9 The Treasury — Standard Business Reporting

Summary

The Standard Business Reporting (SBR) program was initiated by the Australian Government in 2006 in response to the Report of the Taskforce on Reducing Regulatory Burdens on Business, ‘Rethinking Regulation’, which identified excessive reporting and recording burdens on business as one of five priority areas for reform by government. Given its cross-jurisdictional mandate, SBR was subsequently endorsed by the Council of Australian Governments and incorporated into its regulatory reform agenda.

SBR is expected to be available from July 2010, with the resultant envisaged reduction in the regulatory burden associated with financial reporting expected to generate savings to business of $800 million per year. This is expected to be achieved by:

• removing unnecessary and duplicated information from government forms;
• using business software to automatically pre-fill government forms;
• adopting a common reporting language, based on international standards and best practice;
• making financial reporting to government a by-product of natural business processes;
• providing an electronic interface that will enable business to report to government agencies directly from their accounting software, which will provide validation and confirm receipt of reports; and
• providing business with a single secure online sign-on to the agencies involved.

The SBR program is being led by the Australian Treasury, with other participating agencies being the Australian Prudential Regulation Authority, Australian Securities and Investments Commission, the Australian Taxation Office, the Australian Bureau of Statistics and all State and Territory Government revenue offices. The SBR program has around 50 forms in scope, including Business Activity Statements (the Australian Taxation Office), financial statements (Australian Securities and Investments Commission) and payroll tax (state/territory revenue offices).

Strong partnership arrangements are a critical element of the SBR program. A governing board that includes the heads of all participating agencies oversees implementation of SBR, which has been co-designed by the participating agencies in partnership with software developers, business and business intermediaries.

The SBR design stage is now complete and the build of SBR’s core services and single sign-on solution has commenced. Operational testing of SBR systems commenced in October 2009.

Apart from the direct benefit industry is expected to derive from easier business-to-government reporting, SBR is considered to offer other benefits to industry and government. As the XBRL financial reporting language being used for SBR is increasingly being adopted as the basis for sharing financial information in an electronic form by accounting and financial reporting industries globally, the establishment of SBR compatible systems is expected to promote streamlining of the movement and use of financial information in other business reporting chains. While the reduction in regulatory compliance costs for business was the key driver in the SBR program, it was also expected to improve the quality of data submitted to government and deliver processing improvements, reducing ongoing administrative costs for the agencies involved.

Relevant chronology

15 August 2006 — The then Treasurer announced that a committee of Australian and state government officials would examine the case for introduction of SBR in response to one of the priority areas for reform identified in the report of the Taskforce on Reducing Regulatory Burdens on Business, ‘Rethinking Regulation’. The committee consulted Australian, state, territory and local government agencies as well as the business sector and considered various approaches to the introduction of SBR. One of the key principles established was that SBR would need to be implemented in a phased manner, targeting sectors or ‘clusters’ of reporting;

19 December 2006 — The Australian Government announced that SBR would proceed;

30 August 2007 — Following the development of a full implementation plan, the Australian Government announced the commencement of the SBR program, which would include a range of pilots, trials and the fully operational end-to-end testing of all components of the final SBR solution from September 2009. Led by the Australian Treasury, the participating agencies were the Australian Prudential Regulation Authority, Australian Securities and Investments Commission, the Australian Taxation Office, the Australian Bureau of Statistics and all State and Territory Government revenue offices;

25 January 2008 — The Treasurer and the Minister for Finance and Deregulation announced that the SBR program had taken its first steps in meeting the Rudd Government’s commitment to reducing the burden of red tape on Australian business;

26 March 2008 — Council of Australian Governments (COAG) incorporated SBR as part of its new regulation reform agenda. To ensure a real reduction in regulatory reporting burden is being achieved, SBR is being closely monitored by COAG’s Business Regulation and Competition Working Group, which is co-chaired by the Minister for Finance and Deregulation, and the Minister for Small Business, Independent Contractors and the Services Economy;

31 March 2008 — Release of the first cycle of the SBR taxonomy; the common reporting language based on international standards and best practice to support the SBR forms in scope;

