Extensible Business Reporting Language (XBRL)


Extensible Business Reporting Language (XBRL)










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Extensible Business
Reporting Language (XBRL)

by Lynn Greiner

Copyright 2018, Faulkner Information Services. All Rights Reserved.

Docid: 00011521

Publication Date: 1802

Report Type: TUTORIAL

Preview

The Extensible Business Reporting Language (XBRL) is an
XML format with the potential to revolutionize the way data is
reported, routed, and analyzed. While early-stage XBRL was primarily used by banks for
regulatory reporting purposes, the format’s innate flexibility allows it to
encompass any form of structured data. Thus, XBRL can make it simpler to derive
and exchange extremely accurate data pertaining to a wide range of business
activities – whether financial, operational, or transactional in scope. Employing XBRL properly can therefore enable a business to obtain a precise
financial view of itself and its ecosystem, and to customize this view for
any internal or external audience.

Report Contents:

Executive Summary

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The eXtensible Business
Reporting Language
(XBRL) is a language for the electronic communication of business data.

XBRL offers major benefits at all stages of business reporting and analysis:
Lowering
the costs of capturing business data; improving data quality; enabling data
reuse; automating the exchange of data; compressing the time needed to publish
data; and providing for flexible, extensible, and comprehensive data
collection. In short, XBRL promises to be for business reporting what the Universal Product Code
(UPC) has become for retailers – a means of standardizing, managing and simplifying processes.1

XBRL was developed by XBRL International (XII),
a not-for-profit consortium of approximately 650 companies and agencies
operating worldwide
– all working together to build the XBRL language and promote and support its adoption. Members of XBRL International include:

  • Professional services and consulting companies
  • Financial services and information providers
  • Software and other technology providers
  • Government and not-for-profit organizations
  • Accounting and trade organizations

XBRL activity is currently
concentrated in the financial sector, where governmental authorities, like the US
Securities and Exchange Commission (SEC) and the US Federal Financial
Institutions Examination Council (FFIEC), have embraced the language as a means
for facilitating financial reporting and financial industry regulation. It is in
use in over 50 countries.

Description

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XBRL allows software vendors, programmers, intermediaries in the preparation and
distribution process, and end users who adopt it as a specification to enhance
the creation, exchange, and comparison of business reporting data. An XBRL
Instance consists of the business facts reported and a collection of taxonomies
(a Discoverable Taxonomy Set, or DTS) defining metadata about those facts. Business
reporting data includes, but is not limited to:

  • Financial
    statements
  • Financial
    information
  • Non-financial
    information
  • General
    ledger transactions
  • Regulatory
    filings, such as annual and quarterly reports

The current specification for XBRL is version 2.1 (XBRL 2.1), which is available for free download at the XBRL International website (www.xbrl.org).

The
concept behind the eXtensible Business Reporting Language is simple. Instead of treating business or financial data as a block of text, XBRL provides each individual data
item with an identifying, computer-readable tag. Thus, an item like
company net profit has its own unique tag. XBRL tags enable the automated processing of business data by computers, which
can:

  • Recognize the data in a XBRL document
  • Select it
  • Analyze it
  • Store
    it
  • Exchange
    it with other computers
  • Present
    it automatically in a variety of formats to accommodate a variety of users

XBRL
expedites the processing of business or financial data, reduces processing
errors, and permits automatic data validation.

XBRL
and Financial Data

XBRL
benefits all participants in the financial data supply chain, whether producers
or consumers.

Data Collection and Reporting

By
using XBRL, companies and other producers of financial data and business reports
can automate the processes of data collection. For example, data from
different company divisions with different accounting systems can be assembled
quickly, cheaply, and efficiently if the sources of information have been
upgraded to using XBRL. Once data is gathered in XBRL, different
types of reports using varying subsets of the data can be produced with minimum
effort. A company finance division, for example, could quickly and
reliably generate internal management reports, financial statements for
publication, tax and other regulatory filings, as well as credit reports for
lenders. Not only can data handling be automated, removing time-consuming,
error-prone processes, but the data can be checked by software for accuracy. Small businesses can benefit
alongside large ones by standardizing and simplifying their assembly and filing
of information to the authorities.2

