XBRL: XML That Aids Compliance Efforts

If you have not heard of it yet, there is an initiative gaining traction in the financial world called "eXtensible Business Reporting Language", or XBRL. The XBRL Consortium describes it as follows.

"XBRL is a language for the electronic communication of business and financial data which is set to revolutionise 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."

"The idea behind XBRL, eXtensible Business Reporting Language, 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. This is computer readable. For example, company net profit has its own unique tag.

The introduction of XBRL tags enables automated processing of business information by computer software, cutting out laborious and costly processes of manual re-entry and comparison. Computers can treat XBRL data "intelligently": they can recognise the information in a XBRL document, select it, analyse it, store 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, compare and analyse 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 in XBRL by appropriate software."

Some of the global projects underway, as reported on the XBRL Site, include

North America
Regulatory reporting by US banks - The Federal Financial Institutions Examination Council (FFIEC) is adopting XBRL for call reporting by US banks. The "FIND" webside gives details of the progress of this large project.  

Europe
Regulatory reporting by UK financial services companies - The UK Financial Services Authority (FSA), which is responsible for regulating all financial services companies in the country, is adopting XBRL for all regulatory reporting.  

Asia and Pacific
KOSDAQ pilot project for Korean company results - A KOSDAQ Stock Market pilot project has led to the creation of an innovative web service through which investors and others can analyse the performance of companies listed on KOSDAQ.

For companies working on compliance with Sarbanes-Oxley, BASEL II, HIPPA, etc, XBRL is worth taking a look at. There are over 250 member organizations that include the Big 4 Accounting firms and IBM Business Consulting Services (formerly known as PricewaterhouseCoopers Consulting).