i DECLARATION This is to certify that this project entitled “XBRL as a Tool for Financial Reporting: Adoption by the Zimbabwean Companies” which is submitted by me in partial fulfilment of the requirement for the award of the degree Bachelor of Business Studies Honours Degree (Management) by the University of Zimbabwe comprises only my original work and due to acknowledgement has been made in the text to all other materials used. Signature……………………… Name of student: CHIBOWA MARTHA DATE…………………….. APPROVAL This is to certify that, this research report has been under my supervision as a University supervisor. Supervisor…………………… Date……………………………
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i
DECLARATION
This is to certify that this project entitled “XBRL as a Tool for Financial Reporting: Adoption by the
Zimbabwean Companies” which is submitted by me in partial fulfilment of the requirement for the
award of the degree Bachelor of Business Studies Honours Degree (Management) by the University of
Zimbabwe comprises only my original work and due to acknowledgement has been made in the text to
all other materials used.
Signature………………………
Name of student: CHIBOWA MARTHA DATE……………………..
APPROVAL
This is to certify that, this research report has been under my supervision as a University supervisor.
Supervisor……………………
Date……………………………
ii
DEDICATION
To The Lord God Almighty.
Affectionately to my parents (Mr & Mrs Chibowa).
iii
ACKNOWLEDGEMENTS My special thanks and appreciation goes to my supervisor Mr K. O. Kadare for persevering throughout
the time it took to complete this research project and for his continued support. Special thanks also go to
XBRL consortium for their daily updates to me which were highly beneficial during data gathering.
I sincerely acknowledge my parents for their continued support and guidance and making my dreams
possible.
I thank also my friends and everyone who shared their knowledge and opinions with me that made this
research successful.
Special acknowledgement goes to the Lord Almighty for His mercies and the spirit of knowledge,
wisdom and understanding that He continues to give unto us.
iv
ABSTRACT The main aim of this study was to investigate the reasons why Zimbabwean countries have not yet
adopted XBRL. XBRL is a business reporting language that uses extensible mark-up language and
hypertext mark-up language and is computer readable. Increased use of computers and the internet led
to the development of XBRL by the XBRL global consortium. Its development has greatly changed
financial reporting process in several countries. From the aim of the researcher, findings showed that
Zimbabwe has not yet adopted XBRL because of lack of awareness. Other reasons were because it had
not yet been made mandatory by the regulatory authorities and to some lesser extent resistance to
change. From the study, findings also indicated that there are vast merits of adopting XBRL as reported
from the empirical studies of the countries which have adopted XBRL as a tool for financial reporting.
The research showed that there is need for Zimbabwean companies to adopt XBRL as a tool for
financial reporting.
v
Contents DECLARATION .................................................................................................................................. i
DEDICATION ..................................................................................................................................... ii
ACKNOWLEDGEMENTS ................................................................................................................ iii
ABSTRACT ........................................................................................................................................ iv
Definition of terms and abbreviations ............................................................................................... viii
Definition of terms ........................................................................................................................ viii
abbreviations ................................................................................................................................. viii
mitigates benefits of selecting a financial reporting approach that artificially enhance financial
performance and condition, that is, financial statement fraud. This is enhanced through integration
as similar tags show the connection between items and therefore can be evaluated along.
The researcher also noted that the reporting language provides for real time reporting hence
stakeholders, for example potential investors or financial analysts, can make useful judgments
concerning the share price, for example. Having acknowledged most merits of XBRL in financial
reporting and auditing Pinsker, (2003) also found out that knowledge and experience on burl were
still low and found the need for companies to implement training and, or hiring experts on burl so
that they could implement it and start benefiting from its use.
In a case study by PwC of the investment management industry (trusted and efficient financial
reporting), reported that for a company to meet shareholder demand for transparency and greater
speed in financial reporting, businesses need to implement more effective ways of communication.
It recognized the strengths of XBRL in effectively and efficiently communicating financial
performance to its stakeholders.
From a conceptual framework developed by Hogarth, (1980) on how users of financial statements
acquire and use data for financial statement analysis depicted below. It can be seen that XBRL is
useful at every stage and makes it easier at each stage of data acquisition and analysis.
Figure 2.3: Data acquisition and analysis
Information acquisition- this is the stage where one finds and reads the information. The tagging
process makes it easy for one to specifically find the information he/she will be looking for and it’s
readily readable in any format (Cheung, 2011).
Information evaluation- the information can easily be evaluated to assess the condition and
performance of the firm. Integration makes it easier for the information in the reports to be
evaluated as similar tags encourage the data to be evaluated together (Hodge et al, 2004).
Information combination- this is the stage where the user assimilate implications and weigh to
arrive at a conclusion on the financial position or performance of the company. XBRL improves
multiple company financial information analysis (xbrl.org, 2008).
