The XBRL committee, an AICPA-led consortium of more than 50 accounting firms, financial services providers and technology companies, in July released XBRL for Financial Statements, a formal specification of the extensible business reporting language for implementation in the United States. (See “Comments Encouraged on Newly Named XBRL,” JofA, June00, page 14.)
By using electronic “tags” to identify financial data elements, XBRL dramatically reduces the processing time and expense normally associated with producing financial reports. The specification provides detailed information that technical specialists need to construct XBRL-based systems and data structures.
At the same time, the committee released the first XBRL “taxonomy,” which is intended for use by commercial and industrial companies reporting according to U.S. GAAP. An XBRL taxonomy is a dictionary of data elements and definitions that meet the requirements of the overall XBRL specification. It lists and explains each data element used by a specific type of business entity. The XBRL committee is coordinating the preparation of ten more such “data dictionaries.”
Mike Willis, CPA, a partner of PricewaterhouseCoopers and chairman of the committee, told the JofA that the data dictionaries for three sectors—U.S. mutual funds, U.S. federal entities and commercial and industrial companies that use standards set by the International Accounting Standards Committee (IASC)—are at an advanced stage of development.
Use of XBRL will grow steadily. In Willis’s view, it’s not difficult to persuade decision-makers of XBRL’s advantages. In fact, he said, “The most challenging task is getting the right people in the room. Once they’ve reached that point, it’s pretty easy to get them to apply resources to XBRL.”
Like others who realize how much XBRL can do for companies, Willis bases his optimism not only on the relatively low cost associated with its implementation, but also on economies of scale expected to materialize as XBRL becomes more widely understood and accepted.
Willis foresees a pivotal role for the IASC as it increases its collaboration with the XBRL committee. “When the IASC taxonomy is issued, many countries will be able to use it,” he said, also noting that the IASC may encourage adoption of XBRL in conjunction with the implementation of its international accounting standards (IASs).
Details of the new specification are available at the XBRL Web site, www.xbrl.org.