XBRL: A Barcode for Business Reporting
Everyone of us know that barcode shows data about the object to which it attaches. This optical machine-readable representation of data, has done wonders for various industry verticals right from production distribution, supply chain, retail, healthcare, etc. right from 1974 when the very first scanning of the now ubiquitous Universal Product Code (UPC) barcode was on a pack of Wrigley Company chewing gum.
XBRL (eXtensible Business Reporting Language) is all set to do similar wonders for business reporting. In Business Reporting Supply Chain, collaboration of data is the key whether its business operations, internal or external financial reporting and regulatory reporting. XBRL is a open global standard, freely available for exchanging business information.
It is part of the family of “XML” languages which is becoming a standard means of communicating information (tagged data) between businesses on the internet. There is an XBRL specification which tells you how to use XBRL. Hinges on taxonomies is the dictionary of terms for business reporting, which includes financial statements. XBRL is Extensibile XML (Extensible Markup Language).
XBRL began with the idea of a single individual – Charlie Hoffman, from a small CPA firm in Tacoma, Washington. XBRL is a language for the electronic communication of business and financial data which is set to revolutionize business reporting around the world. Better information leads to better management… better governance… better markets. XBRL helps get right information at right time. For example in an Bnaking industry, XBRL helps reduce number of days to update financial information from 11 to a day or two. And reduce time spent on mechanics from 90& to 10%, so that most of the time is available for analysis which is better for banks and reduce risk.
The transaction standards and financial statements are improved and streamlined with XBRL. Companies, financial publishers, data aggregators, investors, trading partners, managememnt accountants, auditors and regulators all are the participants of the business reporting supply chain and one and all can benefit with XBRL. Companies use XBRL to standardize financial info that supports the assessment of their portfolio of risk (that arises from dynamic pricing, M&A, etc.)
The idea behind XBRL is smart data. Instead of treating financial information as a block of text and numbers in a web page view or a PDF file, XBRL identifies each individual piece of data with identifying tags. The tag is based on a standardized list of accounting terms, technically described as taxonomies. For example, the Gross Profit number of Rs.950 million for the 1st quarter of 2011 might be tagged with ‘Rupees’, ‘Gross Profit’, ’1st Quarter’, and ’2011′. These XBRL tags are computer readable and remain connected to the specific piece of data. The power of tagged data becomes important when for example, a comparison is made of gross profit across all industry competitors. Finding the data, comparing, and analyzing the data is much more efficient if it is in XBRL format.
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.
XBRL is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world.
Now, XBRL is all set to revolutionize business reporting through electronic communication of business and financial data. The old days of accountants issuing static reports which required laborious and costly processes of manual re-entry and comparison to work with the data shall soon come to an end. XBRL helps treat data ‘intelligently’: recognize the information, select it, analyze it, store it, exchange it with other 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.
For more information on XBRL visit http://www.maia-intelligence.com/products-xbrl.htm