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The financial world should talk to the marketing department before naming the baby. Here are six initiatives that are trying to create common business reporting standards. How many acronyms can you name based on these short definitions?

(A) Reporting standards that will replace US GAAP

(B) Computer-readable financial data

(C) The system scheduled to replace EDGAR

(D) Principals and standards for uniform accounting

(E) System to prevent money laundering

(F) Reporting frameworks for European credit institutions and investment firms.

ANSWERS:

A.  IFRS International Financial Reporting Standards are standards and interpretations adopted by the International Accounting Standards Board (IASB). The US Financial Accounting Standards Board is committed to converging IFRS and US GAAP and just last month the SEC voted to release a proposed road map for making that happen. Currently more than 100 countries around the world, including all of Europe, currently require or permit IFRS reporting. This IFRS Pocket Guide 2008 by PWC summarizes current IFRS reporting standards.

B.  XBRL Extensible Business Reporting Language Reporting is basically a long list of accounting terms and associated computer code that are used to “tag” each element in a financial report. Sometimes called “interactive data,” XBRL is independent of the accounting standards or national language used to create the financial report. XBRL tags free data from static paper-based documents (and PDFs), allowing computer software to instantly find and use comprehensive, global business information.C.  IDEA, as noted in the story above, is the new Interactive Data Electronic Application system that will replace the decades-old EDGAR system public companies use to send financial data to the Securities and Exchange Commission. In the late 1990s, EDGAR was revamped to accept HTML and PDF files, but a complete new architecture is needed for today’s online world.

D.  GAAP Generally Approved Accounting Principles and standards are defined by each country for uniform accounting, though with

E.  SEPLAC is a system being developed by Spain’s XBRL organization for preventing money laundering and other illegal monetary transactions. China, which was the first country to mandate XBRL reporting back in 2004, is also making headway in the area of business intelligence and data mining to detect anomalies in financial reports.F.  Both COREP and FINREP are additional examples of how XBRL is being used for more transparent reporting by Europe’s credit institutions. CORREP stands for the COmmon solvency ratio REPorting framework being developed for credit institutions and investment firms under the future European Union capital requirements regime. FINREP is the financial reporting for credit institutions that use IFRS for their published financial statements and periodic reports required by supervisory authorities.