Developing a critical understanding of eXtensible Business Reporting language

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This report summarized a general overview of XBRL (eXtensible Business Reporting Language) as a language used in electronic communication of business and other financial data, revolutionizing business reporting around the global world. (Efendi, 2009) XBRL authorize automatic exchange and removal of financial data across software technologies and formats, including the Internet which reduced costs that acquire needed financial information and facilitate logical processes more accurately.


The aims and objective of undertaking this paper is to provide a critical understanding about XBRL (eXtensible Business Reporting Language), with its benefits and to evaluates on the need for development of a business reporting language, why companies should adopt XBRL and to the extent of whether XBRL should be voluntary or mandatory.


In April 1998, ''Charlie Hoffman'' a Certified Public Accountant (CPA) who worked for a small firm in Washington USA had the idea and the founder of XBRL (eXtensible Business Reporting Language) as a way of transforming business reporting data both external and internal, for annual and quarterly reports as well as regulatory fillings as proposes using the XML (Extensible Markup Language). XBRL is an XML based framework uses as a means of communicating business information and practices in exchange of financial reporting standard across technologies and software including the internet, which provides financial society a standardized method to prepare and circulate in a variety formats that automatically exchange financial statements of publicly held companies. (Ahrendt, 2009)

Therefore the idea was rapidly supported by AICPA (American Institute of Certified Public Accountants) in developing primary prototype, afterwards financial support was granted and steering committee was establish in order to setup a proscribed development of XBRL technology. Companies with different background like auditing, accounting firm and software developing companies joined the XBRL committee as an increase in regulatory authorities mandating XBRL. (David, Dean and Murali, 2008)


The prospect for XBRL is inclusive with its challenges. Issues facing the XBRL implementers are discouraging changes and development required in European versions of consolidate accounting standards under GAAP (International Financial Reporting Standards) which can affect listed company entities and estimate system development costs for universal banks. The aim of this change is to grant consistency and intelligibility in the financial reporting information. (Waldt, 2004)

XBRL has previously become mandated within various countries, the US Securities and Exchange Commission (SEC) has instituted voluntary XBRL filing. The prospective of XBRL is that taxonomies for innovative applications of language can be consistently produced. (Brachmann, 2011) Most companies who publish their business reporting data are coded into XBRL, created as a means of communicating data into a general audience and accomplished since the XBRL is considered to be a specification for all companies and is dependable from one financial report to another. (Saeed Roohani, 2008)


5.1 XBRL (eXtensible Business Reporting Language)

A well-known standard prior to the corporate scandals derived for communication of reporting business information from an XML in-between the organizations and over the Internet. XBRL was considered as an intention of tagging and reporting business information, industrialized by an international non-profit consortium of approximately up to 450 major companies, organizations, software vendors and government agencies to meet corporate reporting needs as a royalty and license-free standard available for anyone. (Blake, 2005) XBRL is developed for use in global world using taxonomies based on IFRS (International Financial Reporting Standards) and national accounting standards of a particular country.

XML tags grant software with perspective information and aid to interpret data with multiple nested tags which provides and allows firm to congregate together their financial reporting information across its subunits, despite on the types of software and hardware being used. Therefore taxonomy anticipates in providing set of reliable XML tags, identifying different financial and non financial business information applicable in making business decisions. The goal and developer of XBRL aims to tag overall business information in relation to business reporting and decision making that would facilitate not only effective and efficient search, although it enable continuous auditing and monitoring of such information. (Wang, 2011)



Companies are yet to put into practice an XBRL reporting system to assist investors in collaborative endeavor of XBRL development, the main significant reason for the need of development in business reporting language aim to ease the aptitude of better communication in global market throughout the world. An increased exposure of information established in XBRL tags would enable Investors to have access and examines company's current statement, companies necessitate global economy standard in communicating, analysing and forecasting miscellaneous tools of business risk and to report defeat actions for better forecast, which could be more energetic. (Kernan, 2009)


XBRL specify the main benefits in preparing, communicating and analysing business information which offers greater efficiency, cost savings, improved accuracy and more reliability in business financial data and decision making process. Data pulled automatically into document and spreadsheet, reduce the need for manual reentry and ease data collection process which save time and increase the correctness of business data. (Wang, 2011)

1. Cost Saving: XBRL reduces physical effort requirement of company financial reporting data and analysis in the long run as well as financial cost. In short run, monetary companies require people to accomplish set of physical input work designed for unique data, altering system and educating staff increasing the cost of primary period described as setting up cost.