Information
acquisition
Information
Evaluation
Information
Combination
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2.2.1 XBRL and the accounting conceptual framework: qualitative characteristics
Financial reporting includes disclosure of each monetary fact and reviews to the stakeholders that
offer essential records about the economic or financial health and operations of the organization.
For financial reporting to be effective and efficient, the records provided ought to fulfill the
following qualitative characteristics which can be understandability( i.e. ease of understanding of
the monetary assertion, guidelines, technique and assumptions used); relevance( i.e. records
furnished must be applicable to the user and of material effect); reliability( i.e. should be unfastened
from fabric error or bias); comparability( i.e. the statements or the reports ought to be without
problems compared, there ought to be consistency in presentation and disclosure from period to
period and inside the industry) and other qualitative traits which might be trustworthy presentation,
timeliness, prudence and neutrality.
From the literature review of several studies it is to be seen that XBRL enhances the characteristics
of quality information.
Effective: as it enhances the relevance of information to different stakeholders, a user can simply
query for the specific type of information he/she wants which will be pertinent and also real time
reporting makes information available timely.
Efficient: in the fact that it reduces costs associated with non-electronic financial reporting and the
need to convert into different formats which has anomalies when doing so due to inherent human
error.
Availability: in the sense that XBRL reports can be easily accessed by a user anywhere hence the
information is readily available and the information will be current.
Compliance with legal requirements: it is to be appreciated that IFRS has defined taxonomy of
XBRL and most revenue or filling authorities have adopted XBRL hence information reported will
be complying with the regulatory requirements.
Reliability: in the fact that XBRL provides reliable information as the tagging process can
specifically show each individual item and provides trustworthy information.
Comparability: inter-company can easily be made when the financial reports are made in XBRL
format
Full disclosure: lately reports were made in the form of a general ledger. Due to costs of financial
reporting, not all information could a company publish or issue to all its stakeholders. With XBRL
any user can access any information of any characteristics in the financial statements.
10
2.2.2 XBRL in relation to accounting theories
Table 2.1: theories
THEORY MERITS/ contribution of XBRL
Agency (Jensen & Meckling,
1976): aims to resolve the agency-
principle problem.
Resolves the agency-principle problem.
Resolves the problem of information
asymmetry as the interests of the managers
differs from that of owners (Chen et al, 2015).
Accounting theory: states the basic
accounting framework and
methodology to achieve uniformity
(Wolk, Dodd and Rozycki, 2008).
XBRL is based on a taxonomy hence has a
framework and methodology.
Shareholder wealth maximization
theory (Sharfman, 2015): aims to
increase shareholders wealth.
A research by Pinscher & Li (2008) indicated
that companies who reported in XBRL had
increased earnings per share as it gives a
competitive advantage. Reduced costs also
increases profits hence shareholder wealth
maximization.
Efficient Market Hypothesis: aims
to increase the efficiency in the
financial market (Malkiel, 2003).
XBRL results in real time financial reporting
hence efficiency in financial reporting.
Financial analysts can efficiently and easily
judge the EPS of a company on the stock
market using real time information causing
existing share prices to always reflect and
incorporate all relevant information
Stewardship theory: Donaldson,
(1991) states that it is based on the
assumption that managers are
responsible stewards.
XBRL enables full disclosure of financial
reporting hence managers a greater able to
report on the performance of the company.
11
This table shows that for every weakness or strength of a theory in accounting or an advantage,
XBRL provides a solution or enhances the strengths of the theory. The aforementioned relationship
with the conceptual framework and the theories and advantages related shows that there are more
benefits to XBRL. Most research has shown benefits than demerits of which the demerits are
primarily from lack of knowledge and computer illiteracy.
2.3 XBRL adoption: Evidence from different countries
This section shows the summary of the empirical studies carried out by different researchers for
different countries and companies and the results that were reported.
Europe- (xbrl.org.eu) indicated that European commission and the committee of European
banks that is entire banking industry implementation was inspired by XBRL promise of
efficient data gathering and automated analysis of information since there was a move to
electronic financial reporting. XBRL Europe was then developed to generate better
consistency, interoperability, global sharing and knowledge sharing.
China- from an interview conducted by Kernan, (2008) it was reported that the ministry of
finance and the revenue authority appreciated the implementation of XBRL. China is
credited as the first capital market to adopt quickly although XBRL filings from 2004 up to
2008 were unlikely to affect the capital markets (Songshenget al 2015). It was also reported
by Chen et al that in 2007 some firms on the Shanghai stock exchange (SHSE) and
Shenzhen stock exchange (SZSE) for the AAA stock market had adopted XBRL as a
standardized format for reporting. China reported that XBRL has facilitated knowledge
sharing, and inspired change. XBRL is more influential on a bigger supply chain.
Preliminary literature review shows that Chinese companies have quickly adopted XBRL
although America was the first to implement the electronic tool for financial reporting and it
also hopes to see extended use of XBRL even in small companies and mining.
