Tap into XBRL's Power the Easy Way: The Microsoft Office Tool for XBRL Benefits All Financial Reporting Participants

Article excerpt

XBRL--a specialized form of XML (extensible markup language)--is becoming more familiar to creators and users of electronic financial statements, but few people have actual hands-on experience with it. So, to bring XBRL to a wider business audience, Microsoft Corp. has released the Microsoft Office Tool for XBRL--a free, but important, enhancement--for the 2003 versions of Excel and Word.

Along with the AICPA and more than 200 other organizations, Microsoft is a member of XBRL International Inc. (www.xbrl.org), a nonprofit group that promotes use of the extensible business reporting language to improve financial reporting.

This article explains how to obtain, install and use the tool to create an XBRL-compliant Microsoft Office file. It also explains what XBRL is and why it's important to CPAs, their clients and employers (see "XBRL: A Business Reporting Standard," at right, and "Why XBRL Matters," page 33).

Users can download the enhancement from the Microsoft Web site (www.microsoft.com/office/solutions/xbrl) at no charge and easily install it. Immediately afterward, they can create or use worksheets and documents that employ XBRL to speed data input, ensure accuracy, eliminate ambiguity by specifying the precise nature of each data element and thus simplify the exchange of financial information. The tool benefits not just CPAs but all participants in the financial reporting process, including reporting entities, regulators, financial institutions, rating agencies and individual and institutional investors, and improves data sharing among the various systems--financial, tax and other--they use.

An example of the growing support for XBRL was the 10-year, $39 million contract the Federal Deposit Insurance Corp. awarded in 2003 to Unisys Corp., which, with the assistance of PricewaterhouseCoopers, Microsoft Corp., EDGAR Online Inc. and other technology companies, will use XBRL and other tools to modernize and streamline federal bank regulators' collection, processing and distribution of banks' quarterly financial reports.

BE A CREATOR, A USER OR BOTH

The Microsoft Office Tool for XBRL enables users to both create and use documents formatted in XBRL. Many participants in the financial reporting process likely will employ one of these functions more often than tire other. For example, producers of quarterly earnings reports will benefit from the tool's creation functions, such as those used to characterize earnings data by "tagging" them with a contextual format--known as a taxonomy--that corresponds to a series of principles or definitions, such as U.S. GAAP. On the other hand, analysts of existing financial information will find it advantageous to use the tool to, for example, compare several of a company's earnings statements. Of course, both capabilities are available to everyone using the tool.

Exhibit 1, below left, depicts the current way--without XBRL--electronic financial information flows from an organization's finance department to regulators, analysts, investors and other interested parties. Companies first submit plain-text financial reports to the SEC. They then convert those documents' data into hypertext markup language (HTML) format and post them on the Web for public viewing. Finally, companies reconvert those data into various formats that enable investors and financial analysts to scrutinize key performance indicators and other criteria. This fragmented process is both labor-intensive and error-prone.

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But exhibit 2, page 33, shows how--with the aid of the XBRL tool--companies can transmit their financial data accurately and directly from their enterprise resource planning software and other systems into XBRL-enabled worksheets that are more quickly available for review by third parties.

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In fact, with the tool automated processes pull these data from various designated systems directly into Excel-based and Word-based document summaries, such as financial statements that users can organize for analysis. …