Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Practical pointers to XBRL basics and beyond. By Jay Hammond

by
21st Feb 2007
Save content
Have you found this content useful? Use the button above to save it to your profile.

XBRL or eXtensible Business Reporting Language is gaining recognition within the financial world as well as beyond it. Unfortunately, while many more people have heard of XBRL, describing it further, not to mention demonstrating it, has proven a greater challenge to overcome.

XBRL is a variant of the eXtensible Markup Language (XML), adapted for financial reporting. There are two types of XBRL file: taxonomies and instance documents. Taxonomies define the structure, classification and relationships of the data presented in the instance documents. Think of them as a sort of gigantic form which provides the rules for completing instance documents. Instance documents, in turn, are the files containing the data from a particular organisation during a specific time period. Several organisations offer a more thorough overview of XBRL instance and taxonomy documents, including the International Accounting Standards Committee Foundation (IASCF) and XBRL Australia. Training material intended for technology professionals and software vendors, available from KPMG.

As with HTML, reading raw XBRL can be difficult. The use of an intermediary application, such as a browser or viewer, makes the text easier to read by translating the markups or tags and using them to determine how the text should be displayed. There are a variety of XBRL viewers available including, among others:

Each of these free viewers/readers/browsers converts the raw XBRL files into something readable. What can be done with the information within the viewer varies. Further, none of these applications are editors. They can be used only to view already created XBRL files, not create new files or edit the data of existing files. Additional functionality is available from commercial applications, some of which are also editors.

Currently, the financial world is focusing on developing the taxonomies to make it possible to create financial instance documents. National taxonomies are being created to reflect each country's accounting rules and regulations and international taxonomies are being developed by the International Accounting Standards Board (IASB) and XBRL International.

XBRL International officially recognises "approved" and "acknowledged" taxonomies, which are listed on the body's website, which also includes information on the international recognition process.

DecisionSoft also provides taxonomy documentation for International Financial Reporting Standards (IFRS), UK-GAAP and US-GAAP, with links back to XBRL International. In addition to the Approved and Acknowledged taxonomies, several jurisdictions have taxonomy projects in various stages of development.

Most users, particularly those who are not accounting or finance professionals, and those just beginning their exploration of XBRL, will be more interested in instance documents containing data and information about a specific organisation. One place to get a quick look at how XBRL is being used today is the SEC’s Interactive Financial Report Viewer. Here users can select files submitted by participants in the Voluntary Filing Program and view unaudited and unreviewed financial data. Although there are a variety of companies and reports available, the interactivity of the data is limited in the viewer. At the same time, users do not have to download the application in order to use it.

Examples with more interactivity are available from Ernst & Young. Clicking on one of the Example Links will allow users to manipulate the somewhat limited sample data. Additional demonstrations of XBRL in action are available from XBRL International. These demonstrations walk users through some typical uses of XBRL, but do not allow users to use data other than that provided by the demos.

The downloadable viewers come into their own for anyone who wants to explore the potential of XBRL for themselves. Some viewers require users to download the appropriate taxonomy file (from XBRL International, DecisionSoft etc) in order to read instance documents. Once you have exhausted the possibilities of demo data files, you will need to locate and import financial reports to your viewer. The IASB has samples and test data - or you can prepare instance documents of your own with an editor or application that can output XBRL files.

Those interested in XBRL for research purposes, for example to comparing the performance of different organisations or industries or drilling into more detailed company information, might wish to consider BusinessWire’s EarningsDirect, which uses a PDF file containing XBRL tags, or EdgarOnline’s I-Metrix services. Unlike the previously mentioned viewers, these are commercial services and not free. They do, however, offer more extensive training and support, not to mention access to considerably more data and instance documents from a single location than the viewers.

Several software vendors offer applications for the creation of instance documents and the editing of taxonomies. One of the advantages of XBRL is that it can be tailored to the needs of the users, both at the viewer and more extensively at the developer level. A list of software vendors offering commercial XBRL editing applications and consulting services is available through XBRL International. These are the service providers and applications that organidations should consider when planning an XBRL implementation.

The best way to learn about XBRL is to explore it. The current race to develop taxonomies in nations and jurisdictions around the world has sparked interest even among those who will never be involved in an XBRL implementation or the development of an instance document. Fortunately, tools are now available to assist such users in understanding XBRL. These same tools can provide a low-risk starting point for those who will be involved in implementations and instance document creation. They can also lead to a valuable discussion abot the practical uses of XBRL for a variety of purposes.

Tags:

Replies (4)

Please login or register to join the discussion.

avatar
By bseddon
22nd Feb 2007 19:02

Keep your hair on!
I don't understand such outright hostility to XBRL. It may come from a lack of information so it's great to see Accounting Web doing their bit.

Yes, "raw" XBRL probably is for larger companies and XBRL is likely to offer the biggest benefit to investors through the improved transparency it promises. Isn't it fantastic that our pension fund managers will be able to make better (well better informed) decisions when thinking about investing our cash?

However, the notion that small companies will be hit by an XBRL broadside come 2010 is, to me, not credible. XBRL is a middleware technology that is and will be invisible to end-users. When you entered your last CT600 on-line, you were creating an instance document. Did you notice? Of course you didn't. When, as an owner of a 20 person company, you download the PDF file for audit exempt companies from the Companies House web site, filled it in and submitted it, did you know that you are creating an XBRL instance document. Of course not.