Data Consumption and Analysis

Users
of data which is received electronically in XBRL can automate its handling,
cutting out time-consuming and costly collation and re-entry of information. Software can also immediately validate the data, highlighting errors and gaps
which can immediately be addressed. It can also help in analyzing,
selecting, and processing the data for reuse. Human effort can switch to
higher, more value-added aspects of analysis, review, reporting and
decision-making. In this way, investment analysts can save effort, greatly
simplify the selection and comparison of data, and deepen their company
analysis. Lenders can save costs and speed up their dealings with
borrowers. Regulators and government departments can assemble, validate
and review data much more efficiently and usefully than they have [in the past].3

XBRL promises to make business and financial transactions more transparent by
improving the ability of auditors to select and examine relevant data, thus
helping to avert the type of business and financial irregularities that have
spurred today’s global economic recession.

The IFRS Taxonomy

The IFRS Taxonomy is the
XBRL (eXtensible Business Reporting Language) representation of the IFRSs,
including International Accounting Standards (IASs), Interpretations, and
the IFRS for SMEs (Small and Medium-sized Entities), as issued by the IASB. It contains XBRL tags for IFRS disclosure requirements.
The taxonomies have been updated annually.

Current View

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XBRL International is comprised of local jurisdictions which represent
countries, regions or international bodies and focus on the progress of XBRL
in their areas as well as contributing to international development. It is
rapidly gaining acceptance worldwide, with representation in countries
including Australia, Belarus, Belgium, Brazil, Canada, China,
Colombia, Denmark, Finland, France, Germany,
Haiti, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Korea,
Kuwait, Luxembourg, Malaysia,
Mexico, Netherlands, Panama,
Peru, Romania,
Singapore, Spain, South Africa, Sweden, Switzerland, Turkey, United Arab Emirates,
the United Kingdom and the United States. Sample applications include:

  • Australia –
    Interactive data is being used in Australia’s Standard Business Reporting program, which
    simplifies and expedites the reporting process for Australian companies
    reporting to multiple government agencies.

  • Belgium – Interactive
    data is currently required by the National Bank of Belgium’s Central Balance
    Sheets Office for standardized annual accounts filed with it by Belgian
    companies.

  • Brazil – Project SICONFI collects data for an annual report
    known as the National Public Sector Balance (BSPN), a set of financial and
    budgetary statements that show the economic condition of the Brazilian
    Federation as a whole, as well as that of Federal, State and Local
    Governments, as well as for a set of tables known as Finances of Brazil
    (FINBRA), which contains accounting and budgetary information for each
    entity in the Federation in a unified format. The Treasure utilizes XBRL for
    efficient collection and to improve data quality.

  • Chile – Security regulators require
    listed companies to publishIFRS financial statements quarterly in XBRL.

  • China – The
    Shanghai and Shenzhen stock exchanges have developed XBRL taxonomies for
    listed companies and mutual funds.

  • Denmark – The Danish Business Authority requires businesses
    to provide a digitally signed version of annual financial statements in XBRL or iXBRL format.

  • Committee of European Banking Supervisors (CEBS)
    – CEBS has developed a taxonomy for the Common
    Solvency Ratio Reporting Framework (COREP) and a taxonomy for Financial
    Reporting (FINREP) for credit institutions that use International Accounting
    Standards or International Financial Reporting Standards for financial
    statements.

  • Indonesia – Bank Indonesia collects monthly financial
    statements from 34 Islamic banks, based on Sharia financial rules. Filers
    validate and send XBRL instance documents directly to BI. The data is used
    for supervisory purposes.

  • Ireland – Irish
    reporting companies are using interactive data in quarterly industry surveys
    issued by the Central Statistics Office.

  • Japan – Financial
    services companies are using XBRL to report monthly balance sheet
    information to the Bank of Japan. Thousands of listed companies are
    submitting earnings reports and corporate governance reports in XBRL format
    to the Tokyo Stock Exchange.

  • Singapore – Singapore’s
    Accounting and Corporate Regulatory Authority (ACRA) is requiring companies
    to file their financial statements in an XBRL interactive data format.

  • Spain – The
    Securities Commission of Spain (CNMV) began requiring the use of XBRL in
    2005 for financial statements reported by listed companies. Mutual funds are
    also now using XBRL to report financial statements and details of their
    portfolios to the CNMV.

  • Sweden – Small
    and medium-sized companies are filing company reports in an XBRL format with
    Sweden’s Companies Registration Office.

  • United Arab Emirates – The Security and Commodity Authority requires
    XBRL financial statements from listed companies as well as brokers operating in the country.

