The Colombo Stock Exchange (CSE), in collaboration with the Securities and Exchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), has embarked on a significant initiative to introduce the eXtensible Business Reporting Language (XBRL) for listed entities in Sri Lanka.
This move is expected to transform the way financial data is submitted, analysed, and disseminated within the capital market.
XBRL is a global standard for digital reporting, specifically for financial business data. XBRL is the universal language for business data reporting and standardises communication of financial reporting. It enhances data accuracy, simplifies reporting, and more effective analysis and faster comparison of financial information by businesses, regulators, researchers, investors, and other stakeholders.
The primary objective of this initiative is to streamline the submission of financial and non-financial information of listed companies set out in the Interim Financial Statements and Annual Reports by listed companies in compliance with the XBRL taxonomy, ensuring a more efficient and effective dissemination of financial data to the market. The XBRL taxonomy would be developed jointly with CA Sri Lanka and SEC. The CSE marked the beginning of this journey by signing a contract agreement with Microvista Technologies (Pvt) Ltd, India on April 9, to develop the XBRL system.
A demonstration of the proposed system was held at the CSE premises for 30 selected listed companies, representing the banking, insurance, and other sectors. This session provided companies with a first look at the system’s interface and functionality, followed by a Q&A forum to gather initial feedback. The CSE will conduct awareness sessions for Listed Entities through a structured engagement framework.
CSE will adopt a phased approach for the implementation of XBRL based financial reporting. In phase one, CSE plans to convert Interim Financial Statements into XBRL based digital financial reporting in early 2026.
Upon successful adaptation of phase one by the listed companies, the CSE envisions expanding the scope of XBRL based financial reporting to Annual Reports by 2027 and the submission of Sustainability Reports by 2028.
The adoption of XBRL brings a multitude of benefits to listed entities and market stakeholders. Built-in validation tools help identify inconsistencies or omissions, while the automated system facilitates faster and streamlined financial reporting. Tagged data can be reused across multiple platforms and reports, reducing duplication in data entry and significantly lowering compliance costs.
The implementation of XBRL supports transparency and increases capital market efficiency by helping users of business and financial information locate relevant details.For example, companies reporting under a common taxonomy provide specific details that are immediately comparable by investors and analysts in investment decision-making. XBRL enables listed companies to switch resources away from costly manual processes, typically involving time-consuming comparison, assembly and re-entry of data. Instead, they are able to redirect more effort on analysis, supported by software, which can validate and manipulate XBRL information.
