A technology that allows for automated processing of financial information has been rejected by the UK's financial regulator. The Financial Services Authority (FSA) has said that there is not enough expertise in the UK to use the XBRL language.
Hailed as a breakthrough that would automate many financial reporting functions, XBRL (eXtensible Business Reporting Language) is a form of the XML family of computer languages that some predicted would revolutionise financial reporting and accounting.
It works by creating tags for information so that data entered into one system as, for example, the earnings before tax would be recognised by a second system as that figure rather than, for example, the figure for losses. It uses standardised meta-data to tag information.
The FSA, however, has said that it will stick with ordinary XML when it makes electronic reporting compulsory for companies.
"In order to promote the efficient and effective use of information, the FSA has committed to introducing a common reporting format across all of its regulatory reporting systems," said an FSA statement. "Existing FSA systems have been developed in the standard XML format and it is therefore a logical step to introduce a mandatory electronic reporting system that builds upon and further develops the existing technical infrastructure that supports standard XML based reporting."
XBRL was hailed earlier this decade as a vital component of the coming 'semantic web'. The semantic web is the name for a set of technologies proponents believe will make up the next generation of web technology. It will involve increasing amounts of automation of data processing which will enable computers to conduct ever-more complex procedures without human intervention.
Using XBRL would allow businesses to communicate a raft of information about business and financial performance to the FSA in a standard way, but the FSA says that there is not enough expertise in the technology yet for it to be adopted.
"The FSA does not believe that there is sufficient XBRL experience within the UK currently to develop this system without incurring additional cost and risk," it said. "Feedback from regulated firms suggests that the availability of XBRL software support and industry experience within the UK, whilst on the increase, is still relatively low."
Some software and web industry observers are predicting that the semantic web will still happen, and that it will become the next internet phenomenon after the user-generated content and social networking boom that became known as Web 2.0.