The XBRL Revolution
The Institute of Management Accountants calls it the most significant thing to hit the accounting and finance profession since the invention of the spreadsheet. The AICPA, SEC, and other regulatory bodies are racing to implement it as fast as they can. It's called XBRL or Extensible Business Reporting Language.
XBRL is rooted in XML – Extensible Markup Language. XML uses a set of tags to describe the specific data. Now that the data is tagged with a specific description, the user can pick and choose which data to download. All of the detail contained in a set of financial statements is coded, telling you exactly what it is. For example, the net accounts receivable balance is tagged so that users can extract only this bit of information off the financial statement. All users (investors, regulatory agencies, internal managers, analyst, etc.) will be able to pull off exactly what they want from one extensible coded financial statement. And all types of applications can read XBRL.
Some key points about XBRL :
- XBRL is a standard for preparing, publishing, and analyzing financial statements for both public and private companies.
- XBRL is freely licensed so that software companies and various operating platforms can adopt the XBRL format.
- XBRL does not change any existing regulatory reporting requirements.
The SEC has already setup an XBRL repository within EDGAR Online. Vendors like ekeeper.com have released tools for converting to XBRL. Software vendors are starting to incorporate XBRL into their financial reporting applications. The big ERP vendors, like PeopleSoft, have joined the XBRL Consortium.
Some of the major applications scheduled to roll out for XBRL include:
- Enabled consolidation engines to streamline the consolidation of financial statements.
- Conversion and Web Based Tools for pulling multiple financial sources into one single repository.
- Due Diligence Tools to streamline M & A Analysis.
XBRL will change how financial statements are prepared and analyzed. All users in the supply chain will expect XBRL financials. Therefore, financial professionals everywhere need to understand the coming XBRL revolution. For more information, visit www.xbrl.org .
Written by: Matt H. Evans, CPA, CMA, CFM | Email: firstname.lastname@example.org | Phone: 1-877-807-8756