So What Is XBRL?
XBRL stands for eXtensible Business Reporting Language and has been designed specifically for financial reporting. Essentially it is an XML schema and associated taxonomy for communicating and exchanging financial information. XBRL can be used by companies to report their financial results to governments, tax authorities, stock exchanges and anyone else that is interested in a single, consistent manner, thereby saving both sides time and money.
An example of some XBRL is shown below:
<?xml:namespace prefix = xbrli /><xbrli:context id="BJ2004">
<xbrli:entity>
<xbrli:identifier scheme="www.iqinfo.com/xbrl">ACME</xbrli:identifier> </xbrli:entity>
<xbrli:period>
<xbrli:instan>2004-01-01</xbrli:instant>
</xbrli:period>
</xbrli:context^gt;
As you can see from the example XBRL in of itself is not technically unique or challenging - in essence technically it is just an XML schema. The real power lies in the fact that it is an open standard and that it brings together the technical financial reporting/accounting world and XML to create something simple, effective and extensible that can save both companies and regulatory authorities time and money.
Why Should You Care?
As I alluded to earlier XBRL is gaining momentum worldwide. In the U.S. the SEC has made it mandatory for filers above 5 billion dollars to report in XBRL and this is sure to be extended in the near future. In the U.K. companies currently have the ability to report using XBRL and it will be mandatory from 2011. Similar moves are afoot or have already been taken in Australia and the Netherlands amongst others. Here in Ireland the Revenue Commissioners recently announced that they will provide the ability for large cases to report in XBRL from September of 2010. Mandatory filing cannot be far away.
Apart from the emerging requirement to report in XBRL, there are other benefits to companies using XBRL such as the ability to provide data once and in a standard format to multiple government agencies as part of an attempt by governments in Ireland and abroad to reduce the administrative burden on companies. For example by filing annual returns once in XBRL with the tax authorities there is no reason why this could not be passed on automatically to companies registration offices and other statistical bodies without any additional burden on the submitter. For the submitter there are also advantages in streamlining the preparation of financial accounts, particularly in organisations with multiple subsidiaries whose accounts need to be consolidated before submission.
More Information
More information on XBRL in Ireland can be found http://www.xbrl-ie.org/ or through BRIL members such as Deloitte (for whom I work) - http://www.deloitte.ie/.
Thank you for publishing this call for companies in Ireland to become aware of the potential benefits of XBRL for reduced compliance burden. The UK Inline XBRL mandate and the SEC XBRL/Interactive Data mandate, as well as the Standard Business Reporting environments in Australia and other countries, are great indications of a change, as well as different approaches to leveraging the power of standardization and collaboration.
ReplyDeleteJust a few items of clarification:
1. Financial reporting: Whilst I agree XBRL was designed "especially" for financial reporting, it was not designed "specifically" for financial reporting. It can be used for operational data, tax data, statistical data, management reporting data, sustainability data - it is about broader "business reporting" (XBRL), not just financial reporting (XFRML). It is also about internal efficiencies (e.g., XBRL's Global Ledger Framework) as well as external filing efficiencies. Part of those internal efficiencies can include better internal tracking of reconciliations between book and tax, between book and statutory, between local GAAP and IFRS, etc.
2. XML Schema/taxonomy: the code snippet you showed has no "data" in it, and is not a schema - it is just a small part of an instance, concentrating on a context. The first line elides together the XML declaration and the xbrl opening tag with namespace declarations, where the links to schemas are normally shown.
In communicating XBRL to technical people, the fact that XBRL leverages XML Schema and uses something called a taxonomy is confusing - they think that schema/taxonomy is all that it is: a hierarchical list describing financial statements limited to the validation of an XML Schema. In fact, XBRL is much closer to an ontology, with numerous interrelationships, and using XML Schema and XLink (for additional interrelationships) to DEFINE the concepts as well as describe them and instances leveraging both Schema and linkbases to communicate the business information. XBRL's formalized ties to underlying authoritative and practicial guidance is unique.
3. SEC Mandate "sure to be extended": the SEC mandate doesn't need to be extended - it already goes beyond companies with the $5B public float, so "this is sure to be extended in the near future" isn't quite accurate - the mandate ALREADY requires virtually all other Filers filing in US GAAP and IFRS to begin filing; all remaining accelerated filers using US GAAP for their first periodic reports after 15 June 2010 and most others filing in US GAAP nad IFRS after 15 June 2011. For these Phase 2 and 3 Filers, they shouldn't be waiting to see if the mandate is extended; they should be planning and preparing ASAP.
Just to expand slightly on XBRL developments around the world: The SEC initiative is focused on public company financial reporting in the US at the Federal level. The Netherlands and Australia programs (known as Standard Business Reporting, or SBR) have a wider scope, seeking to standardize reporting by business to government of financial statements, tax forms, statistics, etc. at both Federal and lower (state, regional) levels of government.
ReplyDeleteReaders interested in learning more about XBRL may want to consult a list of XBRL resources I recently posted on the Hitachi XBRL blog at http://hitachidatainteractive.com/2010/03/16/my-xbrl-reading-list-take-three/
Bob Schneider
Editor, Data Interactive (the Hitachi XBRL blog)
hitachidatainteractive.com
Eric & Bob - thanks for the comments and clarifications!
ReplyDeletezas
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