America- XBRL was developed in America. The inventor had recognized anomalies and
inconveniences that arose when converting the data into readable format and the need for a
global access of data from anywhere. Kernan, (2008) postulated that although XBRL had
been made mandatory in USA by the SEC, the reason was China was moving faster than
them was because in China there was no need of shifting to it but it was installed by most as
a background system which would change any input into XBRL rather than wasting time
trying to acquaint with regulatory requirements.
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India- According to a report by Shirdhankar (2014) it was conveyed that XBRL took a
wave in India in 2007 and was made mandatory in 2011 by the ministry of corporate affairs.
The other regulators were the Reserve Bank of India, Securities and Exchange Board of
India and the Insurance Regulatory and Development Authority of India. The ministry of
corporate affairs reported that above all other merits aforementioned, XBRL resulted in
more accurate handling of data, more effort is concentrated on analysis rather than time
consuming costly manual processes which require re-entering of data.
Israel- From an empirical study by Markelevich, Shaw and Weihs, (2015) the Israel
Securities Authority (ISA) mandated the implementation of XBRL in 2008. They reported
that during its first year of adoption a negative result came out. The ISA assumed that it
would increase direct foreign exchange although the researchers concluded that this was
probably that in 2008 there was a global crisis hence little movements in investments.
South Africa-: a research by Steedkamp and Nel, (2012) showed that there was slow
adoption of the technology as there was a very low level of awareness. The other reason
cited was that the reason why most firms had not adopted the technology was becomes it
was not yet mandatory as with other countries. The researcher looked at economic
circumstance as a variable that influenced adoption and the result was that it had no
significant influenced on the decision to adopt or not to adopt. Steedkamp & Nel also
concluded that the case for XBRL should be made stronger for adoption and awareness rate
to improve. Research also found out that its adoption was important and relevant to all
stakeholders interested in information management. South African Institute of Chartered
Accountants (SAICA) formed XBRL South Africa to encourage implementation of XBRL
in South Africa.
Company -Microsoft corporate in 2002 was reported to be the first technology company to
report in XBRL on the Internet. From a report by Neal Hannan, (2003) from Microsoft
corporate, he announced that Microsoft office 11 was to feature an XBRL add-in so that it
will be easy for management to easily communicate business performance and improve
support for corporate transparency.
Earlier studies on XBRL indicated that the technology was beneficial to the global world of
financial reporting. Most researchers did not look at the demerits or problems associated
with XBRL. Also there is no or limited literature on XBRL in Zimbabwe and Southern
African countries.
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2.4 advantages and disadvantages of XBRL
2.4.1 Costs and demerits of XBRL implementation
Justification of XBRL adoption without noting the demerits would be irrational. Like any other
decision that can be made, XBRL has costs or demerits associated with it. Most research has
reported on the advantages of adopting XBRL. The costs of XBRL adoption have been overlooked
by most researchers. According to a survey by Choi et al (2008, p.71) cited by Ahrendt, (2009, p.
16) it was reported that most companies did not do a cost benefit analysis before the implementation
of XBRL. However the study also showed that XBRL was neither a costly or lengthy process.
There are costs associated with XBRL which are hardware and software costs, training costs and
maintenance costs as mentioned by Remenyi et al (2000, p.89).
Ahrendt (2009, p.15) as well acclaimed that companies are afraid of change and may resist it
especially if the current system is functioning well. Also a citation by him from (McCann, 2009)
stated that it might seem easy but it definitely takes time hence time consuming. Neal Hannon
reported that there may be costs if the company treat XBRL as an afterthought, if they hire a
consultant, no attempt has been made to examine the benefits and if none in the organization
understands XBRL. XBRL USA (2010) declared and acclaimed that real time Internet. Reporting of
burl is indeed a double edged sword as it may cause disproportionate volatility of share prices and
may cause the industry to base on short term reporting and it also reported that it may increase
information abuse.
An article by Quaglieri (2012) critiqued that as XBRL taxonomies are extensible they are too
adjustable which may allow companies to enter data which may not exist thus gearing financial
statement fraud. When auditing the financial statements in XBRL, Plumlee and Plumlee (2008)
noted that an assurance cannot be made on the reliability of statements in XBRL as attestations
could not be made on the free and fairness of the statements as there could be mis-tagging.
Semantic misrepresentation, incomplete or incorrect XBRL data and inadequate use of XBRL tags
were some of the shortfalls reported by Markelevich et al (2015).
2.4.2 Reported advantages of XBRL
The Accounting Institute of Chartered Public Accountants (AICPA) reported that XBRL has vast
advantages to the profession of accountancy. According to Steenkamp and Nel (2012); XBRL
enhances the automated process of data collection, that is, data from different divisions or regions
with different accounting system can be integrated cheaply, quickly and efficiently. XBRL
streamlines the preparation of financial reports for both internal and external decision making.