  • United Kingdom –
    The United Kingdom’s Companies House accepts company
    accounts in XBRL format from audit-exempt UK companies. HM Revenue and
    Customs has launched an online service to accept company tax filings in XBRL
    format.

United States

In the US, the Securities & Exchange Commission (SEC) approved a mandate
requiring all companies and mutual funds to use XBRL technology when filing
financial reports.

According to then SEC Chairman Christopher Cox, “Interactive [or XBRL] data will help provide investors with the information they need, rather than just a warehouse of forms on which they can try to find
it. Interactive data will enable new analysis tools to put key information at every investor’s fingertips within seconds, exactly as the investor wishes to see it.”

The SEC mandated the use of XBRL for public company reporting and
other reporting applications:

  • Public Company Reporting – All public companies must file in XBRL
    format; companies with worldwide public float greater than $5 billion
    were to comply starting with the period ending June 2009; all other large
    accelerated filers were to comply starting with the period ending June 2010;
    all other public companies were to comply with the period ending June 2011.
  • Risk Return Summary portion of Mutual Fund Prospectus
    – Mutual funds were to begin publishing the risk return summary portion of
    their prospectuses in XBRL format starting January 1, 2011.
  • Credit Rating Agencies – Began reporting all ratings
    actions (initial rating, upgrades, downgrades, etc.) in XBRL format in 2009.
  • Federal Financial Institute Examination Council
     – Requires quarterly “Call reports” in XBRL format.

The GRI Taxonomy 2014, developed in collaboration with Deloitte, is one of
the first XBRL taxonomies for sustainability reporting. It was designed to help
auditors, investors, and analysts access information in sustainability reports.

Despite the potential benefits of XBRL, it faced significant pushback from business. That pushback was reflected in major
data quality issues in filings that rendered them significantly less useful than they could have been. In February 2013, Mike Willis,
a partner at PriceWaterhouseCoopers and leader with XBRL International, detailed a litany of flaws in an article on Data Interactive.
a site run by the Hitachi XBRL Business Unit.4

CPA Charles Hoffman, who came up with the concept of XBRL in 1998, has been tracking data quality in published companies’ financial
statements quarterly and reporting the error rate on his blog, Digital Financial Reporting.
He has found that data quality has improved with each reporting cycle, but there’s still a distance to go. Companies providing filing software
are not yet generating entirely accurate reports.

In addition, authors of a white paper entitled "An Evaluation of the Current State and Future of XBRL and Interactive Data for Investors and Analysts" from Columbia Business School
also bemoaned the state of data quality, noting Filers should spend the effort they are investing in attempting to destroy
the SEC’s XBRL regulation on
improving the quality of their own data, as well as on making their own data more useful and accessible to users.”5

To help address the issues, the American Institute of CPAs and XBRL US launched the XBRL US GAAP Certificate Program, to provide
information and
hands-on training needed to build high-quality XBRL-formatted financial
statements. The program consists of about 35 hours of online training, covering
areas such as:

  • Understanding XBRL and the US GAAP taxonomy
  • Reviewing and validating XBRL documents
  • Creating the extension taxonomy and building the instance document
  • Transitioning to a new release of the taxonomy
  • Using the SEC Edgar Filer Manual
  • Creating individual financial statements
  • Detailed footnote tagging in 20+ categories, e.g., pensions, debt,
    acquisitions, leases, fair value measures, segments, tax, business
    combinations, commitments and contingencies and more
  • Tagging simulations for a hands-on learning experience that focuses on
    practical application of the principles presented in the detailed footnote
    modules

The US Center for Data Quality, part of XBRL US, has been founded to address concerns about and to improve the quality
of XBRL data filed with the US Security and Exchange Commission.

The Financial Accounting and Standards Board (FASB) has released an updated
taxonomy, the 2017 US GAAP Financial Reporting
Taxonomy, with a 2018 version awaiting SEC approval.

A stern letter6 from the US Congress Committee on Oversight and
Government Reform in 2013 pressed the SEC to stop dragging its feet and provide
answers about the delays in implementing XBRL reporting.

