Financial Supervisory Service Operates Task Force for Advanced Financial Disclosure... "Institutional Improvement Plan to Be Finalized This Year"

On the 5th, the Financial Supervisory Service (FSS) announced that it will operate a task force (TF) to advance financial disclosure in order to activate a financial information disclosure system (XBRL) that aligns with international trends. XBRL stands for eXtensible Business Reporting Language and refers to an international standard computer language for financial reporting created to facilitate the generation, reporting, and analysis of corporate financial information.

The FSS has formed a TF consisting of private experts from accounting and disclosure-related departments, academia, related organizations, and associations, and will hold its first meeting on the 9th. Key discussion topics include the phased mandatory implementation of XBRL considering corporate disclosure burdens and information usage demands, and expanding the obligation to submit XBRL financial statements, which previously applied only to listed companies, to unlisted corporations submitting business reports. Additionally, support measures for submitters, such as practical training on preparing XBRL financial statements in cooperation with related organizations, are also included.

An FSS official stated, "We aim to implement this within the year, finalizing institutional improvement plans such as phased mandatory XBRL implementation through TF discussions and providing related guidance."

So far, the FSS has opened financial statements such as balance sheets, income statements, and cash flow statements in data formats that facilitate analysis to users of the electronic disclosure system. However, notes to financial statements have been prepared and disclosed in various forms depending on each company’s circumstances, making it difficult for users to freely utilize them for comparisons and analyses between companies.

Also, only the financial statement bodies of non-financial industries have been converted into English and disclosed, resulting in information asymmetry issues for foreign investors.

In response, in March 2020, the FSS established a 'Financial Disclosure Advancement Roadmap' to build a financial disclosure system that meets global standards and provide useful data to users. Furthermore, it analyzed standards from the International Accounting Standards Board (IASB) and disclosure cases of listed companies to establish an XBRL standard system. In August of last year, the FSS improved the XBRL authoring tool to enable companies to prepare and submit financial statements in a standard format and built an XBRL disclosure system to open data externally.