14
Noting an empirical study by Steenkamp and Nel (2012) the researchers postulated that XBRL
implementation is beneficial to companies as it facilitates foreign direct investment as the
information will allow international investors to read and analyze the statements regardless of their
language. Yen and Wang (2015) also acclaimed that it improves the stock market price hence
increased share price as also highlighted by Yu, Jia and Lin (2014).
XBRL will enable companies to benchmark themselves against their competitors or sectors
(Steenkamp and Nel, 2012). Furthermore, it facilitates the convergence of accounting standards by
aligning financial concepts among public taxonomies. As it facilitates principle based accounting, it
reduces the need to know the location of an item. Real time on-line reporting facilitates
transparency of the reports (Jones and Willis, 2003).As cited by Songsheng et al (2015) from
(Yoon, Zo, and Ciganek 2011) noted that as XBRL is an advanced information search engine, it can
therefore improve information disclosure quality.
2.5 Summary
From the aforementioned, it is evident that XBRL has been of rising concern in financial reporting.
At present XBRL is obligatory for financial reporting in a variety of countries. Having
acknowledged the advantages and disadvantages of XBRL, it is to be appreciated that as we are in
the era of Internet revolution, XBRL plays an important role in the accounting profession and
financial reporting. It is to be therefore reviewed on the reasons on why Zimbabwean companies
have not adopted XBRL foregoing the merits of using it and not gaining a competitive advantage in
the global market.
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CHAPTER 3
METHODOLOGY
3.0 Introduction This section shall focus on the methods, techniques and procedures on how the researcher gathered
information so as to answer the research questions. As defined by Nangia (2008) research
methodology can be defined as a way of systematically solving research problems. As the research
methodology tries to solve the research problem the researcher structured this chapter in a way to
easily outline the variables and how the research question that is related to the variable was
answered. The rest of the chapter is laid out showing data collection instruments and their merits
and demerits, targeted respondents, data analysis and the conclusion.
3.1 Research design Research design can be defined as the basic methods of data collection. This study's research design
was influenced by the research questions and the theories that link the independent variable to the
dependent variables. An unstructured approach to answer the research questions was utilised by the
researcher as the approach is mostly appropriate so as to determine the extent of the research
problem principally to qualitative research. In order to ensure high quality of findings, the
structured approach was also utilised as some of the questions administered to the respondents had
suggested responses. An ex-post fact research, that is, descriptive methodology was used as the
researcher engaged in fact finding enquiries on whether companies are using XBRL as a tool for
financial reporting in Zimbabwe or not and to endeavour on some of the reasons why Zimbabwe
has not yet adopted XBRL since its inception.
3.2 Dependent Variables Subsequent study cited has shown that there is possibly a relationship between XBRL
implementation and the following variables which are lack of awareness, resistance to change,
technology adaptation, size of business and transactions, use of alternative tools and also policies
and regulations of a country or its stock market. It is therefore postulated that adoption is dependent
upon awareness plus willingness to adapt to change plus size of business plus the influence of
policies and regulations.
16
3.2.1 Awareness It is more likely that Zimbabwean companies have not yet adopted XBRL due to lack of awareness.
From a citation by Steenkamp and Nel (2015) from Pinsker (2003, p.734) from a survey conducted
in USA, it was found out there was a positive relationship between level of awareness and adoption
as it was reported that firms with auditors and accountants knowledgeable and aware of XBRL were
mostly likely to implement it. From the aforementioned advantages of XBRL it is postulated that if
investors are also aware of the merits of XBRL they can possibly be able to influence the industry
to turn to XBRL financial reporting. To mitigate agency costs and information asymmetries,
investors would mostly prefer XBRL reporting if they are aware of it and its merits as it is hold that
managers can only report information to their advantage rather than the owners or other
stakeholders. The question whether there is awareness which could answer as well the research
question 1.4.1 was addressed to the chartered accountants in accounting firms.
3.2.2 Technology adaptation As technology is changing quickly, it has greatly influenced financial reporting from paper to
paperless financial reporting where reports are made available on the internet. However these are
mostly in pdf format. Anomalies of reporting in pdf made the XBRL consortium to develop XBRL.
However it is not everyone who quickly adapts to technological change. From the empirical studies
by the aforementioned researchers, it was noted that first would countries like USA and UK were
quickly to adopt and the research by Steenkamp et al (2015) indicating that South Africa slowly to
adopt. This probably might indicate the fact that there is some extent of change resistance to
technological change or rather slow adaptation. The question on how long it takes for a crucial
change to be taken can possibly show the extent of speed of adoption if too long indicating
resistance to change.
3.2.3 Size of business transaction As reported by Shongsheng et al (2015) XBRL adoption results in increased earnings per share and
reduced cost of capital. However from a comment by the China finance minister interview by
Kernan (2008) the results could be only positive on a bigger supply chain. Smaller transactions
would only prove costly for real time financial reporting hence possibly the reason on why firms
have not yet adopted XBRL in Zimbabwe due to their size of transaction and the size of the firm in
terms of capital to implement XBRL which include training costs.