In January 2015, the SEC launched a pilot program to provide information from
XBRL filings from 2009 – 2014 in combined datasets on a website to academics and
investors. In June 2015, the SEC updated its EDGAR viewers to support XBRL, and
in January 2016, it adopted revisions to the EDGAR Filer Manual to include
dissemination of raw and rendered XBRL submissions. EDGAR now
accepts iXBRL (Inline XBRL), a format that allows filers to embed XBRL data in
an HTML document, and the Filer Manual has been updated accordingly. It has also
released a free viewer.

In February 2015, XBRL.org announced a new initiative, Open Information Model
(OIM). The goal of this effort is to produce a syntax-independent model for XBRL
with a focus on two closely related goals: simplification, and the ability to
transform into non-XML syntaxes. The OIM will draw on the outputs of previous
modelling efforts, including the XBRL Abstract Model PWD, and the XBRL Infoset
PWD, but with a strong focus on simplification in order to achieve clean
representations in multiple syntaxes. An updated XBRL
Glossary was released in February 2017. In addition, it released a candidate
specification for XBRL – JSON as part of OIM, to allow data collected and
validated in XBRL to be distributed on websites using JSON. In November 2017, it announced the first
XBRL Certified Software to ensure interoperability between XBRL products. There are currently two categories:
Report Consumption software, with seven certified products, and Report Creation Software, with nine certified products.

SEC also issued an order7 to allow companies satisfying its criteria
to file structured financial statement data integrated in their HTML annual and quarterly reports, through March 2020.

Another area of focus will be creating new value for consortium members in
the form of prescriptive guidance. The Best Practices Board is centered on
collecting, analyzing and sharing the business and technical strategies and
tactics used in successful implementations around the world. This “Body of
Knowledge” will be a valuable resource for members and is expected to enhance
project outcomes and increase the number of XBRL proficient professionals around
the world. The consortium views this as a critical effort and urges members to
contribute to the project as opportunities arise.

Along with the Body of Knowledge, it plans to continue to foster the use of
XBRL for new applications – especially those within the enterprise. Companies
are generating a vast wealth of structured data related to their compliance
activities and it presents an opportunity for companies to gain valuable insight
into their own financial situation and leverage that information to enhance
business performance.

Outlook

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XBRL’s clear value proposition and demonstrated history of success combine to
indicate a bright future for the framework. It is likely that not only financial
institutions but also most enterprises will embrace XBRL, meaning an ongoing
increase in the number of XBRL members and in the popularity of XBRL training
programs. Accordingly, special familiarity with XBRL will become a necessary accounting
and technology expertise in the same way that general familiarity with XML is
currently necessary for such functions as enterprise Web development and trading
partner management purposes.

The general outlook for XBRL is a transformation from the mandated instances
dominant today to voluntary and creative uses of the technology. Companies that
use XBRL to improve internal efficiencies and create innovative processes will
become more agile and gain competitive advantage. An excellent example of this
kind of strategic use of XBRL comes from Deutsche Bank, which uses XBRL to
import financial data into a risk analysis system. This project has mitigated
Deutsche Bank’s risk exposure – a very valuable outcome given that many financial
services companies have recently experienced catastrophic breakdowns in risk
management.

Companies that act
on information faster than their peers win competitive business battles against
less agile peers. Finding and sorting that information is a matter for business
intelligence, and XBRL has become the framework with the most potential for
speeding up the discovery and delivery of financial data in all kinds of
contexts. Accordingly, XBRL can be expected to augment the processes not only of
companies involved in financial reporting, but also of companies looking to
obtain competitive advantage based on business intelligence sophistication.

There is every indication that metadata – data about data, parsed in a
way that facilitates easy exchange between systems – is becoming almost as
important as data itself. In an age of e-business, data that comes without tags
that tell systems where to send that data, and what to do with it, is of
dwindling value to the enterprise, since it is manifestly inefficient to have
human brings sort through mountains of data. Metadata’s importance in financial
data, which has to be consumed by audiences ranging from regulators to
individual investors, cannot be overstated. From the finance organization’s
perspective, XBRL-tagged data will be a viable defense against the incomplete,
inaccurate reporting that can doom a company with regulators, and cause investors
to lose confidence.

