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Progress in Adopting XBRL in South America
2009-01-16 Editor: Views:

Daniel Díaz is a contracted regional coordinator for XBRL International (XII) for South America.  He is Professor of Information Technology at the National University of Rosario (Argentina) and was a prize winner of the International XBRL Academic Competition sponsored by Bryant College and  XII.

The economic crisis in Argentina that began in 1999 — culminating in a default on its international obligations in 2002 — had a dramatic, negative impact on most countries of the region. Since then, however, South American nations have begun to restructure their economies, as high commodity helped stabilize business conditions. At the same time, the region’s stock markets, regulatory agencies, and financial regimes have pursued better control and predictive systems that reflect the models and advances seen all over the world, and they have adopted more efficient tools to succeed in these goals.

Against this backdrop of improved economies and enhanced control, South America’s countries have been moving ahead in the XBRL field. Brazil, Argentina, and Chile – the  region’s three leading economies which together represent some 75% of its GDP – are involved in projects for adopting XBRL. The convergence toward IFRS is playing an important role in spurring these efforts, and the support offered by the IASB and IAS is notable in this area. The mandate by the U.S. SEC that all listed companies file financial statements using interactive data will also help foster adoption in South America, because it will require about 100 leading companies of the region to begin reporting in XBRL.

Brazil, Argentina, and Chile will likely begin the process of developing their own XBRL jurisdictions this year. This will be a great step forward in increasing an active presence and diffusion of XBRL in the region. The balance of this post provides a brief description of the main projects and initiatives going on in the region, with the ultimate aim of implementing the XBRL standard throughout South America.

Argentina

On October 1, 2008,  the Central Bank of Argentina  (BCRA) decided to begin the process of establishing an XBRL Argentina Provisional Jurisdiction. The BCRA will be facilitator of the Provisional Jurisdiction; the co-founders and participant members will be FACPCE, Argentina’s professional accounting association; AFIP, the country’s tax office; and CNV, her stock exchange commission. In the meantime, BCRA  will apply  to be a Direct Participant of XII. 

Under the so-called Balance Sheet Registry Project, XBRL would be introduced for financial reporting in stages, according to the company’s size, market prominence, etc.. When the entire system is in place, XBRLized financial information will be received for about one million Argentine companies. The BCRA – again with the active participation of the FACPE, AFIP, and CNV – is leading the Project. Its main goal through this initiative is to obtain clear credit rankings for different clusters of companies in Argentina’s economy.

The FACPCE will help in obtaining legal approval of the system. It will collaborate with BCRA in the development of the financial data sets necessary to develop credit ranking models. The AFIP will provide the electronic infrastructure and digital signatures required for implementation. The CNV will take care of the regulatory issues for the listed companies that will join the system in its first stage.

The FACPCE and CNV are leading the convergence initiative between Argentina GAAP and IFRS for 2010.

Brazil

Members of an initiative to establish an XBRL jurisdiction in Brazil have been in contact with the Jurisdiction Development Committee of XBRL International. In addition, the University of Sao Paulo has presented an XBRL taxonomy to the Taxonomy Recognition Task Force of XII.

Still in its initial stage, the implementation of XBRL is being studied as part of the Balance Sheet Registry Project  for Brazil, an effort being led by the Tax Office of Brazil (Receita Federal) and the Central Bank of Brazil (BACEN).

Over the past few years, BACEN and the Stock Exchange Commission of Brazil (CVM) have both decided to move to IFRS. In 2006, BACEN issued a resolution that would mandate IFRS for the banking sector in Brazil from December 31, 2010. On July 13, 2007, CVM published instructions that would mandate IFRS for all of Brazil’s listed companies for periods ending in 2010.

Chile

In October 2008, the president of Accountant College of Chile (CONTACH) offered that institution as the facilitator for the development of the XBRL Chile Jurisdiction. CONTACH’s Board of Directors includes representation of each state of Chile. This month the Board will likely ratify the President’s decision and begin the process of developing the XBRL Jurisdiction.

The Stock Exchange Commission of Chile (SVS) has developed electronic reporting with XBRL for listed companies of Chile. Companies will begin to report for periods ending June 2009. For this project the SVS developed an XBRL taxonomy based on IFRS version 2006.  While CONTACH will be organizing the Chile jurisdiction, the SVS has decided to apply to be a Direct Participant in XII.

Over the past three years, CONTACH has been working to converge to IFRS. This project has been funded by Inter-American Developing Bank (IADB).  Beginning this year, Chilean companies will have to report in IFRS.

Uruguay

Uruguay’s National Internal Audit Office (AIN) and the Central Bank of Uruguay (BCU) have been leading projects — funded by the World Bank — to improve  transparency in local financial markets. One goal of the project, which began in 2007, is the modernization of the country’s Balance Sheet Registry system, which is still based on paper submissions of company financial statements.  The AIN has decided to implement XBRL for electronic reporting this year.

The AIN will probably apply for direct membership in XII to support recognition of the taxonomies used and to enjoy the benefits of being part of the XBRL international community.

As member of the transparency project, the BCU is interested in modernizing the reporting system of commercial and industrial companies and the banking sector as well. In view of this objective, it is analyzing and studying the benefits of implementing XBRL. If the BCU this year decides to implement XBRL, it will apply for direct membership of XII.

 
 
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