3.2.4 Policies and regulations Most regulatory authorities from China, India, Israel, UK, USA and other countries have
implemented XBRL afterthought of its advantages. The issue of policies and regulations also comes
back to the fact that regulators or policy makers may not be aware. Auditors, financial analysts or
17
the accountancy profession in Zimbabwe could influence the Zimbabwe stock exchange to regulate
and even mandate all listed companies to file in XBRL. From a research by Li and Nwaeze (2015)
it is noted that regulators are most likely to opt for XBRL as it reduces the burden for them to get
through so much information in pdf financial reports. It is therefore likely that if regulators for
example ZIMRA and financial analyst would change the policies and regulations of reporting in
XBRL.
3.2.5 Availability of other tools After having noted the demerits of XBRL and the fact that financial reporters are comfortable with
using formats already available like excel, XML, and pdf makes it possible to conclude that
availability of other tools has made the XBRL implementation slow globally. From the shortfalls of
XBRL by Markelevich et al (2015) of mistagging and not providing room for footnotes could also
indicate why XBRL has been overlooked. However it is to be acknowledged that it have vast
advantages and to answer whether it is an answer to financial reporting (research question 1.4.3).
The question would its reported advantage Zimbabwe stock market and accountancy profession was
asked.
3.3 Data collection instruments It is noted that XBRL implementation and adoption investigation findings application is on pure
research methodological approach. The objectives of the study, as descriptive to the phenomenon
and correlation to the variables, took use of qualitative enquiry mode in conducting the study.
Interviews were used as an instrument for primary data collection with guided interview questions.
However were an interview was not appropriate due to time constraints, a questionnaire was
administered which had both closed and open ended questions. To answer the question whether
XBRL is an answer to effective financial reporting and its contribution to the accountancy
profession, archival research was used where the researcher made use of available literature in data
and textual archives.
3.3.1 Interview Merits
The response rate is high
Allows room for probing which increases data accuracy
There is always clarification of questions and answers
new points can be drawn out from the conversation
Demerits
Subject to time constraints for face to face interview
18
Interviewees at times may not be willing to give sensitive information
3.3.2 data archives Merits
provides vast information
information can be compared cross sectional
access to longitudinal data and global information
Demerits
unreliability of data
irrelevance of some data to the subject
3.4 Target population As accountants are responsible for XBRL implementation as noted from literature reviewed, it is
therefore pointed out that it is then the chartered accountants who can have possibly evidence or
concrete reasons why XBRL has since yet not been adopted by Zimbabwean companies. Steenkamp
and Nel (2015) conducted their research with the data collected through a structured, self-
administered website based survey sent to chartered accountants as they will or are primarily
responsible for XBRL implementation. Chartered accountants in accounting firms have more
information in the industry since they engage with companies from different sectors hence would
have a more sharper perspective on the reasons why there is not yet adoption and implementation of
XBRL and whether if its implementation would benefit Zimbabwe.
3.5 Data analysis Basic examination of the information obtained was done as a method for checking the precision and
legitimacy. The analyst exhibited the information utilizing rates from point scoring which were
figured in order to demonstrate the diverse reaction for every inquiry and the researcher chose to
utilize them since they are easily comprehended even by layman. Charts were also used to clearly
indicate the extent of the effect of a variable on the adoption on XBRL.
3.6 Conclusion This section brought up the examination system which was potentially reasonable for this study. The
specialist pointed in-depth meeting as the information accumulation technique including utilization of a
questionnaire and information archives in order to accomplish the exploration targets. The section
additionally introduced the focused respondents which are the Chartered accountants and the variables
indicated out the inquiries answer the exploration question inquired. A brief strategy for information
investigation was sketched out which will be completely exhibited in chapter 4
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Chapter 4
Data analysis and presentation
4.0 Introduction Chapter 3 highlighted data gathering technique in order to address the research questions so as to
achieve the research objectives. This chapter will discuss the findings of the study. Findings of an
analytical survey will be discussed in this chapter and the results from inquires made. Impact of the
variables were analyzed and presented on pie charts to clearly show their effect on the choice of
adoption of XBRL. This chapter will knock off with a brief summary of the findings.
4.1 Data Findings and Interpretation It emerged from the data findings that the variables postulated had a greater contribution to why
Zimbabwe has not yet adopted XBRL for financial reporting. It is evident that the global
technological environment is quickly changing and hence the need to move with the change. From
the study, it was found out that level of awareness of the XBRL technology was low hence why
companies have not yet adopted the technology.
4.1.1 Impact of all variables Data analysis was done using themes or codes which were common phrases or ideas that were
common among the respondents. It was found out that all the variables had an impact on the
adoption of the technology, although the extent of the impact was different. The chart below shows
the overall impact of a variable coded theme on the adoption of XBRL.
