Tap Into XBRL’s Power the Easy Way

The Microsoft Office Tool for XBRL benefits all financial reporting participants.

BY JEFFREY W. NAUMANN
May 1, 2004

BRL—a specialized form of XML (extensible markup language)—is becoming more familiar to creators and users of electronic financial statements, but few people have actual hands-on experience with it. So, to bring XBRL to a wider business audience, Microsoft Corp. has released the Microsoft Office Tool for XBRL—a free, but important, enhancement—for the 2003 versions of Excel and Word.

Along with the AICPA and more than 200 other organizations, Microsoft is a member of XBRL International Inc. ( www.xbrl.org ), a nonprofit group that promotes use of the extensible business reporting language to improve financial reporting.

This article explains how to obtain, install and use the tool to create an XBRL-compliant Microsoft Office file. It also explains what XBRL is and why it’s important to CPAs, their clients and employers (see “ XBRL: A Business Reporting Standard ” and “ Why XBRL Matters ”).

XBRL : A Business Reporting Standard
To appreciate the tool’s usefulness, it’s important to have some understanding of XBRL, which is the XML-based standard for identifying—and improving the accuracy and electronic communication of—complex financial information. XBRL is a computer programming add-on that tags each segment of business information with an identification code or marker.

XBRL International Inc., a nonprofit global consortium of more than 200 companies, associations—including the AICPA—and government agencies, has developed XBRL as a royalty-free, open software specification ( www.xbrl.org/whatisxbrl ). Version 2.1—the most current specification, or full description, of XBRL—is available for review and comment at the organization’s Web site, which also contains information on the different roles XBRL can play in various business contexts.

Users can download the enhancement from the Microsoft Web site ( www.microsoft.com/office/solutions/xbrl ) at no charge and easily install it. Immediately afterward, they can create or use worksheets and documents that employ XBRL to speed data input, ensure accuracy, eliminate ambiguity by specifying the precise nature of each data element and thus simplify the exchange of financial information. The tool benefits not just CPAs but all participants in the financial reporting process, including reporting entities, regulators, financial institutions, rating agencies and individual and institutional investors, and improves data sharing among the various systems—financial, tax and other—they use.

An example of the growing support for XBRL was the 10-year, $39 million contract the Federal Deposit Insurance Corp. awarded in 2003 to Unisys Corp., which, with the assistance of PricewaterhouseCoopers, Microsoft Corp., EDGAR Online Inc. and other technology companies, will use XBRL and other tools to modernize and streamline federal bank regulators’ collection, processing and distribution of banks’ quarterly financial reports.

Why XBRL Matters
There are several reasons why CPAs—who often must follow relatively inflexible processes—could benefit from a new means of working with financial data. Among these motivations are their need for greater

Accuracy. Imprecise, inconsistent and unreliable values are common results of transferring data in ambiguous formats, such as those in which values are separated by commas or other characters. Because XBRL transcends the limitations of such data formats, it eliminates errors that occur during data re-entry and it minimizes the risk of losing “metadata,” or verbal descriptions of individual data elements.

Efficiency. Because XBRL data contained in one document or system can be easily shared with another without being rekeyed, exchanging information is swift, easy and error-free, resulting in immediate productivity improvements for all involved parties. In addition, XBRL can be used with software and data on any computer operating system or hardware equipment.

Transparency. Due to the consistency of their formatting and identification, XBRL data do not vary from the time and place of their creation to their eventual destination and use—whether it be public record or another purpose. XBRL therefore can help CPAs play a strong role in helping public companies satisfy the strict financial reporting obligations the Sarbanes-Oxley Act of 2002 has imposed on them. Section 409 of the act requires companies to “disclose to the public on a rapid and current basis…information concerning material changes in the financial condition or operations of the issuer.” CPAs can provide a valuable service to their clients or employers by helping them implement XBRL-based reporting capabilities that automatically facilitate compliance by aggregating such information for review and distribution.

BE A CREATOR, A USER OR BOTH
The Microsoft Office Tool for XBRL enables users to both create and use documents formatted in XBRL. Many participants in the financial reporting process likely will employ one of these functions more often than the other. For example, producers of quarterly earnings reports will benefit from the tool’s creation functions, such as those used to characterize earnings data by “tagging” them with a contextual format—known as a taxonomy—that corresponds to a series of principles or definitions, such as U.S. GAAP. On the other hand, analysts of existing financial information will find it advantageous to use the tool to, for example, compare several of a company’s earnings statements. Of course, both capabilities are available to everyone using the tool.

Exhibit 1 depicts the current way—without XBRL—electronic financial information flows from an organization’s finance department to regulators, analysts, investors and other interested parties. Companies first submit plain-text financial reports to the SEC. They then convert those documents’ data into hypertext markup language (HTML) format and post them on the Web for public viewing. Finally, companies reconvert those data into various formats that enable investors and financial analysts to scrutinize key performance indicators and other criteria. This fragmented process is both labor-intensive and error-prone.

