XBRL as a tool for supervision Arnoud Vossen Chairman CEBS Expert Group on Financial Information.
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XBRL as a tool for supervision
Arnoud Vossen
Chairman CEBS Expert Group on Financial Information
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Outline
•What is CEBS?
•Plusses of XBRL for supervision
•Use of XBRL in the EU supervisory authorities
•Priorities to a more harmonised EU reporting framework
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What is CEBS?
The Committee of European Banking Supervisors is a consultative body comprised of high level representatives from the banking supervisory authorities and central banks of the European Union (other EEA countries may participate as observers)
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CEBS’ role
Main tasks:
• Give advice to the Commission
• Promote consistent implementation and application of EU legislation
• Exchange information and enhance convergence of supervisory practices
Objectives:
Promote cross-border supervisory co-operation and the safety and soundness of the EU financial system through:
• good supervisory practices
• efficient and cost-effective approaches to supervision of cross-border groups
• effective regulation
• level playing field and proportionality
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CEBS’ activities
• Development of EU supervisory reporting frameworks
• Templates for regular reporting by banks to EU supervisory authorities
• Based on Basel II and CRD for solvency information
• Based on IFRS for financial information
• COREP for solvency information
• FINREP for financial information
• From a flexible harmonised towards a more uniform approach
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CEBS’ stance towards XBRL
Cover note to the Framework for Common Reporting of the New Solvency Ratio
“While national supervisory authorities are free to decide on the technical transmission specifications to implement the reporting framework, CEBS considers that XBRL can be a helpful tool in constructing a harmonised European reporting mechanism. CEBS will therefore develop an XBRL platform and make it available free of charge to national authorities and supervised institutions. XBRL taxonomies will be developed for both the COREP and FINREP (Financial Reporting) frameworks.”
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CEBS’ organisation linked with XBRL
CEBS
SWG on Auditing
Expert Group on Financial information
SWG on Accounting
SWG on Reporting
COREP network
FINREP network
XBRLP network
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Plusses of XBRL for supervision
•XBRL enable cross-border groups to use the same IT transmission standard in different jurisdictions.
Avoiding having multiple systems for each country
•Small banks may benefit from a free standard like XBRL and the economies of scale derived from the development of the XBRL taxonomy by CEBS.
Possibility of using same system to other reporting (e.g. tax returns)
•Supervisors may benefit from economies of scale. XBRL provides the flexibility to accommodate in a consistent manner different reporting and legislation.
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Plusses of XBRL for supervision
•XBRL provides the IT framework for the reuse of harmonised terms and definitions.
Regardless of the lay-out of the national templates
Regardless of the language used in the national implementations.
With higher levels of reliability, since the taxonomies incorporate the validation rules needed.
References included in the taxonomies determine the content of the items.
The more widespread is the use of XBRL,the more benefits from XBRL can be obtained.
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Conceptually…
Reporting before… and after…
Supervisor 1
Supervisor 3
Supervisor 2
Different templates and definitions Common templates and definitionsSeveral formats Single formatDifferent technologies XML/XBRL recommended
Supervisor 1
Supervisor 2
Supervisor 3
XBRL
Group A
Group B
Group C
Group A, B, CCommon
framework
XBRL
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Use of XBRL in EU supervisory authorities (COREP)
Applying XBRL (12) Not applying XBRL (12) Planned XBRL (1) No information (5)
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Insight: COREP taxonomy in CEBS membersCountry Taxonomy
VersionXBRL
Belgium 1.2.4 Compulsory
Bulgaria Planned -
Cyprus 1.2.3 Compulsory
Germany 1.2.3 Optional
Spain 1.2.2 Compulsory
Finland 1.2.3 Optional
France 1.2 Compulsory
Ireland 1.2 Optional
Lithuania - Compulsory
Luxembourg - optional in 2007, compulsory in 2008
Netherlands 1.2.3 Optional
Norway 1.2.3 Optional
Poland 1.2.3 Compulsory
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CEBS actions for 2008 - 2011
Actions
1) Differences inprocedures
2) Differences in datadefinitions
3) Differences in nationalimplementations
4) Differences in IT
•Standardise remittance date•Standardise reporting frequency
•Increase transparency of Q&A•Industry experts’ networks•Clarify FINREP IQs
•Streamlining FINREP•User test COREP•Subsidiaries data requirements•Simplified approaches for cross-border groups reporting
•Versioning policy
Convergence in reporting
FacilitatesXBRL
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CEBS actions for 2008 on supervisory reporting
Differences in reporting procedures: remittance date (COREP)
•Corridor approach converging by 2011.
•Towards a common remittance date
•Difference between consolidated reporting & and solo reporting
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CEBS actions for 2008 on supervisory reporting
Differences in reporting procedures: reporting frequency
• Towards a basic quarterly frequency
• Some exceptions, eg
– Investment firms under art. 9 Directive 2006/49/EC
– Summarised information of capital ratio in solo basis for
SA institutions
– Use of templates for data collection for monetary policy.
COREP
FINREP
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CEBS actions for 2008 on supervisory reporting
Differences in data definitions:
• Intensify use of current Q&A mechanisms
• Publish Q&A in national websites
• Set up panel of industry experts in reporting
• Clarification of scope of Q&A in FINREP: no IFRS interpretation
CRD
National laws
Supervisory rules
Supervisory practises
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CEBS actions for 2008 on supervisory reporting
Differences in national implementations
Streamlining of FINREP
• Lower level of commonality in non-core information
• Identify areas with low supervisory interest
• Reasons behind the lack of usage of certain templates
• It implies a net reduction in the required data
User-tests of COREP
• Actual use tested in practise
• Involvement external panel
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CEBS actions for 2008 on supervisory reporting
Differences in national implementations:
analysis of simplified reporting procedures for cross-border groups
• Investigate potential alternatives (one-entry point, interconnected databases)
• Analyze:
– Cost and benefits
– Technical and business requirements
• Have in mind relevant obstacles (e.g. national discretions)
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CEBS actions for 2008 on supervisory reporting
Differences in IT mechanisms:
harmonised versioning policy
• Cooperation to modify at the same time the Guidelines
• Cooperation to change the version of the XBRL taxonomy at the same time.
• Give enough time to industry and national authorities to assimilate any changes.
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Outline
•What is CEBS?
•Plusses of XBRL for supervision
•Use of XBRL in the EU supervisory authorities
•Priorities to a more harmonised EU reporting framework
Contact details: Arnoud Vossenemail: a.m.j.vossen@dnb.nltel: +31 (0) 20 524 39 03
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