Table 4.1: point scores of variables and expressed as a percentage of the total
score.
Theme/code point score Sum of % impact
adaptability 4 9.523809524
alternative tools 5 11.9047619
awareness 15 35.71428571
policy 10 23.80952381
size of transactions 8 19.04761905
Grand Total 42 100
Source: common codes from the interview
20
figure4.1: percentage impact of all variables on the decision on adopting
Adoption is mainly dependent upon awareness. If users, investors, preparers and reviewers are
aware of the technology and its advantages, there is more likely to be positive towards the reaction
of whether to adopt or not. Awareness has the greatest impact on adoption and implementation than
other variables. It was found out that awareness level was very low. Hence the reason why it has not
yet been adopted.
4.1.2 Where there is awareness In order to critically analyze each variable percentage impact on decision to adopt. In circumstances
where the profession of accountancy is all aware of the technology as it was noted that it is the duty
of accountants to implement XBRL as a tool for financial reporting rather than sticking to the old
culture. When awareness was excluded as a variable that caused the reason for not adopting was
excluded, it was found out that policy implementation would be the primary factor that would result
in firms adopting XBRL. This effect is depicted in the figure and table below where the percentage
impact of policy would be at least 37%.
Table 4.2: percentage impact of variables where rate of awareness is high Theme/code % impact of the variable
adaptability 14.81481481
alternative tools 18.51851852
policy 37.03703704
size of transactions 29.62962963
Grand Total 100
Source: common codes from the interview
Sum of score
adaptability
alternative tools
awareness
policy
size of transactions
21
Figure 4.2: impact of variables where the level of awareness is high Policy implementation would force firms to adopt XBRL. From the literature review it was seen
that most companies and countries which had adopted XBRL was because it had been mandated by
the stock exchange commission or the revenue authority. Where there is no implementation firms
will be reluctant to adopt the reporting language, hence the case for Zimbabwe. Companies will
only adopt XBRL, in the case that there is already awareness, when the Zimbabwe revenue
authority has mandated the companies to report real time on-line rather than periodically or in the
case that the stock exchange committee mandates every listed company to report using XBRL for
easy data analysis.
4.1.3 Overlooking other tools Arguments may be made on the reason to adopt when there are already available tools which are
said to efficient enough instead of incurring more costs in the implementation of a new system.
From the argument in chapter 2, it was found out that from all the shortfalls of other tools, for
example using Portable Document Format (pdf) or hyper markup language (HML) for on-line
reporting, XBRL has many advantages over the reporting tools currently used in Zimbabwe. In
order to justify the study, the variable availability of other tools was excluded in order to critically
identify the reason why XBRL has not yet been implemented. The outcome is depicted in the figure
and chart below where it was found out that policy implementation would only result in a much
greater reason why firms have not yet adopted XBRL. Policy implementation would only drive or
force firms to implement XBRL. Size of transactions would also force the adoption of XBRL as
reported by China that it mainly benefits companies in relation to enterprise resource planning
(ERP) if the size of their transactions are large and need regular updating of the data in the system.
If the size of transactions is small or infrequent, it will tend to be costly to implement XBRL. Hence
the reason why Zimbabwe has not had the eagerness to adopt the reporting language as capacity
utilization is still low since economy failure and financial crisis of 2002 up to 2008 as compared to
China, Europe and the USA.
Total
adaptability
alternative tools
policy
size of transactions
22
Table 4.3: % impact in the case where users acknowledge the pitfalls of other tools Theme/code % impact of the variable
adaptability 18.18181818
policy 45.45454545
size of transactions 36.36363636
Grand Total 100
Source: common codes from the interview
Figure 4.3: impact of the variables on adoption in the case where level of awareness is high and other tools are seen as inefficient.
Overally, it can be critiqued that where there is no awareness all other variables will be nullified or
invalid as there cannot be policy implementation without awareness, resistance to change without
the change or new technological improvement being known. This is the reason why analysis was
further made in the case that there is awareness so as not to overshadow other variables. Research
has found out that when individual are resistant to change as they may feel insecure they take the
avoidance approach where they may pretend as if they do not know about the change that is
occurring or appear to be unknowledgeable or uneducated about the subject. XBRL is an up surging
technology which raises concern and the bone to contention on the possible reason of overlooking
the technology when it has so many merits that could benefit the capital market, if not the whole
business sector due to effective and efficient financial reporting.
Total % impact
adaptability
policy
size of transactions
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4.2 Other findings in relation to research questions In addressing research question on the benefits of the reporting language over other tools, literature
survey showed that it has been so far by the early implementers of XBRL as beneficial to corporate
reporting and hence the reason why the consortium has still been updating regularly the technology,
supporting the current implementers and users, training all interested parties for a little fee on how it
works and as well encouraging companies to adopt XBRL, mostly chartered accountants to know
how it works and its benefits.
