Australia must mandate digital reporting, or get left behind

Posted on October 28, 2022 by Editor

CPA Australia’s INTHEBLACK magazine discusses ‘Why digital financial reporting should be mandatory,’ as momentum toward digitisation Down Under continues to build.

Many countries now require digital reporting, including 14 of the G20 nations, observes the article; “Australia, by contrast, has no immediately apparent plans to make digital financial reporting mandatory.” Companies have been able to make XBRL filings to the Australian Securities and Investments Commission (ASIC) on a voluntary basis since 2010, but must also still submit PDF or paper reports. “To date, while having the option available to them, it is understood that no Australian company has chosen to lodge a digital financial report with ASIC.”

“Digital financial reports allow users to slice and dice the information in different ways to get a much better understanding of what’s in the financial accounts,” comments Ram Subramanian, Senior Manager – Reporting and Audit Policy at CPA Australia. “It also allows the preparers to provide more detailed, richer information, so they can tell their own story while also complying with relevant laws and accounting standards, which can be digitally consumed. It allows users to readily find the information that is useful to them without having to read the whole report from cover to cover.” At the macro-economic level, software analysis of digital data enables users to compare the financials of companies within sectors, and to identify patterns across sectors. Digitisation offers substantial benefits for stakeholders across the board, including companies, auditors, regulators and investors.

Interestingly, research by CPA Australia suggests that voluntary approaches to digital reporting are ineffective, generating limited uptake unless there is a clear expectation of a future mandate. “CPA Australia believes that Australia’s voluntary regime is limiting the uptake of digital financial reporting, and that it should be made mandatory for listed companies.”

We agree.

Read more here.