XBRL in Plain English: Understanding An Important Business Content Standard

The eXtensible Business Reporting Language (XBRL) is a language for the electronic communication of business and financial data which is revolutionizing 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. It is one of a family of “XML” languages which is becoming a standard means of communicating information between businesses and on the internet.

XBRL is being developed by an international non-profit consortium of approximately 450 major companies, organizations and government agencies. It is an open standard, free of license fees. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world.

Case Studies

• The National Bank of Belgium
• The Bank of Japan
• The Bank of Spain
• The Tokyo Stock Exchange
• The FFIEC and US Banking Regulation

Demonstrations

• Deutsche Börse Demo
• KOSDAQ Stock Market XBRL Demonstration
• Earnings Release in XBRL

A Simple Explanation

The idea behind XBRL 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, creating computer-readable and consumable content. For example, company net profit has its own unique tag.

The introduction of XBRL tags enable automated processing of business information by computer software, cutting out laborious and costly processes of manual re-entry and human comparison.  Computers can treat XBRL data “intelligently”: they can recognize the information in a XBRL document, select it, analyze it, store it, filter 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, sort, compare and analyze 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 natively in XBRL by appropriate software.

To learn more about XBRL see: How XBRL Works and Benefits and Uses. A short video clip is included below to help you understand the standard and why it’s needed.

[Source: XBRL International]

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