But exhibit 2 shows how—with the aid of the XBRL tool—companies can transmit their financial data accurately and directly from their enterprise resource planning software and other systems into XBRL-enabled worksheets that are more quickly available for review by third parties.

In fact, with the tool automated processes pull these data from various designated systems directly into Excel-based and Word-based document summaries, such as financial statements that users can organize for analysis. These same documents also can be readily exchanged between disparate data repositories, such as finance and tax systems. It is easy to see the tool’s advantages over the current, largely manual process of manipulating various data formats.

ALL IT TAKES IS A FEW SIMPLE STEPS
After downloading the tool and installing it on their PCs, CPAs can begin the process of “marking up,” or converting, a document to an XBRL format that meets the requirements of the specific information with which they want to work.

Gain access to required resources. To create an XBRL “instance document”—that is, an XML file containing financial data marked up with XBRL, or an XBRL-compliant Excel worksheet or Word document—a user of the tool must have access to the following resources:

A Word or Excel file containing data that are intended for the XBRL document.

An XBRL-compliant “taxonomy” for tagging the content of a given financial report.

In this context, a taxonomy is a standard description and classification system for financial data. XBRL taxonomies exist in several versions and conform to U.S. GAAP and the financial reporting standards of other jurisdictions such as Canada. They can be downloaded from the XBRL International Web site ( www.xbrl.org/resourcecenter ).

After installing the tool, when a user launches Word or Excel, the option “XBRL” appears on the menu bar, as shown in exhibit 3 .

Create a context. XBRL contexts make it possible to provide additional information about the content being marked up. Multiple contexts are permissible in any instance document. Each provides facts such as a date span for the data used, their currency type and other optional descriptive content and identifiers. This helps consumers of an XBRL document compare it and merge it with other data sources. Here’s how to create a context:

Click on the XBRL menu, and select Contexts , as shown in exhibit 4 .

This opens the Context Library dialog box. Click on the Add button to create a new context. That will open the Context Editor , as shown in exhibit 5 .

Enter information as required in each field by navigating using the left-hand task pane. Be sure to name each context by entering text in the Identifier Value field. Then click on OK to save the context.

Add and attach a taxonomy. In this step a user can select a taxonomy provided by his or her company or one downloaded from the XBRL Web site, such as the U.S. GAAP Commercial and Industrial taxonomy. To add a taxonomy, click on Taxonomies on the XBRL menu. The Taxonomy Library dialog box opens, as shown in exhibit 6 .

To add a taxonomy click on the Add Taxonomies button, name the taxonomy, select the appropriate file and click on OK . Once the desired taxonomies are in the Taxonomy Library, select one and click on the OK button. Now, on the XBRL menu, select Enable Markup . This activates the XBRL Document Actions task pane, which is on the right side of the document (see exhibit 7 ). To attach the taxonomy just added to the document, click on the Attach link at the top of the task pane.

Mark up the data. It now is possible to tag—or mark up—the content with elements from the taxonomy. This process enables metadata—that is, descriptions of data—and context information to accompany the content’s numeric values as long as they remain in the XBRL format. In this example a standard SEC Form 10-Q is shown as displayed in the tool.

The tool supports standard Excel workbook elements, such as multiple worksheets. In this illustration, only one element (Inventories, Net—a standard line item in financial statements) is tagged—as indicated by the blue cell border—and can be exported as an XBRL instance document. This example will show how to tag a single data element and export it as an XBRL instance document.

Use the cursor to highlight the cell containing the revenue amount. Then type revenue in the Select element for markup text box on the task pane. Then click on Find Next to search for a specific revenue element or navigate through the elements displayed in the hierarchy shown in the pane. From the Select a context for markup drop-down menu, select the correct context for the data in the revenue cell. Then click Apply Markup to tag the data in XBRL format, which is indicated by the blue border now surrounding the cell.

Create the XBRL instance document. After the data to be marked up have been tagged, the XBRL instance document can be created. Click on Export XBRL Document (see exhibit 4 ). Enter a file name and then save the file. The result is the XBRL instance document. That’s all there is to it.

COMPARING AND ANALYZING DATA FROM DIFFERENT SOURCES
The tool’s analytics component enables users to compare multiple XBRL documents received from public or private sources. Data tagged with the same XBRL taxonomy can be readily compared, reconciled and analyzed. Analytics scenarios are used by financial analysts, individual investors or anyone else who regularly compares financial data in multiple documents covering numerous reporting periods for an individual company or who compares single documents from several companies. An analytics scenario also makes it possible to evaluate trends in multiple versions of such documents.

Depending on the amount of historical financial data a user wants to analyze, he or she may find it necessary to subscribe to EDGAR Online ( www.edgar-online.com ), a Web site that offers—for a fee—access to all data public companies report to the SEC.

To begin comparing data, open Excel and on the XBRL menu, click on the Analytics submenu and select New Worksheet , as shown in exhibit 8 .

This will open a new workbook that is preconfigured to analyze XBRL data. Multiple worksheets are automatically created for the various tasks available in the tool’s analytics component (see exhibit 9 ).

