Why Do We Need SBR in Canada?

This also appeared on the XBI Software web site at www.xbisoftware.com/whysbr.htm

Standard Business Reporting (SBR) consists of a group of programs initiated by government to reduce the compliance burden for business. It can be implemented in Canada in three years and will result in overall savings to industry alone of over $800 million dollars annually. Government departments, agencies and regulators cooperate and collaborate to create one national definition taxonomy (in XBRL) to contain all the data collected by these bodies. This one definition taxonomy has no unnecessary or duplicated concepts or data descriptions and is used to create reports for each agency taking part in the project. By way of example, in Australia, 2,694 data items were reduced to 1,094 unique data items, a reduction of 1,600. By only asking for the information in the taxonomy, the cost of compliance or red tape is reduced significantly. Without collaboration and standardization, the same information is reported in many ways, using different terms, different standards, different software. This increases confusion and the cost of reporting for business. Business owners and managers spend their own time or they hire accountants and consultants to accommodate the needs of reporting.

SBR is a better way of doing business because one harmonized standard data set is used. Reporting becomes a by-product of normal business processes and it becomes easier for business to manage its reporting obligation. Less data need be collected, only once, and ambiguity and confusion are reduced.

Typically, SBR comes with one single sign-on for all agencies with one digital certificate, one authentication process, and immediate acknowledgement and response. Any errors (there should be few because of automated validation and verification) should be reported back to the company with explicit instructions on how to fix it. Key benefits to business will include:

• reduced time and effort spent preparing reports for government by business, accountants and bookkeepers
• reduced need for and use of accountants to file government reports
• reduced time and effort spent dealing with errors

These benefits come from:

• Collaboration between government departments, agencies and regulators
• One single definition taxonomy
• No unnecessary, duplicate or confusing concepts
• One sign-on with one digital signature and one authentication process

The first country to adopt SBR was the Netherlands. In addition to the Netherlands, there are now also SBR projects in Australia and New Zealand. According to the Guidance Note on Standard Business Reporting, published by the OECD Forum of Tax Administration: Taxpayer Services Subgroup in July 2009, "Studies in the Netherlands and in Australia, backed by early work on SBR in the UK, have estimated that the administrative burden imposed on businesses by government reporting amounts to roughly 2.5% of GDP. The Netherlands and Australian studies estimate that SBR related savings could reduce these costs by at least 8%, reducing the burden by 0.2% of GDP to 2.3%, which represents savings in the high hundreds of millions in both currencies."

By example, 12 agencies participate in the Australian SBR program, ATO (taxation), ASEC (corporate regulator), APRA (banking regulator), ABS (statistics) and the 8 state taxation agencies. With use of this taxonomy, in XBRL, accountants, bookkeepers, tax professionals and software developers will have access to a powerful system which will enable them not only to sent reports to government, but to banks and anyone else that requires business information.