PARADISE
POSTPONED
LESSONS AND OPPORTUNITIES FROM
XBRL ADOPTION IN AUSTRALIA
Paul Phenix
Senior Adviser
Overview
1. The Regulatory Framework
- Who does what
2. Financial Reporting in Au
- Continuous vs. Periodic
3. Stepping Stones
4. Adoption Progress
5. Lessons
6. New Dawn?
THE REGULATORY FRAMEWORK
[XBRL-Au focus has been on regulatory adoption]
Organizational Equivalents
USA
SEC
FIDC
FASB
NYSE/NASD et al
DTC (securities clearing)
EDGAR
AICPA
Au
ASIC
APRA
AASB
ASX
ASX
ASX (“CAP”)
ICAA;CPAA;NIA
THE REGULATORY FRAMEWORK
2
1. Enforcement: Corps Act and Accounting
Standards
- Australian Securities & Investments
Commission [ASIC]
[Stds are issued by Au. Accounting Stds.
Board; part of Fin. Rep. Council. “AASBs” is
generic name for all Au standards]
THE REGULATORY FRAMEWORK
3
2. Prudential Regulation
- Financial Institutions : APRA
- Other Corps : ASIC
3. Market Provider : ASX
- ASX Supervises its Rules: Listing; Market;
Clearing
THE REGULATORY FRAMEWORK
4
1. Stock brokers; traders etc
- licensed and regulated by ASIC
2. Prudential Regulation
“participants” in ASX market
supervised by ASX re. Capital Adequacy (risk to
market); internal controls; fair dealing
CONTINUOUS
DISCLOSURE
ASX Supervision:
Primary Driver
- Supplemented by Periodic Reports
CONTINUOUS
DISCLOSURE
Provides what the market wants:
i.e.
- the full story;
- immediately.
1.
Financial Reporting in
Au
Informed Market :
Give all announcements to ASX as Proxy for the
Market;
2. Informed When?
- Immediately : Continuous Disclosure
-
“Becomes Aware”:
Listing Rules 3.1 & 19.2
Periodically : Chap.4: But LR 3.1 principles still
apply:
“immediately...becomes available”
3. Inform What?
- LR 3.1 & 19.2 again
CD: Listing Rule 3.1
Once an entity is or becomes +aware of any
information concerning it that a reasonable
person would expect to have a material
effect on the price or value of the entity’s
+securities, the entity must immediately tell
ASX that information.
CD: Listing Rule 19.2
Entity must comply with spirit, intention and
purpose etc of rules
19.2 An entity must comply with the listing rules as interpreted:
• in accordance with their spirit, intention and purpose;
• by looking beyond form to substance; and
• in a way that best promotes the principles on which the listing
rules are based
Introduced 1/7/96. Origin: Foreword.
Note: The principles on which the listing rules are based embody their intention and purpose.
See the Introduction.
Financial Reporting in
Au
ASX ELECTRONICALLY PROCESSES AND
PUBLISHES OVER 100,000 COMPANY
ANNOUNCEMENTS EACH YEAR
GROWING AT>12% pa
PEAK DAYS RUN AT >1000
ANNOUNCEMENTS
SEE WHY WE LIKE XBRL?
PERIODIC REPORTS TO ASX
1. Half Year :
Appendix 4D
- Highlights
- Embedded S.320 Statutory
Accounts (auditor reviewed)
- Supplementary ASX Info.
- 2 months deadline
PERIODIC REPORTS TO ASX
2. Full Year :
Appendix 4E: - Preliminary Final Report
- Highlights
- Condensed Accounts
- Commentary on Results
- Supplementary ASX Info.
- Un-audited but normally reviewed
- 2 months deadline
PERIODIC REPORTS TO ASX
Full year: continued: 1.
- Section 319 : 3 months deadline
- Full set of accounts
- Full compliance with Corps Act & AASBs
- Audited
PERIODIC REPORTS TO ASX
Full Year: continued: 2.
