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Financial Reporting

XBRL Revisited

Grasp the fundamentals to see how businesses use XBRL today.

By Neal J. Hannon and Robert J. Gold
February 2005
XBRL: A Structure for Business Data

This month the JofA begins a series of articles exploring how XBRL can help CPAs, their clients and employers, financial institutions, regulators, rating agencies and individual and institutional investors issue or obtain business information in a standardized format for sharing and viewing in any order on any computer system.

se of XBRL is gathering momentum. In September 2004, investors, analysts, public companies and other securities market participants—including CPAs—took note of the SEC’s announcement it will permit public companies to submit their mandatory filings in XBRL format. This step by the SEC is only the latest to demonstrate the steady acceptance of the extensible business reporting language since XBRL International Inc., a nonprofit business consortium that includes the AICPA, introduced it in 1999. More than 250 of the world’s leading organizations—including Morgan Stanley, Microsoft Corp., major accounting firms and accounting institutes—have embraced XBRL and supported its adoption.

XBRL BASICS
Several earlier articles (see “
Prior JofA Coverage of XBRL”) contained a wealth of XBRL-related information and resources readers can tap to refresh their knowledge of the fundamentals and/or to build a foundation for understanding intermediate and advanced aspects of XBRL—such as instance documents—discussed in this and subsequent articles in this series. In addition, exhibit 1 explains the elements that make up XBRL and shows how they relate.

Exhibit 1: An Overview of XBRL
Specification: Defines the technical standard for the composition of XBRL taxonomies. It’s the set of rules that permits the expression of business reporting data in a format that complies with XML, the extensible markup language, of which XBRL is a subset.
 
Taxonomy: Defines a set of data elements in a given business reporting context, such as U.S. GAAP or international accounting standards. It’s a controlled set of tags and relationships that provides standard descriptions for the data elements used in business reporting.
 
Instance document: The product of a process by which an individual or an automated process uses software to add “tags” to data elements according to one or more XBRL taxonomies. It’s an XML file that contains links to the taxonomies used, the financial data described and the context in which they can be found, as well as links to supplemental reference, presentation, calculation, label and definition information (see “ XBRL’s Building Blocks”).
 
Application: Software that can read or write in XBRL format to create or use XBRL documents.

 

XBRL’S BUILDING BLOCKS
To appreciate how XBRL works, CPAs need to understand the concept of the instance document (see exhibit 2), which describes a financial data element, such as cash, and contains

References to the XML specification and XML schema, or database structure.

References to the XBRL taxonomy and any additional taxonomies that may be required to describe all the XBRL tags used in a specific instance document.

Links to

References. Documentation of the data elements the instance document describes.

Definitions. The location on a balance sheet where the data elements reside.

Calculations and formulas. Instructions on how the data elements should be calculated in relation to other such elements described in the instance document.

Presentation. Details on any descriptive labels that should be applied to the data elements, including the language—for example, German—in which they should be reported.

Contexts. Other information—for example, the type of currency, accounting period covered or other identifying facts—necessary to put the data elements in proper context.

Exhibit 2: Illustration of an XBRL Instance Document

Source: Walter Hamscher, Standard Advantage, Concord, Massachusetts, 2004.

 

CREATE ONCE, USE REPEATEDLY
The information contained in an XBRL instance document is endlessly reusable. Each document has all the data necessary to perform an analysis, prepare a report, conduct an audit test and/or send information to software that will use it for management reporting or any other business purpose. With every data element fully described in terms of its definition, format, location, calculation and labeling, XBRL-formatted information can be combined easily, without rekeying or reformatting, for use with a variety of software or hardware. XBRL thereby provides information that’s up-to-date, accurate and easy to distribute.


NEAL J. HANNON, CMA, is a lecturer in accounting and management systems at the Barney School of Business of the University of Hartford in Connecticut. His e-mail address is hannon@hartford.edu. ROBERT J. GOLD, CPA, is a principal of R.J. Gold & Company PC in Waltham, Massachusetts. His e-mail address is robgold@goldgrp.com.

RESOURCES
XBRL International Inc. Resources

The group’s Web site ( www.xbrl.org) provides
An overview of XBRL’s functions and capabilities (www.xbrl.org/whatisxbrl).
Questions frequently asked about XBRL (www.xbrl.org/faq.aspx).
A technical information center (www.xbrl.org/technicalinformation).
Details on how to create an XBRL-compliant financial statement (www.xbrl.org/specifications).
Descriptions of the benefits as well as the issues involved in adopting XBRL, with sections focusing on specific interest groups (www.xbrl.org/xbrlandbusiness).

AICPA Resources

The AICPA Web site ( www.aicpa.org) provides XBRL-related resources such as

An explanation of why CPAs need to be involved in XBRL, how it will help those 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).

A Web-based video, “XBRL—Real Solutions, Real Time” ( www.aicpa.org/video/xbrl).

Prior JofA Coverage of XBRL
Finally, Business Talks the Same Language,” Aug.00, page 24.

A Napster for Financial Data?” Jan.03, page 66.

Tap Into XBRL’s Power the Easy Way,” May04, page 32.

Other Resources

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

The 11th XBRL International Conference will be held in Boston, April 25–29, 2005 ( www.xbrl.org/upcomingevents).

©2008 AICPA

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