XBRL Taxonomy (essentially the data dictionary) is the heart and often the starting point of any XBRL Implementation and a critical factor towards its success. If one gets the XBRL taxonomy right, half the battle is won. On the other hand, XBRL specifications are vast and offer a lot of flexibility with the result that there are a bunch of alternatives that the XBRL taxonomy authors can choose from. The decisions taken for the XBRL taxonomy design impact all the other stages of XBRL implementation.
Over the years as XBRL evolved, many XBRL taxonomies have been developed to cater to a variety of business needs. If we analyze the XBRL taxonomies available, it is evident that even for taking care of one business need, there have been different ways adopted in different XBRL taxonomies. It is important to know the alternatives available, and equally important is to know the impact of every choice made. If all the relevant information is available at the time of deciding XBRL taxonomy architecture, the success rate of the XBRL taxonomy adoption and usage, and also the project implementation can be higher.
With so many choices to make, how do the taxonomy authors decide which way to go – to take the less-beaten path or follow and adapt the steps of the other successful implementations? Because every regulator or the standard setter, who is in the process of developing an XBRL taxonomy, will have to go through the process of selecting from different alternatives, the Best Practice Board (BPB) of XBRL International (XII) has set up a dedicated task force for guiding taxonomy building.
The Taxonomy Architecture Guidance Task Force (TAGTF as it is called), has recently come up with its first version of a guidance document. The XBRL Taxonomy Guidance Document would be an evolving document and the current scope covers guidance on data modeling, choices that are driven by filing programs as well as some specific taxonomy architecture features. This initiative of XII to provide support and guidance to the XBRL community has been highly appreciated and one can hope to see more such guidance and information from XII in the future as well.
A second factor that influences the success of any XBRL project is the participation of all stakeholders. Engagement with all the stakeholders right from the beginning helps to understand the needs and concerns of each stakeholder. Once the discussion and evaluation of user needs are completed, the business requirements for taxonomy and the expected outcomes from the project itself can be well defined. We’ll cover this aspect and many more in our subsequent blogs.