- Section 314 “Glossy”: 17 weeks
deadline
- “Annual Report” and “Concise Annual”
- ASX LR 4.10 Info (inc. Corp Gov)
- Audited
PERIODIC REPORTS TO
ASX
Quarterly Reports: Cash Flow Statements
- Appendix 4C: “CTEs”; “start ups”; or
if ASX requires
- Appendix 5B: mining explorers
Monthly reports
- Mining explorers
- Investment entities
ACCOUNTING STANDARDS
1. ASX Listing Rules:Presumption:
All Financial Info. and reports:
- comply with Accounting Standards; and
- show True and Fair View
2. Aussie Companies
- Must use AASB (CA Ss. 296 &304)
- No TFV over-ride
- Can now use other $$ (AASB 121)
ACCOUNTING
STANDARDS
3. Foreign Companies (GN4)
- Can use AASB or one of 7 Acceptable
Stds.
- IAS : UK : NZ : CAN : SG : HK : USA
- If use other Stds. must provide:
-reconciliation to AASB or IAS.
- can use any currency.
PERIODIC REPORTS AND
ASX
• Review all Offer Docs
• Review all Fin Reports under LRs
• ASX Appendices 4C;4D;4E;4F;5B
• Stat Accounts: S319; 314 (full and concise)
PERIODIC REPORTS AND ASX
What do we do with Reviews?
• Looking for compliance with LRs; esp. 3.1
• Report AASB/Corps Act issues to ASIC
• Report all “non-std” Audit Reports to ASIC (diced
and sliced by auditor and office)
• Report all odd Auditor Independence Declarations
to ASIC; generic report to FRC.
See why we like XBRL?
THE 13 STEPS
Organize
•
Form Jurisdiction
•
Join XBRL-International
3.
Get funds
Involve; get buy-in; membership from/by:
4. Professional Bodies
5. Stock Exchanges
6. Securities Regulator
7. Banks (promise of credit control)
8. Banking Regulator
9. Tax Authority
10. Govt. IT Agency/authority
11 Other Listeds (if you can)
12. Get more Funds
13. Use IASB Extension approach (if possible)
AU ADOPTION PROGRESS 1
- First meetings 2000
- Jurisdiction formed 2001
- 3rd XBRL International Meeting: Sydney
2001
- Promoted IASB based approach
- First draft Au taxonomy 2003
Au ADOPTION PROGRESS 2
Early Supporters and Members
-Prof Accounting Bodies;
- ¾ Big Four
- ASX
- APRA
-- BANKS
- Few LISTED COMPANIES
Government: indirectly with funds only
Au ADOPTION PROGRESS 2
Later Supporters and Members
- ATO (tax)
- ASIC
- AASB
- Main Local SOFTWARE (Listed)
COMPANIES (>75% write-up mkt.)
TICK THE BOXES
We hit all the Stepping Stones and
roughly in the right order.
So we should not have got our feet wet.
S0, WHAT WENT WRONG?
Nothing really.
Conclusion:
Milestones are;
-- NECESSARY:
-- NOT SUFFICIENT.
S0, WHAT DID NOT GO RIGHT?
ALSO NEED:
-- LUCK
-- TIMING
-- A GUN TO THE HEAD
S0, WHAT DID NOT GO RIGHT?
LUCK
-- SHD BE A NON-ENGLISH SPEAKING
JURISDICTION; SO THAT
--NO OTHER JURSIDICTION
WILL POACH EXPERTS.
--NOT RUN OUT OF RESIDENT EXPERTS
(XBRL-Au experts too busy on XBRL projects to
spare time for XBRL-Au)
-- THAT TIMING IS RIGHT
S0, WHAT DID NOT GO RIGHT?
TIMING
-- IFRS 2005ADOPTION
- (swamping accounting and IT
resources for 2-3 years )
-- ASX CAP RE-ENGINEERING: URGENT
-- Consolidation of domestic Software Vendors
-- BASEL II
- (major distraction for banks: which are
the natural XBRL champions)
S0, WHAT DID NOT GO RIGHT?
GUN
Late active involvement of:
-- Tax Authority;
-- Securities/Companies Regulator
-- Accounting Standards Board.
Early but passive involvement is not sufficient.
Compulsion from one or more is necessary.
A NEW DAWN?
-- More funds soon?:
-- so 2nd Au-Extension TAXONOMY and
training
-- Active support from Regulators [esp. ATO]
-- Task Force formed inc. users
-- Software vendors active