It was noted that no technical knowledge is required in order to be acquainted with XBRL, as some
perceive it as so difficult to learn even to use. Use of tagging data items makes it much easier for a
financial statement preparer to prepare the financial statements in the case where too many items
will have to be prepared. Keying and tagging present data in the easiest way as there is no need to
know the location or destination where the data has to be but the fact that keying determines the
location the location of data that is where it should be and where one who queries the data will find
the information.
Integration of XBRL technology into the company accounting and reporting system will produce
the actual benefits. This can be manifested in the reduction in current manual efforts in data
gathering, grouping and recording in order to prepare the financial statements. Too much
documentation of transaction which may carry so much diverse account names may present a
problem and susceptibility to error when it comes to the issue of auditing the statement and
controls. XBRL improves the auditability of the financial statements which are in XBRL and the
process can be quick hence effective as manual documentation will be meager than when the full
system is not keyed or coded electronically.
Some arguments for not adopting and overlooking the reporting language were that it was perceived
that it was costly to implement. However, it can be further critiqued that implementation is just like
an investment which tend to appear costly in the first year of capitalization of the investment but
yields better sub-sequentially. It was argued by the AICPA that there are certainly misconceptions
about XBRL in regard to resources required when implementing XBRL. Its initial costs can be so
much outweighed by its benefits. It can be implemented for cost accounting, performance
measurement, analysis and decision making purpose in addition to real time financial reporting.
In addressing research question on whether the reporting language is an answer to financial
reporting and a contribution to the accountancy profession, it was found out that XBRL could be
beneficial to the chartered accountants as preparers of financial statements and also that it proves to
be effective and efficient way of financial reporting as compared to other forms or tools for
financial reporting.
XBRL reduces time spent manually finding and preparing information. A fully automated
information exchange also improves the data quality; this is also beneficial to creditors, analysts and
investors. It also results in fewer burdens to the accountant from the pressure by management to
issue out the financial statements as there is quick preparation of data, quick data analysis and
redistribution to management and stakeholders for better informed decision making use.
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Standardized information formats would assist chartered accountants in gathering, managing and
reporting financial information accurately. As the technology was developed by a chartered
accountant, he saw the need which was there to develop a new tool that would overcome the
anomalies in data interpretation and updating from the use of other system. The motives in
development of XBRL are the benefits for the accountants in effective and efficient financial
reporting and the accountancy profession. Some arguments against the profession were made
previously in the need for financial reporting when the market is assumed to be efficient by the
efficient market hypothesis and the burden on the investor or user to go through statements which
may be nearly a hundred or more of pages. These critiques however can be made void with the
implementation of XBRL as it results in no need for an investor to go through the whole statement
but query for a specific set of data or data item. The AICPA argued that the accounting profession
and more so those it serve would benefit from the standardization of data.
4.3 Summary This chapter concentrated on the findings of the research. From the opinions gathered and the
literature survey it was found out that XBRL implementation was most dependent upon awareness
followed by mandating a policy. Furthermore, it was instituted that XBRL would positively impact
on the profession of accountancy and benefit accountants in-terms of preparing and analyzing
financial statements. The outcome of the research was that no firm or company in Zimbabwe is
using XBRL due to lack of awareness and the fact that it is not mandated although to some extent it
was influenced by the fact that people are resistant to change. From the opinions gathered and the
literature survey all the research questions were fully addressed. Conclusion of the findings and the
recommendations are set in the next chapter.
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Chapter 5
Conclusion and Recommendations
5.0 Introduction
This chapter consists of the overall conclusions to the study and recommendations. It is scheduled
as follows. Firstly conclusions from the findings laid out in chapter 4 followed by the insight of the
study, that is, the critical brainstorm of the study. After that follows the fore sight which is the
prudent vision of the future in relation to the study. The chapter knocks off with the
recommendations.
5.1 conclusion of the study
Adoption of XBRL has been on rise in countries such as the UK, USA, China, India and also
African countries in the Eastern such as Israel. In the Southern African countries, it was indicated
from the surveys by other researchers that South Africa had traces of evidence of adoption although
SAICA highlighted the fact that awareness level was very low and need to educate so as to give
awareness to the stakeholders or those served by the profession of accountancy.
The growing use of internet and changes in technology has since affected financial reporting
although other companies or firms have not yet been affected especially small firms. To reach all
the stakeholders, nearly most companies have a website were all the information about them is
found including their reports. Some even provide the figures of earnings per share on their website
for the investors or potential investors to see the return the company gives and how much it is
performing in the overall market against competitors. Also the Zimbabwe stock exchange provides
updates online on the earnings per share of companies. Use of XBRL makes it simpler for
companies to update their information reported. In order to avoid anomalies in updating, inserting
and delete the data, XBRL was developed to reduce human interference which results in errors. This
is mainly the reason why it was developed, has been implemented by some, mandated by some
regulatory authorities and continues to be encouraged to be adopted by most that have been using
the reporting language. The benefits are not only for the user or for data analysis, findings also
show that it results in an increase in return on investment as the costs will outweigh the benefits and
also increases the earnings per share of the investors. Financial reporting hence does not become a
cost to the company but a competitive advantage.
