Research Proposal on "Accounting Information Systems"

Research Proposal 55 pages (17839 words) Sources: 20 Style: Harvard

[EXCERPT] . . . .

XBRL Adoption at HMRC and CH

XRBL and Electronic Government Initiative

The research highlights the importance of e-government and systems to help achieve fully integrated government systems in the near future. E-commerce led to the development of technology capable of revolutionizing the way in which common transactions are handled. These technological developments and the successes of e-commerce led to the idea that this same technology could be used to transform the bureaucratic processes of governments around the world. This was the topic of the current research study. However, this concept has met with a considerable amount of skepticism from scholars, who focus on the number of failed projects as evidence of e-government to serve the public's needs (Fountain, 2001).

Despite the pessimistic attitude of some towards the electronic business movement, there is still a considerable faction that feels that one can learn from past failures and transform them into suceesses. They are willing to give new projects a chance to succeed before passing judgment on the effectiveness and ability of e-government to serve the needs of the people. This study explored HM Revenue and Customs office (HRMC) and Companies House (CH) and their movement towards e-government as a means to conduct day-to-day transactions. Currently, many companies and agents are reluctant to file their Corporate Tax returns and VAT electronically using the current system. This hindered the ability to develop e-Government to the point where paper filing becomes obsolete.

This research explored technology adoption process of these two agencies and its impact on the ability to institute XBRL as a means to file personal and business taxes electronically in response to a mandate that all filing be done electronically by April of 2012. This research will explore the results of the analysis by comparing the adoption process by XBRL and CH, using the TOE model as the framework for the argument.

The Problem

Electronic services have several advantages for both HMRC and CH through improved online services, lower operating costs and the ability to deliver services to a greater number of consumers. Among the problems cited for failure of companies to adopt e-filing were problems with HMRC's website due to technical problems and difficulty encountered during authentication processes (HMRC, 2006). Problems with customer logins and frustration with the system were key reason that customers cited for preferring to file their taxes using the old papare filing system. In order to realize a return on their investment and respond in accordance with the Aril 2012 e-filing mandate, HMRC needs to increase electronic filing of taxes. This would also benefit customers as well, by providing them a more convenient and expedient means to file their taxes. In order to do this, HMRC needs to make certain that the system is working properly and is as frustration free as possible for the tax filer.

In order to address the technical issues and authentication issues behind the unwillingness of clients to use the electronic filing system, the use of Extensible Business Reporting Language (XBRL) has been proposed. Aside from an exploration of the innovation adoption process between the two organizations, the purpose of this research is to explore the possibility of establishing a joint filing facility that combines the services of HMRC and Companies House to file corporate tax returns by the year 2012.

Companies House (CH) has initiated the first XBRL-based system for filing a set of abbreviated and dormant accounts. This system has been in existence since 2005 (Companies House Annual Report, 2008). Since the inception of this system, CH has experienced a serge in its electronic filing services. This increase supports the use of XBRL for the processing of electronic filings and provided the rationale for this research study. This study focused on the motivations of the government in mandating such a system, the process of adoption, and factors that promote or serve as hindrances in that process.

The Internet is an excellent channel for communicating many types of business information. The interviews conducted as part of this research support this fact. The final results of the interviews indicate that XBRL and its successor, iXBRL will more than likely be adopted as the language of choice for the electronic filing of tax documents of both corporate and personal taxes. The adoption process encountered several roadblocks that will be discussed at length throughout this chapter. However, it also had many positive influences that led to its final adoption at both CH and HMRC.

Key Research Findings

XBRL is open standard and free of license fees, making it a cost-effective solution to corporate and government entities alike. XRBL is platform independent, making it an excellent candidate for many different types of systems and applications. The adaptability of the language gives it potential for the development of an international standard using it as a backbone. In Chapter 1, it was found that XBRL is easy to adapt to a number of applications easily. These applications include applications from financial and accounting reports to social networking. These factors would tend to favor the adoption of XBRL for many applications including those being considered by HMRC and CH. However, despite these positive aspects, it is not likely that the joint collaborative project between CH and HMRC will result in future success.

In order to understand key issues regarding the adoption of XBRL, let us examine how this change came about. XBRL is a form of XML (Extensible Markup Language). Mark-up language consists of a dictionary of tags that allows the computer to understand and description of the text. One of the more familiar and early mark-up languages is HTML, which is used for web pages. XML is a more generic form of mark-up language that allows the text to be used for a number of applications, such as PDAs, text messaging via mobile phones and other ecommerce applications. XML is an open standard, which means that anyone can use it without paying a royalty. Software packages are developed using XML and those can be patented and protected, if they qualify.

XBRL is an extension of XML that takes the tags further and describes the environment in which a set of financial accounts have been drawn, XBRL is specifically designed to serve the needs of the accounting community and includes elements such as the year, period, and name of the account. However, for the most part, tagging systems such as these are meant to be read by computers, not humans. They are difficult to read, as one has to either understand the tags, or ignore them. They are complicated to the eye. They are not easily exported to word processors or spreadsheets, such as Excel. Therefore, many application have HTML and XML tags embedded in their programming.

XBRL is an excellent language for computers, concentrating on data transfer, rather than human readability. There was a concern that the tax inspector, or the customer receiving a request from CH may not be able to understand it (Keeling, 2009). Inline Extensible Business Reporting Language (iXBRL) was the solution to the problem. This tagging system allows the system to bridge between HTML and XBRL, allowing XBRL documents to be read by humans. XBRL is about submitting data, not about submitting documents, as tax filers currently know them. Much apprehension exists regarding the accuracy of data and "mistakes" that are a result of the translation process, rather than filer error. Prior to iXBRL, many accounting programs used PDF files as a means to communicate data in a meaningful way (Keeling, 2009). iXBRL will add the element of user-friendliness to the XBRL submission process. This was a key concern in the development of eGovernment services.

One of the key factors in the promotion of technology is to gain understanding of the adoption process within an organization. This research explored the adoption of XBRL in two different UK regulatory agencies. A comparison of the adoption process of these two agencies gives us an example of the types of processes that may be experienced as other agencies and companies begin to adopt XBRL as the backbone of their system.

In addition to the adoption process itself, the study also explored the factors that influence the innovation adoptions process in the two government agencies. Kanal (2006) found 40 critical success factors including technology, organization, external and collaborative efforts. Tornatzky and Fletcher (1990) presented similar findings and found that people, organizations, politics and intercompany relationships also contributed to the adoption of innovation and new technology. In the case of CH and HMRC, the relationship used to be informal, with a casual exchange of information between the two organizations. According to interviewee, Jeff Smith (P2), this relationship changed as soon as they entered into a collaborative project together. The relationship changed and the formal hierarchy harmed the personal relationships that had been formed. It introduced a formality that replaced the former team spirit and complicated interactions between the two agencies.

Overall, the interviewees provided a wealth of information and expressed opinions that provided an excellent basis for the… READ MORE

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