Magazine article The CPA Journal

XBRL: Not Just for Public Companies

Magazine article The CPA Journal

XBRL: Not Just for Public Companies

Article excerpt

Nearly a decade ago, experts said that Extensible Business Reporting Language (XBRL) would revolutionize financial reporting and bring visibility, consistency, and transparency to often confusing financial statements. But the recent financial crisis and resulting recession, along with a wave of high-profile debacles that eluded the attention of the SEC and other regulators (such as the Bernard Madoff fraud), took precedence over computing and coding.

During the summer of 2009, however, the efforts of former SEC Chairman Christopher Cox to transform the way financial analysts, regulators, journalists, and others read, parse, and analyze data were realized. An SEC-mandated threeyear phase-in for public companies to file their financial statements using interactive data began. The first wave of companies, beginning with the Fortune 500, started filing their financial statements in XBRL.

Under the regulations of the SarbanesOxley Act, CEOs and CFOs of public companies in the United States are now criminally liable for the accuracy of their financial information. According to a survey conducted by the AICPA and XBRL US in September 2009, 73% of public companies reported they have already begun preparations for the adoption of XBRL.

The main driver for preparedness today is compliance, but public companies aren't the only ones that should be paying attention. Regulators around the globe are using the standard for both private and public companies. Perhaps even more compelling is the argument that XBRL offers cost savings, increased efficiency, reporting accuracy, and reliability.

XBRL is ushering in an era of financial transformation that has the potential to change the way businesses are managed. Ultimately, the interactive data that XBRL provides will be used in the internal financial systems of a company - public or private - to improve the accuracy, interoperability, and speed of reporting and internal analysis. XBRL, at its core, simplifies and streamlines the financial information supply chain that includes public and private companies, accountants, data aggregators, members of the investment community, and, essentially, consumers of financial information.

As soon as a significant bulk of corporate financial and operational information is available in XBRL format and accessible via the web, new ways of business management will begin to emerge. …

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