XBRL adoption and implementation in Zimbabwe showed that there were no companies which had
yet adopted the reporting language as a tool for financial reporting. Several variables were the
reasons why there had not been the implementation of XBRL to date in Zimbabwe although the
XBRL consortium has reported that there was a positive reaction globally.
5.2 Insight of the study
Of all the reasons pointed out, it can be concluded that awareness was the main reason why firms
had not yet adopted the reporting language regardless of the efforts by XBRL consortium to raise
levels of awareness globally. Level of awareness in Zimbabwe was found out to be very low of
which those with the knowledge assumed it to be a complex technology to even start to learn about.
Some perceived it as unnecessary for the implementation of XBRL mainly because of effect of
resistance to change. ZIMRA introduced fiscal registers in 2011 but is still facing problems since
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the tax collectors are still being prejudiced. In a report by Newsday (13 may 2016) it was reported
that ZIMRA was advising users of the fiscal register to link their fiscal devices to ZIMRA. Need for
electronic real time update by ZIMRA shows the importance of real time reporting from the
companies by the regulatory authority, hence the need to know about XBRL.
Where there is resistance to change, people often chose avoidance. This was seen by the researcher
as the reason why it was pointed that lack of awareness was the main reason why companies in
Zimbabwe had not yet adopted XBRL. Adverse behavioural reactions have geared the resistance to
the adoption of the new technology. Where there is resistance because of fear of unknown, failure;
technology; loss of status or job, biases and natural resistance, it is management's duty to
communicate the reasons or benefits of the change to the workers so that change is not resisted. It is
crucial to be cautious about the manner in which change is introduced during implantation as it may
only result in negative reaction by the users. However it is noted that if top management is
characterised of older individuals not educated about the technology, they are the ones who resist
the change and it is the duty of those who are young, educated and comfortable to technological
change to implement it, thus young chartered accountants.
5.3 Foresight of the study
Technology is rapidly changing. IFRS formulated taxonomy for XBRL and has since supported the
use of the reporting language. It can be predicted that IFRS in the future may mandate financial
reporting in XBRL in order to achieve uniformity, efficient and effective financial reporting
globally as since some institutes of chartered accountants, for example AICPA, SAICA, CICA to
mention a few have advised the use of the reporting language. It is probable that XBRL will either
be optional or mandatory form of listing on the stock exchange, where optional most firms will opt
because of the rising use of internet and need to reach a diverse range of users or stakeholders
especially potential investors. Continued development and advancement of XBRL indicates that
benefits will continue to grow.
5.4 Recommendations
It is therefore advisable from the above analysis that accountants should expand their knowledge on
XBRL as it shows that it shall or has a greater impact on the profession and financial reporting in
order to improve the reporting process. Accountants need to understand the degree of human
interference in the data access, validation and analysis facet of their company or clients' reporting
process so as to make informed recommendations in setting up XBRL in accounting soft wares and
also information processing systems as proposed by Microsoft corporate.
It was noted that for the capital market to benefit from the claimed merits of XBRL, it should be
mandated by the regulatory authorities such as ZIMRA or Zimbabwe Stock Exchange commission
for every listed company to do real time online reporting of their trading results.
For the academia or student accountants, there should be the efforts in gaining knowledge about
XBRL as suggested by Elliot and Elliot (2008), as this creates a competitive advantage in gaining
knew uncommon knowledge.
It is to be further researched on technological change and financial reporting, how the changes are
affecting financial reporting and actions taken by financial preparers or reporters
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Reference list
Ahrendt, B 2009, ''What Are The Costs And Benefits Of XBRL In The Financial Services
Industry?''Master Thesis Economics &Informatics. P.15-17 Available At
Https://Thesis.Eur.Nl/Pub/6405/6405-Ahrendt.Pdf Accessed On (21/04/16)
AICPA, ‘Return On Investment On XBRL’, Journal Of Accountancy,June 2007
Available At Http://Www.Journalofaccountancy.Com/Issues/2007/Jun/Roionxbrl.Html Accessed On
15/04/2016
Kernan K, ’XBRL Around The World’, Journal Of Accountancy AICPA, October 2008
Available At Http://Www.Journalofaccountancy.Com/Issues/2008/Oct/Xbrlaroundtheworld.Html
Accessed On 15/04/2016
Definition of XBRL available at http://www.xbrl.org.tw/ accessed on (13/04/16 13:00)
Integrating XBRL Into Your Financial Reporting Process (October 2011). Oracle white paper
available at http://www.oracle.com/us/solutions/integrat-xbrl-financial-repors-wp-518965.pdf