The IFRS Taxonomy is the extensible Business Reporting Language (XBRL) representation of International Financial Reporting Standards (IFRSs). It issued by the IASB and includes International Accounting Standards (IASs), Interpretations, and the IFRS for Small and Medium-sized Entities (SMEs). The purpose of development of IFRS Taxonomy was to address the need of an electronic standard to pass on the IFRS financial information. The commercial and industrial organizations can use this taxonomy to report under IFRSs.
Development of IFRS Taxonomy
The development of IFRS Taxonomy includes three major steps.
· First step involves development of XBRL technology framework. XBRL (eXtensible Business Reporting Language) is a digital language that provides a common, electronic format for business and financial reporting.
· In the second step the requirements of IFRS regarding presentation and disclosure are implemented.
· In the third step the above two are combined. The combination of above two results in a set of a set of XBRL computer files. The files make-up the IFRS Taxonomy.
IFRS Taxonomy is issued annually and the revised edition each year incorporates any changes and amendments to the IFRSs (or new IFRSs if any) and any improvements in the XBRL technology.A formal rigorous due process and a very broad international consultation are used to develop the IFRS Taxonomy. This due process and consultation are necessary to ensure the transparency and compliance with all the relevant best practices. The process of international consultation provides opportunities to engage with a variety of stakeholders all over the world. The stakeholders get a chance to express their concerns and to provide their suggestions to the developers of IFRS Taxonomy. This process also helps the IFRS Foundation to understand the impact of its decisions on the stakeholders.