2. Automation: XBRL computer software can search, restore and access financial data analysis automatically without physical input and data allocation. Business information and accounting transaction can be immediate products as the action is being taken.

3. Reliable and Accurate: XBRL create company's financial reporting data more reliable and accurate, upon when system software accuses the most creating procedure in reporting data.

4. Quality of decision making and better information: Financial information is well structured as XBRL formatted, computer improve accurate and provides certain force of supportive financial data analysis. Decision making improved when taking into consideration the availability of further reference financial information than the software.

5. Faster: Companies frequently store their financial data over web server as well as financial bodies and to access faster XBRL formatted information over the internet other than physical work. (Kehrer, 2011)


The adoption of XBRL give companies chance to establish innovative efficiencies into their financial reporting workflow, avoiding unnecessary tasks through automating information extraction and increase the correctness through validation of both semantics and syntax. Therefore, there are areas which companies should considered in XBRL adoption before they are being mandatory to do so by the Securities and Exchange Commission. (Henson, 2009)

1. Competitive Advantage: Most companies have a minor competitive advantage during easy access to securities market, as investors are capable in accessing XBRL tagged business filing easily and more quickly which could lead to better potential investors and audience of the company.

2. Learning Curve: Early adoption of XBRL by the companies would pass through learning curve prior to their competitors.

3. Software Tools: Most companies consider XBRL adoption to conclude if they choose to out-source their XBRL performance attempt or in-source the attempt by carrying out the work internally.

4. Internal Data Use: Companies which adopt XBRL data tagging system within their financial reports can access information electronically and increase the validation, persistence, usability and context of financial information in other applications. I.e. suppose a company tags its financial data within Hyperion, it could feed data to tax software, excel spreadsheets, internal reporting software and could gain more efficiency and accuracy while reducing costs.

5. Investor Communication: Companies adopting XBRL early would notify their account to public investment more quickly and systematically than their non XBRL counter parts which could be more visible to investors and others. (Henson, 2009)

5.5 XBRL AS A Mandatory

From the research point of view, I would suggest that XBRL adoption should be mandatory where as most business looks to adopt eXtensible Business Reporting Language practices into their company to access listed products and services obtainable through national jurisdiction, which are a non-profit entities intended to promote XBRL among domestic business and allocate taxonomies that helps business quickly to compile tax and business reports into language that is governmentally acceptable. XBRL has been deployed and worn throughout the global world; it plays the role in communicating business financial information both internal and external to the stakeholders and management, and offers a method of communicating barrier caused by mismatched business data and software; provides a universal language for developers to enable their products and services to communicate directly through Internet technology and provide business information consumers directly to access information in the report and of immediate use in logical software for decision making. (Alison and Mike, 2003)

Portfolio analysts and managers could gain direct access to information from companies without any intermediaries in providing data made available to them in working form, as they can easily, rapidly and accurately company data provided by third parties.


Microsoft is developed among members of Securities and Exchange Commission's voluntary filing program with their primary XBRL filing in 2005. Chris Liddell (Microsoft's CFO) joined the SEC Committee in 2007 based on the improvement in financial reporting and challenged internal team to create idea about developing site which could summarize and merge company's relevant financial information from different public communications (Kirk, 2007). Microsoft was recently a long time supporter for several years involved with XBRL development in improving financial disclosures and delivery of company financial information.

Microsoft unveiled investor central in 2008, designed in helping investors understand business strategies and financial results. The major benefit of XBRL in Microsoft provides timely and evident company's financial data to investors and to decrease the chance of errors release in the financial information, which could give Microsoft more flexibility in selecting taxonomy elements.

Microsoft supports both its investor central as well as traditional investor site powered by XBRL, which the company could merge the sites once it creates an expressive, efficient and acquiescent way in presenting the information. Therefore, at present there are incremental works concerning the needs in maintaining the sites, expected to make more efficient the procedure of populating investor site and free up resources. XBRL inhabit financial information in its Microsoft's investor relations and financial results in context with its Management's Discussion and Analysis and footnote disclosures, allows directly in financial statements and for viewers to perceive full story behind numbers. (Naumann, 2004)


Online financial reporting has developed into an attractive technology in financial company, which provides a strong background to enable potential investors, to release to the public online reporting and to improve the performance of financial sectors. XBRL international business reporting language communicates financial data which grant solution to difficulty in current business activities and envelop tools used in providing financial data in relation to the financial condition and performance of the companies to stakeholders. Therefore the growth of taxonomies consumes time and resources, most were undertaken by volunteers with a scene to plan issues and complete tasks.