Magazine article The RMA Journal

Bar Codes for Financial Information? Introducing XBRL. (Accounting Issues)

Magazine article The RMA Journal

Bar Codes for Financial Information? Introducing XBRL. (Accounting Issues)

Article excerpt

XBRL promises swifter and more flexible use of financial information and would be freely licensed to facilitate the automatic exchange and reliable extraction of software-based information--anywhere in the world. Ultimately, all financial institutions are likely to use this new business reporting language. Here, the authors introduce XBRL and conjecture how it might affect the industry.

All of us have probably ended up at least once with an unfamiliar entree in a restaurant because of miscommunication. Either we misunderstood the menu, or the waiter did not understand us clearly. Similarly, understanding--and communicating--information in different languages or formats creates problems for business professionals all over the world.

Differences in terminology, presentation, and interpretation of financial reports have made the search for specific pieces of information a nightmare for businesses worldwide. Communicating and interpreting business information supplied by different parties can be frustrating, unrewarding, and potentially misleading.

Based on the needs of the intended users, businesses present financial information in a variety of formats to manage tax offices and shareholders. Individual industries frequently report similar transactions in varied, and often conflicting, ways. Risk management reporting differs between business units, never mind between different companies.

Because of differences in business reporting, users of financial information--lenders, investment analysts, individual investors, and even corporate management-are unable to get information in a timely manner, making analysis time consuming and costly.

The financial reporting fraternity has been investigating opportunities to resolve some or all of these problems. But dissemination and standardization of financial information must come first.

Of course, the most likely venue for speeding up business specialists' and analysts' access to financial information is through electronic means, specifically the Internet. The Internet certainly has eased the pressures of speed and timeliness. And the development of XML (eXtensible Markup Language) ensures that financial reporting through electronic communications technology satisfies the highest standards of reliability and accuracy. (1)

What's been missing is an agreement on standardized terms within a sector or industry that would make data easily transferable through disparate systems. But that's about to end. XBRL allows financial and business reporting concepts to be compiled and expressed quickly, less expensively, and more efficiently. Its widespread use will streamline reporting and transaction tracking in every area of business, from regulatory and tax compliance to internal and performance measurements and international harmonization.

What Is It'

EXtensible Business Reporting Language (XBRL), formerly code named XFRML, is a markup language that simply takes the output from a financial system and codes the data in machine-readable format. XBRL is a standards-based method with which users can prepare, publish (in a variety of formats), exchange, and analyze financial statements and the information they contain. It's a subset of XML, a standard computer language that allows users to create tags for each piece of information on a web page. It is the catalyst for single-entry, multiple-carrier interface, something long sought by accountants, investors, analysts--anyone with a need for, or interest in, using the web for financial reporting or research.

XBRL has the ability to search for, and find, specifically tagged information, such as data that could be used to compare the performance of multiple companies or to collect and compare internally generated facts and figures. The development of XBRL offers two major advantages for the business community:

1. It will be possible to prepare financial data and present it in many different forms. …

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