WHY DID DANGOTE CEMENT ADOPTS XBRL REPORTING SYSTEM?
On July 15, 2021 Dangote Cement, #Dangcem announced that its financial information has been disseminated to the investors in eXtensible Business Reporting Language (XBRL) format using the International Financial Reporting Standard (IFRS) taxonomy. By this act, Dangote Cement becomes the first company in Nigeria listed firm to adopt #XBRL for financial reporting, even thought the Nigerian Exchange (#NGX) has not mandated the use of XBRL reporting format. One is then tempted to ask, what are the benefits of this reporting format to #Dangcem?
Simply put, #XBRL makes financial information smart in nature and makes them shareable across platforms and borders in a seamless manner without human intervention. Each piece of data in the financial statements is tagged and intelligent for machine and human to read. Take the case in hand, Dangote Cement reported using the XBRL format for the reporting of its financial results for Q3 2020, Full Year 2020 and Q1 2021. Hitherto, a company like Dangote Cement may have sent such report in Word, Excel, or PDF format to the Exchange for them to manually feed the financial report into the Exchange database but with the adoption of XBRL reporting format using the IFRS taxonomy, the #NGX server will simply be fed directly with such financial report from Dangote Cement's server. Below are some of the identifiable benefits of XBRL adoptions by Dangote System:
Enhancement of capital market efficient: because financial markets thrive on information and it more efficient if this information is made available to all investors in a timely and even manner; no one investor can out smart another on the basis on the information released to public through the XBRL format because lags and human interventions are eliminated, and information are disseminated on near real-time basis.
Easier Access to Funding: Potential lenders can easily assess the creditworthiness of an organization and credit rating agencies like Fitch, Augusto & Co. and Moody can easily carry out their credit rating without human intervention because the financial reports are fed seamless into their database for assessment.
Enhanced Decision Making: for investors and traders in the market with smart console, companies' performance evaluation can easily be carried out without human intervention once the XBRL format financial reports are sent to the Exchange and made available to the investing public.
Time and Cost Savings: XBRL-coded financial reports make information portable across various platforms. This eliminates paperwork and human interface and this thus led to cost savings for organizations.
Conclusion
#Dangcem, on its own, has chosen to be a forerunner of the XBRL reporting format at the #NGX and it’s setting the peace for both the regulators and fellow companies at the exchange to follow. It will not be a surprise if in the near future the Nigeria Securities and Exchange Commission and #NGX mandates the adoption of XBRL reporting format for firms listed on the Exchange.
