IFRS taxonomy is a large collection of data and links companies using international financial reporting standards can operate under. Mostly international companies fall under the guidelines for using IFRS, with companies in the United States not usually reporting financial activity under these rules. IFRS taxonomy is a computer-based language that multiple users can build on in order to present the most up-to-date taxonomy available for users. The two most common attributes of this taxonomy include schemas and linkbases. The document structure is usually XRBL, which is a common computer language used in accounting structures.
As many different companies or users can update the IFRS taxonomy, there is typically a new version given out on an annual basis. The taxonomy files and support material may be on a website governed by the International Accounting Standards Board (IASB), the international agency that governs the IFRS and its users. A few of the supporting materials include summaries and feedback, illustrative examples, a taxonomy guide, and other information as desired by the IASB. With all of this information available, the IASB attempts to create a semblance of order through each annual version. Reviews are necessary for user updates to ensure that the information is applicable and necessary for all companies using the taxonomy.
Another important part of IFRS taxonomy is the structure that surrounds the taxonomy when used by companies and individuals. As with most accounting documents and processes, the IFRS taxonomy includes a series of flowcharts that help a company define the taxonomy process. In some cases, the flowcharts provided give a pictorial reference of how a computer-based program may work. This reference helps an accountant work with computer technology workers to create a useful program for implementing the taxonomy. Slight changes or alterations may be necessary in order to get the entire taxonomy to work in the company, given the somewhat individual nature of each company’s accounting processes.
The use of models and computer-based modeling may also be a part of the IFRS taxonomy. Financial statements may be the most common models a company needs to duplicate in order to work these standard models into the company’s accounting processes. Although a company may have its own financial statement formats, using the models in the IFRS taxonomy allows the computer program to populate the statements under a given set of constraints. The schemas are typically the dimensions that help drive this formatting process. Changes may be necessary to current processes in order to fully use this taxonomy.