of its own concept and methodology.

  4. (d)

    Financial reporting rules are constantly changing, which require re-configuration of XBRL. Recent changes include significant transformation of accounting for financial instruments, revenue, leases that was connected with the adoption of IFRS 9, IFRS 15, IFRS 16. An accountant needs now more and more additional information to make a professional judgment in various situations. It is becoming increasingly difficult to decide on accounting treatment of a transaction or an object.

  5. (e)

    various non-financial reporting standards are currently used worldwide. In Russia, as in the world, most public companies use GRI standards or the Conceptual framework of integrated reporting. The existence of some significant differences between these standards, as well as differences in the conceptual framework of financial and non-financial reporting make it necessary their integration on the basis of XBRL.

These issues need to be addressed. Moreover, XBRL capabilities already include some solutions to these problems. Previously, software products and technologies were chosen for accounting. Rapid development of information technology, the era of digitalization present a new stage of relations between accounting and information technology. Nowadays technologies, such as XBRL, set the trend for the development of accounting, pushing in the direction of fusion of different types of accounting in a unified reporting system [9].

Decision on Training

IFRS education pays little attention to digital technologies. Although certain IT courses are present in universities, they are meant for IT students. As a result, many companies that need to implement XBRL, neither have specialists who master both IFRS and IT (including digital technologies), nor have specialists of either of these groups.

Decision on Concept and Methodology

The concept of unified accounting based on XBRL involves the use of a multidimensional description of each operation and object. The methodology should include the possibility of adjusting disclosures to the requirements of key stakeholders, primarily regulators and investors. New requests should be processed and taken into account in a timely manner.

Decision on Change of Accounting and Direction of Its Future Development

Harmonization of financial and non-financial reporting standards is required. In addition, non-GAAP disclosure requirements are needed for measurements used by the organization in management accounting. XBRL already allows to do this, i.e. organize, process such information, get it in the form of the necessary reports. It is critical to ensure effective cooperation between development of accounting methodology (both financial and nonfinancial) and digital technologies.

4 Results

The results of our study are important because XBRL is been widely using for financial information be reported in a standardized and digital manner to regulators such as the SEC, the Committee of European Banking Supervisors (CEBS), The Central Bank of the Russian Federation [10]. At the same time, the analysis of the possibilities of its application for the formation of non-financial reporting and their integration has been studied to a much lesser extent.

The study shows that XBRL:

  • brings improvements to sustainability reporting;

  • plays a crucial role in facilitating progress toward more comprehensive sustainability reporting;

  • gives opportunities to develop different fields of application in sustainability reporting, benefiting from the opportunities in data management based on standardized XBRL taxonomies [19];

  • affects governance, transparency, data management (extension, mutual complement and linking data) and cost effectiveness in business reporting (XBRL, being already established in mandatory financial reporting, offers opportunities to develop rigorous sustainability metrics that increase comparability and cost reduction).

  • reduces information asymmetry [2]. Next to the cost benefits of not obtaining third-party assurance on the disclosure document;

  • works as a concept incentive to enhance the financial reporting supply chain and to involve major stakeholders in the use of XBRL-based reporting both financial and non-financial [5].

We have shown that the composition of the information that fills the XBRL is determined by the rules: reporting under IFRS (or another system of financial accounting and reporting); additional requirements of the regulator, non-financial reporting (according to certain standards); management accounting and reporting rules (according to the standards established by the company).

We have identified the possibilities of XBRL for the formation of various types of reporting and formulated two main goals of filling XBRL with information - ensuring effective management of the company, its business processes, and high-quality satisfaction of information requests of stakeholders [21]. The joint achievement of these goals increases the image and value of the company, contributes to its sustainable development, creates an opportunity for the sustainable development of civilization.

We identified (formulated) the actual problems of XBRL technology distribution in Russia, summarizing the experience of its use in the financial sector under the guidance of the Central Bank of Russia (the issue of acquiring the right IT solutions; lack of specialists with the necessary qualifications; lack of a methodology for the transition to the implementation of XBRL; constant change of IFRS standards).

Based on a detailed analysis of these issues, we found that to solve them, it is necessary to focus on two areas - improving the training of accounting professionals in the field of digital technologies and harmonizing the concept and standards of financial and non-financial reporting, which is made possible through the use of XBRL technologies.

5 Conclusion

Our study, of course, does not cover all issues of using XBRL in the accounting area. We investigated only some problems of this topic and their solutions. In addition, our study has a number of limitations, which should include insufficient coverage of respondents, limited list of questions, lack of periodic representative sample surveys in the context of various groups involved in the field of accounting and reporting. However, we believe that, despite these limitations, our results will be useful for other studies, and will also contribute to the development of accounting in the context of digitalization.

We consider it necessary to develop XBRL application its existing advantages, as well as other aspects that will help in improving company’s reporting system, and a deeper penetration of digital technologies in the accounting area, as well as the further development of the accounting sphere under the influence of digital technology. In addition to the described advantages of XBRL-based business reporting, other aspects can be identified that will help in developing company’s reporting to become more holistic with regard to both content and managerial application. Such advantages arise from the combination of XBRL with Big Data and Business Intelligence technologies, which can significantly extend the benefits of structured integrated reporting.