XBRL stands for eXtensible Business Reporting Language. It is a common, global language to label data used worldwide in business reporting. XBRL was developed by XBRL.org, an international consortium of companies and organisations. Their member includes many large accounting firms and institutions, such as AICPA (American Institute of Certified Public Accountants), IASB (International Accounting Standards Board), and the CICA (Canadian Institute of Chartered Accountants).
I believe there are three reasons that company should use XBRL:
First, XBRL meets the need to exchange accounting information with a digital standard. As an investment consulting company, we have to collect data from financial statements prepared in various formats such as xls, pdf, html, doc etc. With XBRL tag, computer software can easily collect, process and distribute all the financial information, and achieve more efficient internal processes.
Second, XBRL offers cost saving and improves accuracy of financial information. By reducing the time to re-enter the information collected and limiting the error of data entry, company can provide accurate and reliable business information.
Third, XBRL allows simplified data selection and comparison. Since gathering data is more easy and efficient, we can spend more time comparing and analyzing information, and provide more valuable and timely information to our clients.
As a standardized language, XBRL is mainly used for collecting, processing and distributing financial and business information between business and on Internet. By adding unique identifying tags to each financial data, showing the relation between the data, computer software can easily search, select, analyze, and publish the data.
There are two methods to implement XBRL depending on the complication of business report and financial information: use taxonomy created by another entity, or develop and publish your own taxonomies. The latter could involve the following steps from my research at http://www.xbrl.org/CaseStudies/:
- Identify the goal of implementation of XBRL;
- Set up a working group including accountant, financial analyzer, computer specialists with experience in system analysis, and software vendor;
- Join XBRL jurisdiction Canada for more support;
- Study the business process and flow of information, determine what information needs to collect and exchange, how it should be standardized, and develop an XBRL taxonomy to categorize data file;
- Present a draft taxonomy to XBRL jurisdiction for review or comments and any improvement;
- Test, modify and publish;
- Maintenance and upgrade;
In order to stay up to date on XBRL standards, accountant can join in the local XBRL international membership; take part in training or information session hold by jurisdictions and member organisations; and check on latest news on XBRL at http://www.xbrl.org/LatestNews/.