Finally, despite the apparent advantages, some companies pushed back against
government-imposed XBRL implementation timetables, expressing concerns over the
cost of the switch. According to a WebCPA article,
"Nearly
one-third of public companies have no plans to use Extensible Business Reporting
Language technology for their financial filings, despite an SEC mandate
requiring XBRL use by 2011. A [2010] survey of CFOs and senior controllers
by Grant Thornton found that 64 percent of public companies do not currently
report their financial results using XBRL. Of those, half have no plans to
file their financials in XBRL format in the future, despite an SEC mandate that
all public companies have to report their financials using the interactive data
format by 2011.8

To address some of the issues, in January 2015 the XBRL GL 2015 Framework was
published as a proposed recommendation, and in February 2015, the XBRL Standards
Board approved a formal working group to further development of a
syntax-independent model for XBRL 2.1 to simplify its adoption and
implementation, and to help it evolve from its XML roots to embrace new
technologies.

The American Institute of CPAs has also weighed in on the
benefits of XBRL, and provides resources for its implementation on its website.
It is also actively providing input on XBRL to the IFRS (on taxonomies), and to
the government.

Recommendations

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Within the enterprise, the
adoption and use of XBRL requires the commitment of multiple parties at multiple
levels.

  • Chief Executive
    Officer (CEO)     – Move to a data intelligence-oriented paradigm for your
    enterprise. XBRL
    is mandated for a few reporting situations, but its entry into the enterprise
    should be viewed as a chance to alter your entire data intelligence approach. Champion an enterprise environment committed to data speed, data transparency, and
    data sharing. The age of closed systems and siloed data is over.
  • Chief
    Information Officer (CIO)     –
    Whenever your enterprise creates or processes shareable data, ask
    yourself how you can speed up the process of shuttling this data between your
    own disparate systems, with business partners, and with regulatory agencies. This may involve global Enterprise Application Integration (EAI) deployments,
    the tactical use of frameworks such as XBRL, and many other discrete projects.
    Whatever the exact approach, the point is to make shareability a meta-property
    of enterprise data.
  • Chief Financial
    Officer (CFO)     – Map all current reporting processes and create a plan for achieving
    XBRL compliance within each process, making business report writers responsible
    for acquiring XBRL expertise. Doing so properly will lessen the traditional
    pressure of crunch time reporting, and transform the practice of
    financial reporting into a source of business intelligence.
  • Process Owners
    and Managers –     In highly structured situations, such as
    call reporting for banks, the path to XBRL compliance is well-trodden. However,
    there are plenty of other reporting and data sharing processes that will move to
    easy shareability in the future. Query your software providers as to whether
    their products can produce XBRL documents, and determine their vision about the
    future of data sharing, both in the financial domain and beyond. This will help
    to align your technology partner strategy with the company’s overall strategic
    commitment to data shareability.
  • Finance and IT Employees
    – There is an ongoing convergence between
    line-of-business pursuits (such as finance and accounting) and IT functions
    designed to support those pursuits. Accordingly, XBRL is a job skill that will
    be relevant to accounting and finance professionals as well as to dedicated IT
    workers. Pursuing training and certification in XBRL will allow you to take the
    front line in deploying mission-critical data reporting and exchange projects.
  • Consultants – Currently, XBRL-oriented business reporting is a niche
    practice for consultancies, but the growth of the market will necessitate
    developing or adding XBRL expertise. As XBRL becomes a foundational finance
    process, management, IT, and business process outsourcing consultants will all
    ramp up their XBRL practices. This will improve the career chances of
    entry-level consultants trained on XBRL.

Finally, all concerned need to concentrate on providing high-quality data, rather than wasting energy fighting the XBRL mandate.
Only then will XBRL’s full potential be achieved.

References

1-3 XBRL International.

4 “Persistent Errors Inhibit Consumers from Using XBRL Data” Hitachi Data Interactive.
February 13, 2013.

5 “An Evaluation of the Current State and Future of
XBRL and Interactive Data for Investors and Analysts.” Columbia Business School. December 2012.

6 Letter from Congress to the SEC.

http://oversight.house.gov/wp-content/uploads/2013/09/2013-09-10-DEI-to-White-re-Interactive-Data-Rule.pdf.
September 2013.

7 SEC Order to Allow iXBRL.
http://www.sec.gov/rules/exorders/2016/34-78041.pdf.

8 "Companies Expect to Defy SEC on XBRL Mandate." WebCPA.
May 6, 2010.

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About the Author

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Lynn Greiner is Vice President, Technical Services, for a division of a
multi-national corporation, and also an award-winning computer industry
journalist. Ms. Greiner is a regular contributor to Faulkner Information
Services and a member of the Advisory Panel.

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