The eXtensible Business Reporting Language, commonly referred to as XBRL, is a variation of the eXtensible Markup Language (XML), which allows for the exchange of different types of digitized information. A user-friendly markup language, XBRL does not require any previous XML experience or a background in information technology (IT).
The global standard, established by the XBRL International consortium of more than 600 companies, is used by more than 8,000 companies worldwide. The effort began in 1998 with the goal of facilitating standardized business reporting.
Among those sectors actively using XBRL is the financial services industry for exchanging and sharing financial data electronically. The usage of XBRL allows firms to exchange information such as financial statements and earnings releases. By encoding this information and transmitting data electronically, XBRL is intended to increase functionality and efficiency, making it easier to compare and sort financial information.
For example, EDGAR Online, the electronic corporate filing system of the SEC, uses XBRL for data exchange; all publicly traded companies use EDGAR when submitting reports and data to the SEC. In fact, financial regulators across the globe are pushing companies to file with them via XBRL. Corporations are also likely to use XBRL for accounting purposes as it has been adapted for use with the Generally Accepted Accounting Principles (GAAP), the international set of common accounting principles, standards and procedures used to formulate financial statements.
Although the Federal Deposit Insurance Corp. (FDIC) was among the first to use XBRL, people in the business reporting industry, auditors and financial analysts have since widely accepted the language.
How XBRL Works:
- XBRL assigns tags to identify the financial data in a digitized financial statement. The XBRL tags can then be read and gathered via software. At the same time, the XBRL tags normalize company-specific terms, making information global and accessible across companies.
- A group of these encoded tags or major elements can be referred to as taxonomies.
- The preparation and matching of financial information is called mapping.
- Once this process is complete, the XBRL-encoded document is often referred to as an instance document, which must be reviewed before it is released.
- XBRL works with other XML markup languages such as XLink, which creates hyperlinks in XML documents, and XPath, which is a query language used to navigate via elements and attributes in an XBRL document.