The benefit of XBRL in these scenarios is to the HMRC and Companies House respectively. They hide XBRL behind user interfaces. You can argue about the quality of the interfaces provided by these organisations but their quality is not affected by XBRL.

As an aside, one of the challenges both HMRC and Companies House face when collecting accounts from companies (XBRL-based or otherwise) is wording in the Companies Act which is interpreted to mean that the accounts submitted have to be in the same form as the ones agreed by the board. Clearly bytes and sheets of paper are not the same form.

I have no doubt that by 2010 it will be possible for small companies to submit electronically their accounts that accompany their CT600 in much the same way that audit exempt accounts are submitted to Companies House today. Of course this service may only meet the needs of "ordinary" companies. But if your company is not ordinary, you probably have to employ accountants and incur significant cost anyway.

Finally, there maybe 3,000+ items in the IFRS GAAP taxonomy. But this taxonomy is just a codification of the IAS standards. So companies that are reporting in compliance with these standards today, have to know how they work and have to deal with this number of items (or know their sub-set) today.

With three year to go, there's plenty of time for the accountants that are likely to be affected to learn about the taxonomies. Looking at the raw schemas will, of course, be daunting but so would the HTML for this web page but there's not need to look at the information in such a raw form. Get to know the taxonomies by using one of the viewers, for example the one on the IASB web site. There maybe a lot of elements in any given schema but they are what any accountant would expect and organised the way any accountant would expect them to be organised. After all, these taxonomies really have been prepared by accountants for accountants.

Thanks (0)
avatar
By plega
23rd Feb 2007 10:51

XBRL isn't hard for small companies
First, a disclaimer. My company (DecisionSoft) develops XBRL-based software so, naturally, I'm pro-XBRL.

But we are a small company, with fewer than 30 staff, and have ourselves already gone through the XBRL filing process. Our external accountants prepared the corporation tax comps using the Forbes software, and sent a printed version to me for approval - exactly the same process as the year before. Forbes generated the filing documents (with the tax comps in XBRL) and posted them online without anyone ever having to see the XBRL - I know I didn't. This is the same process that thousands of other small companies will go through in due course - and I really don't expect that they will ever know they are using XBRL, any more than payroll clerks filing their PAYE returns at the end of the year know they are using XML.

Thanks (0)
avatar
By User deleted
22nd Feb 2007 16:45

Just not workable - Part 2
And this for a draft standard for which the previous draft contained 1783 key elements; now at 3,486 key elements. Thisnumber will only get bigger as drafts are expanded to handle more business types.

Yet small businesses that can now produce Corpn Tax Returns and Annual Accounts in a day using tools like MS Excel will be expected - no required - to take the time and effort to understand XBRL, its structure and use. Then to troll through 3,500+ key elements looking for the 200-300 elements that they need.

This is a dream - no a nightmare!

I myself have over 20 years experience of software and its development and over 30 years in preparing accounts for large and small businesses. I understand programming, IT analysis, XML, XSL etc. so I am not new to reading such documents. Yet when I look at XBRL I am horrified by its complexity, bloat and its complete un-usability. It lacks any consideration for the MAJORITY of users that will need to compile and build XBRL documents.

Then in addition from all this effort and cost, I believe, small business will receive NO benefit at all, other than to satisfy the mandatory demands of Government Departments. I even doubt that the tax inspectors will know what they are looking at when it comes to using the annual accounts submitted in such a manner. For the quality of such accounts will be poor, given the absurdity of the XBRL draft standard as it stands.

What I would like to see is some realism in the XBRL standards that are focused on producing real benefits for the majority of future users. That is the small business.
Not XBRL standards derived by those with the most to gain from their imposition on a disparate user base, that at the moment does not have a voice.

Small business must wake up to this threat before the 2010 deadline in order to avoid a major catastrophe.

Thanks (0)
avatar
By User deleted
22nd Feb 2007 16:44

Just not workable! - Part 1
This article is yet another sales job for something which yields no benefit for those small businesses that will be compelled to use it from 2010 onwards!
And that is the majority of users, given the large number of small businesses when compared to large organisations.

Yes - large organisations and stock markets may like it; although the inconsistency of the data will produce a lot of dangerous and unstable business decisions

Yes - large accounting firms and consultancies will definitely love it, as for them it is seen as a brand new income stream

Yes - HMRC may like it as they can reduce manpower in 2010 and beyond when they make it mandatory for companies to submit accounts and Corpn Tax Returns in XBRL format.

But - for 95% of businesses (under 20 employees) this move by HMRC/Companies House to impose XBRL on them for Corporation Tax Returns and Annual Accounts will be a nightmare that will greatly increase the costs of these annual events.

What is more if you look at the development of the XBRL standard, it does not take long to realise that big business, large software houses and large accounting firms (those driving the development of the standards) have a vested interest in making the taxonomy and standards as complex as possible. So that they become the only people who understand it and thereby stand to create a lot of money out of the use of XBRL by small business when Government bodies make its use compulsory.

What is my proof for this - take the XBRL GAAP draft standard published 15 May 2004; using the smallest font size available still takes 700 pages to print the 5 XSD/XML files that specify this standard.
In an introductory document dated 13 June 2004; I quote -
" ... the UK GAAP taxonomy was aimed at a user base which was going to be looking for, say 200-300 key elements out of a generic taxonomy of 3,500..." – that’s less than 10%.

Thanks (0)