On this screen it is possible to download XBRL content from your computer or company network, from a Web-based source or both. Clicking on Add Local Data opens a dialog box that makes it possible to load XBRL documents from the user’s PC or network. Clicking on Add WS Data opens a worksheet that links to EDGAR Online.

Using the WS Data component, it is possible to search for a company’s name or ticker symbol or an industry and narrow the search by specifying a reporting period, such as quarter or year. To download the data for selected companies, click on Get Data in the lower right corner of the screen.

After downloading the data, it is possible to perform ratio analysis, build comparison tables and illustrate a financial analysis using automated charting tools. Two screenshots provide examples. In the first one multiple companies are compared according to a single measurement criterion (see exhibit 10 ).

The second example shows one company’s financial results over multiple reporting periods (see exhibit 11 ).

LOOKING AHEAD
XBRL promises to revolutionize the way those involved in the financial reporting process create, use and analyze financial information. New reporting standards driven by market acceleration and regulatory requirements make it necessary to automate financial reporting processes.

The Microsoft Office Tool for XBRL enables CPAs and other finance professionals to improve the efficiency, accuracy and transparency of the software products they currently use.

Previous JofA Articles on XBRL
“Comments Encouraged on Newly Named XBRL,” JofA , Jun.00, page 14 and www.aicpa.org/pubs/jofa/jun2000/news_sr.htm .

“Finally, Business Talks the Same Language,” JofA , Aug.00, page 24 and www.aicpa.org/pubs/jofa/aug2000/zarowin.htm .

“XBRL Approved for U.S. Implementation,” JofA , Oct.00, page 23 and www.aicpa.org/pubs/jofa/oct2000/news1.htm .

“A Napster for Financial Data?” JofA , Jan.03, page 66 and www.aicpa.org/pubs/jofa/jan2003/spec_zar.htm .

JEFFREY W. NAUMANN, CPA, is a senior technical manager at the AICPA. His e-mail address is jnaumann@aicpa.org . Mr. Naumann is an employee of the AICPA, and his views, as expressed in this article, do not necessarily reflect the views of the Institute. Official positions are determined through certain specific committee procedures, due process and deliberation.

Resources
Microsoft Office Tool for XBRL
The tool is available for free downloading at www.microsoft.com/office/solutions/xbrl .

Conference
Tech 2004: AICPA Information Technology Conference
Will introduce the XBRL tool to attendees and help them understand how XBRL can, among other things, benefit smaller privately held companies and their CPAs.
Las Vegas, May 3–5, 2004
www.cpatechconf.com

Web sites
Along with the AICPA and more than 200 other organizations, Microsoft is a member of XBRL International Inc., a nonprofit group that promotes use of the extensible business reporting language to improve financial reporting. The group’s Web site, www.xbrl.org , provides the following information:

An overview of XBRL’s functions and capabilities ( www.xbrl.org/whatisxbrl ).

A resource center with separate sections for business and technical users of XBRL. This portion of the site contains demonstrations, white papers, Microsoft PowerPoint presentations, taxonomies that describe and classify the contents of financial statements and other business reporting documents, specifications that define the syntax and semantics of XBRL files, links to other useful Web sites and samples of products—such as the XBRL tool—you can use to apply XBRL (www.xbrl.org/resourcecenter).

Questions frequently asked about XBRL (www.xbrl.org/whatisxbrl/index.asp?sid=14).

The XBRL specification, which explains in technical terms how to create an XBRL-compliant financial statement (www.xbrl.org/whatisxbrl/index.asp?sid=11).

A road map that shows CPAs and marketplace participants who use or create financial statements the steps their organizations can take to adopt XBRL to increase efficiency, reduce costs, streamline reporting processes and improve the accuracy and timeliness of financial reporting and analysis (www.xbrl.org/whatisxbrl/index.asp?sid=13).

In addition, the Institute’s Web site provides these XBRL-related resources:

An explanation of why CPAs need to be involved in XBRL, how it will help CPAs in industry and public practice and descriptions of potential XBRL uses—such as in financial statements, tax returns, regulatory filings, accounting and business reports, authoritative literature and audit schedules ( www.aicpa.org/innovation/baas/xbrl/homepage.asp ).

Interpretation No. 5 of chapter 1, “Attest Engagements,” of SSAE No. 10, Attestation Standards: Revisions and Recodification ( AT Section 101 ), as amended, which describes XBRL and defines XBRL instance documents ( www.aicpa.org/members/div/auditstd/announce/xbrl_09_16_03_final.htm ).

A Web-based video, XBRL—Real Solutions, Real Time, in which CPAs familiar with XBRL explain the advantages it offers them, their clients and employers ( www.aicpa.org/video/xbrl ).

The World Wide Web Consortium’s site also provides information about the extensible markup language (XML), of which XBRL is a subset ( www.w3.org/xml ).

For more information about any of these resources, to place an order or to register, go to www.cpa2biz.com or call the Institute at 888-777-7077.

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