An Introduction to XBRL[1]

8/3/2019 An Introduction to XBRL[1]

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XBRL is supposed to facilitate the electronic exchange of financial information. Explain

what XBRL is and how it would help with the exchange of information

An Introduction to XBRL

Extensible Business Reporting Language (XBRL) is a language for the electronic communication of

business and financial data which is revolutionising business reporting around the world. It provides

major benefits in the preparation, analysis and communication of business information. It offers

cost savings, greater efficiency and improved accuracy and reliability to all those involved in

supplying or using financial data.

XBRL is a member of the family of languages based on XML (Extensible Markup Language), is

becoming a standard for the electronic exchange of data between businesses on the Internet. Using

XML, identifying tags are attached to items of data so they can be processed efficiently by computer

software. Therefore, XML has gained wide acceptance throughout the information technology

community as a primary method to provide efficient data communication over the Internet. As anXML convention, XBRL is easily extensible and can be used across platforms, software formats,

and/or technologies. These XBRL characteristics allow the complex, ever-changing financial reporting

process to become more efficient, effective and; accordingly, economical. As a result, it is becoming

increasingly popular in public financial reporting.

In wider terms, XBRL is a technology by which directed searches and simultaneous presentation of

related financial statement facilitate, and also footnote information could potentially help financial

statements users. The use of search-facilitating technology depletes differences in nonprofessional

investors financial performance judgments and investment decisions created by recognition versus

disclosure; accordingly, it could not be wrong to conclude that search-facilitating technology broadly

improves the transparency of firms financial information.

Financial statements in XBRL format bring users of financial reports the opportunity that provides

them with directly search for relevant information regardless of the informations location and to

conveniently compare related information among different companies. All in all, XBRL can reduce

unreliability of financial information for firms and help them to minimize the minus effect of

nondeterministic decisions based upon financial statements information.

XBRL is being developed by an international non-profit consortium of approximately 450 major

companies, organisations and government agencies. It is an open standard, free of licence fees. It is

already being put to practical use in a number of countries and implementations of XBRL are

growing rapidly around the world.

The Effects of XBRL on Financial Transparency

XBRL is not a software application; also it is not a new accounting standard. XBRL is a so-called

semantic data format additional to an open and free electronic language providing each data

element with a tag that identifies it unambiguously.



The data tags, prepared by XBRL format, provide information about the structure of financial data

that allows software applications, such as search engines, parsers and so forth, to more effectively

process the data. As a case in point, software developed to search for these predefined data tags

allows users to extract and simultaneously view all similarly coded information, notwithstanding

where the information is presented in a firms financial statements. This search capability has the

potential to contribute to increase the transparency of different accounting treatments, decreaseusers costs of processing information, and perform as a decision aid for users by facilitating the

providing related information.

The implementation of search-facilitating technology has two implications for managers choice of

recognition versus disclosure. First and foremost, by facilitating comparisons across companies that

differ in their choice of recognition versus disclosure, search- facilitating technology makes

managers choice of recognition versus disclosure more transparent to users. Second, search-

facilitating technology allows users to conveniently access information disclosed in the footnotes

and compare and integrate this information with related information recognized on the face of the

financial statements. For both reasons, search-facilitating technology enables financial statement

users to make more informed decisions based upon the information contained in the report,regardless of where it is presented.

A Simple Explanation

The idea behind XBRL, Extensible Business Reporting Language, is simple. Instead of treating

financial information as a block of text - as in a standard internet page or a printed document - it

provides an identifying tag for each individual item of data. This is computer readable. For example,

company net profit has its own unique tag.

The introduction of XBRL tags enables automated processing of business information by computersoftware, cutting out laborious and costly processes of manual re-entry and comparison. Computers

can treat XBRL data "intelligently": they can recognise the information in a XBRL document, select it,

analyse it, store it, exchange it with other computers and present it automatically in a variety of

ways for users. XBRL greatly increases the speed of handling of financial data, reduces the chance of

error and permits automatic checking of information.

Companies can use XBRL to save costs and streamline their processes for collecting and reporting

financial information. Consumers of financial data, including investors, analysts, financial institutions

and regulators, can receive, find, compare and analyse data much more rapidly and efficiently if it is

in XBRL format.

XBRL can handle data in different languages and accounting standards. It can flexibly be adapted to

meet different requirements and uses. Data can be transformed into XBRL by suitable mapping

tools or it can be generated in XBRL by appropriate software.



Benefits and Beneficiaries

XBRL offers major benefits at all stages of business reporting and analysis. The benefits are seen in

automation, cost saving, faster, more reliable and more accurate handling of data, improved analysis

and in better quality of information and decision-making.

The use of XBRL does not imply an enforced standardisation of financial reporting. On the contrary,the language is a flexible one which is intended to support all current aspects of reporting in

different countries and industries. Its extensible nature means that it can be adjusted to meet

particular business requirements, even at the individual organisation level.

XBRL enables producers and consumers of financial data to switch resources away from costly

manual processes, typically involving time-consuming comparison, assembly and re-entry of data.

They are able to concentrate effort on analysis, aided by software which can validate and

manipulate XBRL information. As just one example, searches for particular information which might

in the past have taken hours can be completed with XBRL in a fraction of a second.

Those who stand to benefit include all who collect business data, including governments, regulators,economic agencies, stock exchanges, financial information companies and the l ike, and those who

produce or use it, including accountants, auditors, company managers, financial analysts, investors

and creditors. Among those who can take advantage of XBRL include accountancy software vendors,

the financial services industry, investor relations companies and the information technology

industry.

Conclusion

We find that when stock option accounting varies between two firms, search technology contributes

users to both acquire and integrate relevant information. Participants who used XBRL-facilitating

technology were more likely to acquire footnote information, and also they were more likely to

integrate the footnote information with related information on the face of the income statement

when making judgments and decisions. When compared to participants who did not use search-

facilitating technology, differences in investment decisions were detected. It can be seen that the

implementation of XBRL improves the transparency of a firms financial statement information and

managers choices for reporting that information.

The XBRL and Business section explains how particular types of organisation can benefit from XBRL.

The use of XBRL does not imply an enforced standardisation of financial reporting. On the contrary,

the language is a flexible one which is intended to support all current aspects of reporting indifferent countries and industries. Its extensible nature means that it can be adjusted to meet

particular business requirements, even at the individual organisation level.



Documents

An Introduction to XBRL[1]