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XBRL Tutorial
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XBRL Tutorial

What is XBRL?

XBRL is the emerging "language of choice" for financial reporting. The eXtensible Business Reporting Language, developed by XBRL International, takes advantage of new internet technologies to vastly improve how business information in financial statements is gathered, shared, and analyzed.

XBRL automates financial analysis, which is an historic accomplishment. Computers can intelligently "read" an XBRL report to select specific data, pull it into documents and spreadsheets, analyze it, exchange it with other computers, and present it in a variety of formats. This can all take place in real time, allowing users to instantly compare hundreds of companies, industry sectors, topics, and issues, with automatic updates.

The SEC and XBRL

In the United States, XBRL is still a voluntary reporting language, though the SEC (U.S. Securities and Exchange Commission) is transforming its public-company disclosure system, EDGAR, to a real-time search tool with interactive capabilities using XBRL data. The upgrade is expected to be completed within a year and will set the stage for mandatory reporting in XBRL by U.S. companies. The agency expects that errors in SEC data should be reduced to near zero, based on the U.S. Federal Deposit Insurance Corp.'s experience in using XBRL.

Meanwhile, the SEC has a voluntary program in which companies file their reports in XBRL format for at least one year and give feedback on their experiences, including the costs and benefits associated with reporting in the interactive data format. In turn, reporting companies get expedited reviews and gain early experience in using the technology.

What is XBRL data?

XBRL data is more robust, accurate, and transparent than data in financial statements that appears in legacy electronic and paper reports. Here's why: in an XBRL financial report, each piece of data (both numbers and text) is given a unique ID, based on standardized lists of accounting terms, or taxonomies. For example, a data point of $200,000 might be linked to the accounting terms "U.S. Dollars," "Net Profit", "2nd Quarter" "2006". Once data is tagged, it is computer-readable. It can be identified, verified, extracted, and reused. The tags remains connected to the data, so even when the data is used in other XBRL software, it can still be understood in its original context.

For investors and analysts, XBRL eliminates the time, labor, and errors of scouring through thick financial statements or browsing multiple websites to find, copy, and paste specific information to it into spreadsheets. It also eliminates the problem of working with outdated information.

XBRL tags both numbers and textual information, which means not only balance statements, but information such as statement of principals and even footprints, appendices, and updates, is accounted for, to aid in internal audits and external research and analysis.

XML and XBRL and what?

XML and XBRL are the programming languages used to control how data is rendered and exchanged over the internet on computers, cell phones, PDAs and other XML-compatible devices. XBRL, which stands for eXtensible Business Reporting Language, uses the XML framework to address the specific needs of the financial community to prepare, share, and analyze financial statements.

The XBRL Organization

XBRL International is a not-for-profit consortium of approximately 450 companies and agencies worldwide, responsible for developing and promoting XBRL. Starting in 1998, the groups' challenge was to develop the XBRL taxonomy. This list, or lists, of standardized accounting terms were needed to cover all types of financial reporting in accordance with the rules of accounting in each country or with other reporting regimes such as banking regulation or performance benchmarking. This is where the word "eXtensible" comes from. XBRL taxonomies can be extended to cover the specific reporting needs of many different organizations, including regulators, specific industries or even companies.

For example, the XBRL taxonomies used in the U.S. would need to apply to the United States Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). Use of the taxonomies, therefore, does not require an organization to change its accounting method; it just makes the company's financial reports understandable in a universal system. In the U.S., taxonomies there are only a few industries still awaiting the completion of their taxonomies, which are expected to be accomplished by end of 2007, so most companies can use XBRL if they haven't started already. It should be noted that Europe has played the leading role in XBRL implementations, including Holland, Spain, and Belgium. The Dutch Government is about to implement nation-wide XBRL reporting by all businesses as well as (semi-)government organizations.

Using XBRL: recommendations for getting started

Get XBRL analytic software
A growing number of XBRL programs are available for using interactive data, from standard desktop software such as Microsoft Office, to Cartesis 10, to advanced proprietary systems such as the I-Metrix suit of XBRL products and services. They are the only analytical tools currently available that can instantly and automatically aggregate XBRL data. They automate and facilitate deep company and industry analysis including benchmarking, peer analysis, valuation modeling, scenario testing and contribution analysis.

Get access to XBRL data
Presently, EDGAR Online is the only source for current and historical XBRL data on from over 10,000 publicly-traded U.S. companies. EDGAR Online automatically extracts financial data from SEC filings in real time and formats it into XBRL. This enhanced, interactive data is available in real time to financial professionals via online subscriptions. It covers a broad spectrum that includes fundamental data, institutional holdings, insider trades, IPO/SPO registrations, and access to global annual reports and conference call transcripts.

Join the XBRL organization
Interested companies and agencies are encouraged to join the XBRL International consortium where companies can benefit from an active knowledge exchange.

Create your own XBRL reports
To generate your own XBRL data, a company can either create its own application or outsource the task. (Creating your own application is not recommended, unless you are prepared to support and upgrade the application.)

Companies, such as RR Donnelley, already provide complete solutions for public companies' EDGAR and SEC online filing needs. They can generate financial statements for immediate participation in the SEC XBRL Voluntary Filing Program. (They also offer their clients software and web-based services for working with XBRL data.)

Other software vendors like Adobe, EDGAR Online, Microsoft, Oracle, Fujitsu and Hitachi, DecisionSoft, DynAccSys, Rivet Software, Semansys and UBmatrix also provide a range of XBRL solutions and services.

A number of ERP providers offer conversion tools, including SAP, Hyperion, and Cartesis It should be noted that using these tools requires a company to have some understanding of XBRL and how to map the more than 1800 labels in the XBRL taxonomy, or to extend the list for internal use, in keeping with the U.S. GAAP (Generally Accepted Accounting Principles).

There are a number of XBRL document readers available that simply translate financial data into XBRL format, and news distribution companies such as PR Newswire and Business Wire will distribute their financial information in XBRL format for a fee.

Join the SEC's voluntary filing program
Contact the SEC for information on participation in its voluntary reporting program. Take advantage of lessons learned and lessons shared, while XBRL financial reporting is still voluntary and while XBRL reports are given expedited reviews.

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