Academic journal article International Journal of Business

Extensible Business Reporting Language: The Future of E-Commerce-Driven Accounting

Academic journal article International Journal of Business

Extensible Business Reporting Language: The Future of E-Commerce-Driven Accounting

Article excerpt

ABSTRACT

XBRL, short for eXtensible Business Reporting Language, is a framework based on XML (eXtensible Markup Language) that would be freely licensed and facilitate the automatic exchange and reliable extraction of financial information among various software applications anywhere in the world. This new business reporting language should enable companies and individuals to use financial information in a much swifter and more flexible way. This article discusses the implications of this new standard on accountants, investors, analysts, risk mangers, bankers, and the financial services industry.

JEL: M41, C88

Keywords: HTML--HyperText Markup Language; XML--eXtensible Markup Language; XBRL--eXtensible Business Reporting Language; Accounting & Financial Reporting Systems

I. INTRODUCTION

The purpose of this study is to explore the use of Extensible Business Reporting Language {XBRL} as a new common language for financial reporting electronically compared to other formats such as HTML, Web-based sites, the SEC's Edgar system, and Email. We also investigate the applications of XBRL for banking, reporting, analysis, financial services, and accounting firms. Furthermore, this study also discusses how long or difficult will it be to get XBRL in place and why the financial community should care about XBRL. Differences in terminology, presentation, and interpretation of financial reports have made searching for specific pieces of information a nightmare for businesses worldwide. Furthermore, communicating and interpreting business information between parties can be frustrating, unrewarding, and potentially misleading.

Understanding and communicating information in different languages or formats creates problems for business professionals all over the world. One major area of global confusion is that of business reporting. Regulatory and accounting bodies apply different standards to similar reporting issues. Based on the needs of the intended users, businesses present financial information in a variety of formats to manage tax offices and shareholders. Likewise, individual industries frequently report similar- transactions in varied and often conflicting ways. Moreover, risk management reporting can differ between business units, let alone between different companies. In addition, a major criticism of financial reporting has been its lack of timeliness in providing financial information to the business users.

The financial reporting fraternity has been investigating opportunities to resolve some or all of these issues. There are two basic issues that financial community needs to address: dissemination and standardization of financial information. Of course, the most likely venue for speeding up business specialists' and analysts' access to corporate results is through electronic means, specifically the Internet. While the Internet eases the pressure for timeliness, the issue of standardization remains to be addressed. The development of XML {Extensible Markup Language} ensures that financial reporting through electronic communications technology satisfies the highest standards of accuracy, reliability, and accuracy. But, the missing link has been an agreement on standardized terns within a sector or industry that will make data easily transferable through disparate systems. XBRL--Extensible Business Reporting Language--is the missing link, the specification that allows financial and business reporting concepts to be expressed quickly, less expensively, and more efficiently. The widespread use of XML will streamline reporting and transaction tracking in every area of business, from regulatory and tax compliance to internal and performance measurements and international harmonization. This article explores the use of XBRL as a new common language for financial reporting electronically. Besides explaining the history and technical details of XBRL, it also investigates the applications and future of XBRL as a new benchmark. …

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