XBRL Changes Financial Reporting

By Klusek, Louise A. | Information Outlook, December 2006 | Go to article overview

XBRL Changes Financial Reporting


Klusek, Louise A., Information Outlook


Anyone who has been following developments at the Securities and Exchange Commission since the appointment of Christopher Cox as chairman knows that he is a champion of investor education. He has promoted the use of plain English to remove legalese from SEC documents. He has made the SEC's company filings and mutual fund reports fully searchable on the Web. He has spoken frequently about the need to give investors the tools they need to make informed investment decisions. This September he announced that the SEC intends to invest in an interactive data system that will make real-time search tools available to investors.

What is Interactive Data (XBRL)?

"Interactive data" is another term for XBRL or eXtensible Business Language Reporting. XBRL is essentially a classification system that uses metadata for financial reporting. It was developed as an open standard by a nonprofit consortium, XBRL International (www.xbrl.org). The consortium--composed of more than 450 companies, organizations, and government agencies--promotes the development and use of XBRL and freely licenses it to anyone. Under development for more than five years, XBRL has the capability to alter how investors, analysts, and regulatory agencies access and use corporate reports. Moreover, it has the potential to provide a uniform standard for the electronic distribution of corporate reports not only in the United State but also worldwide.

One analyst/consultant compares XBRL's effect on financial reporting to the Dewey Decimal System's effect on libraries. Simply put, XBRL enhances the analysis and sharing of financial information. It offers advantages to a wide variety of financial-data users, from the ordinary investor, to buy-side and sell-side analysts, to the reporting company itself. Librarians who deal directly with investors will be working in a new data-enhanced environment. Librarians who work in corporations, banks, or accounting firms will see their work streamlined by new desktop analysis tools.

How Does It Work?

We are used to seeing information presented in documents that use HTML to control how data looks on a Web page. But Web sites also employ another meta language called XML (eXtensible Markup Language) consisting of tags that describe data so that it can be read by various software applications. Data is tagged so that static documents can function as interactive reporting tools. XBRL is an extension of XML created to conform to the requirements of financial reporting.

Librarians might best appreciate XBRL if they understand it as metadata (data that provides context for data) specifically developed for financial statements. XBRL is based on a standard computer language that tags all elements of a given financial statement to a taxonomy or data dictionary. The tags surround the data with context, providing information about what the data represents, where it comes from, and why it is useful.

In XBRL, taxonomies go beyond simple description of discrete items. XBRL taxonomies define relationships between items (as a mathematical formula or a reference to a standard, for example). For example, any number in a financial statement will be defined in the taxonomy and will be recognized in any XBRL application. Non-numeric information is also tagged so that, in addition to other materials, accounting policies, compensation information, or information in the Management Discussion and Analysis (MD & A) are identifiable and retrievable. Taxonomies also include text labels in multiple languages that make it possible to "read" financial statements written in a foreign language. A financial report written in Chinese or Japanese, for instance, can be "read" in English if the report has been tagged in XBRL. XBRL is also extensible, which means that filing companies can extend the taxonomies for their own industry-specific or even company-specific needs.

Accounting Standards and XBRL

In the United States, accounting bodies have been key players in the development of XBRL taxonomies. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

XBRL Changes Financial Reporting
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.