1 July 2008 — Contracts signed with IBM to design SBR’s core services and with Verizon Business to design the single sign-on solution for SBR;

3 July 2008 — COAG announced details of SBR’s implementation plan and approach to consulting with the business community;

30 September 2008 — SBR Cycle 2 taxonomy released, which supported 20 of the forms in scope;

29 November 2008 — SBR included in COAG’s National Partnership Agreement to deliver a seamless national economy;

16 February 2009 — SBR tax file number declaration pilot begins, with six software developers participating in a limited test of SBR’s end-to-end capability;

31 March 2009 — SBR Cycle 3 taxonomy released, providing for the first time a harmonised list of definitions for around 50 SBR forms in scope;

March/April 2009 — Contracts signed with IBM and Verizon Business to build SBR’s core services and single sign-on solution;

26–29 May 2009 — SBR Conference 2009 Revolutionising business reporting demonstrated what Australian business can expect from SBR, as well as exploring global financial reporting trends (including open standards such as XBRL);

October 2009 — Operational testing of SBR systems;

End March 2010 — SBR financial reporting solution due to be delivered to the public; and

July 2010 — Full production to be available for financial reporting, including compliant record keeping software from suppliers due.

Key observations from case study

Major innovations

Expected to achieve a major reduction in the overall business to government reporting burden via a multi-agency, cross-jurisdiction approach, developed in partnership with industry, which will:

• remove unnecessary and duplicated information from government forms;
• adopt a common reporting language, based on international standards and best practice that will make financial reporting a by-product of natural business processes;
• provide an electronic interface enabling business reporting directly from accounting software; and
• provide business with a single secure online sign-on to the agencies involved.

Observations and lessons learned

• Responding to need — The 2006 Report of the Taskforce on Reducing Regulatory Burdens on Business, ‘Rethinking Regulation’, found that regulatory compliance cost business tens of millions of dollars each year, and that much of this cost could be alleviated by regulatory reform. Excessive reporting and recording burdens were identified as a priority area for reform. It has been estimated that the benefits to business of the SBR program reforms will ultimately rise to $795 million per year on an ongoing basis;
• Benefits to government — While the reduction in regulatory compliance costs for business was the key driver in the SBR program, it is also expected to improve the quality of data submitted to government and deliver processing improvements, reducing ongoing administrative costs;
• Building on previous experience — Australia is building on the lessons learnt from the Netherlands SBR program, which is also aimed specifically at reducing regulatory reporting burden;
• Leveraging technical developments — More general developments in information technology platforms are being applied to the configuration of the electronic interface which is central to the SBR program. The Financial Reporting Taxonomy for the SBR program, which will provide the definition and rules for the reportable items of all forms in scope, incorporates use of XBRL (eXtensible Business Reporting Language), an open international standard which is increasingly being used by accounting and financial reporting industries globally;
• Strong cooperative partnership — The SBR program is being coordinated by the Treasury with a governing board that includes the heads of all the participating agencies overseeing its implementation. The SBR not only involves a range of agencies and jurisdictions on the government side, but is also a long term partnership between governments and the business community. This partnership is reflective of the key roles that each party has in current reporting processes and the appreciation that a sustainable reporting reduction can only be delivered through co-operation between all the parties involved;
• Government and cross-jurisdictional endorsement — The SBR program has been strongly endorsed by the Australian Government and subsequently incorporated into the COAG reform agenda via a formal COAG commitment to the program. Once implemented and settled the infrastructure developed for SBR — including systems, process and standards — could be expanded for use into other areas of reporting; and
• Capacity to provide flow-on benefits to industry — The XBRL based financial reporting taxonomy will provide software developers with an alternative to ongoing codification of reporting rules in their software. The SBR program is also working with the accounting community to ensure that, in addition to its use in government reporting chains, the taxonomy can be extended into all relevant sectors to maximise use of tagged accounting information in business reporting chains. The authentication solution developed for SBR, which provides a single sign-on for online services, will meet the needs of a wide range of agencies that would otherwise have to build, maintain and operate their own authentication regimes when dealing with businesses online.

 

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