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Getting Started with eXtensible Business Reporting Language (XBRL)

General Background

The eXtensible Business Reporting Language (XBRL) is an XML-based standard that is widely used to define the required content of electronic filings of financial statements by public companies. An increasing number of regulatory authorities around the world are mandating XBRL for financial statements and for other purposes as well. Standardization of the electronic formats for corporate filings holds forth hope that regulated companies and regulatory authorities can interact with new efficiency, thereby lessening companies' burden of compliance. But the real power of this standardization is that it lays the groundwork for a new generation of tools that companies and authorities can use to mine public data and thereby spot trends, manage risk, and improve compliance and governance. Regulatory authorities, public companies, and enterprise software vendors comprise a specialized business network that is being transformed by digitization via XBRL

Although the US led in the invention of XBRL, China and Japan are substantially ahead of the US in using its power. Chinese authorities have had an XBRL mandate in place for corporate filings since 2004, and have thus amassed a useful database that can be mined for all sorts of purposes. Japan also has a mandate in place. The US Securities and Exchange Commission this year issued a proposed rule that phases in a mandate over a three-year period, but has not yet issued its final rule as of this writing.

XBRL Taxonomies

The core of XBRL is an XML-based language for defining taxonomies that represent the data to be included in business reports. Using this language, multiple taxonomies have been defined for varying purposes and geopolitical locations. When a regulatory authority mandates XBRL for some purpose, it mandates a specific XBRL taxonomy.

For example, the U.S. Securities and Exchange Commission (SEC) is in the process of phasing in mandates for public companies to file corporate financial statements that conform to the XBRL US GAAP Taxonomy. This taxonomy is based on the U.S. Generally Accepted Accounting Principles. The Japanese Financial Services Agency's mandates for filing financial statements are based on a different XBRL taxonomy that is based on Japanese GAAP.

Other regulatory authories that mandate conformance to some XBRL taxonomy for filing corporate financial statements include:

  • China Securities Regulatory Commission and Shanghai Stock Exchange
  • Singapore Accounting & Corporate Regulatory Authority
  • South Korea Financial Services Commission

The following regulatory authorities have voluntary XBRL programs in place for filing corporate financial statements, meaning that regulated companies have the option to submit their financial statements in conformance with some specified XBRL taxonomy (not necessarily an exhaustive list):

  • Australian Prudential Regulatory Agency
  • Canadian Securities Administrators
  • Israeli Securities Authority
  • New Zealand Inland Revenue and Statistics
  • Spanish Securities Commission
  • Statistics Netherlands
  • United Kingdom Companies House

Most mandates were preceded by voluntary programs, and some of the voluntary programs are already transitioning to mandatory ones.

There is also an XBRL taxonomy based on the International Financial Reporting Standards (IFRS). Adoption of IFRS around the world is spreading, which is bound to have an impact on the landscape of XBRL taxonomies.

Other Uses of XBRL

XBRL is used for additional kinds of regulatory reporting. Examples of these other uses include:

  • Basel II: The Committee of European Banking Supervisors is promoting the COREP and FINREP XBRL taxonomies for regulatory reporting by banks. Usage is mandatory or optional depending on local regulations.
  • U.S. Federal Deposit Insurance Corporation: XBRL is required for call report filing by member banks
  • Netherlands municipalities and provinces: There is mandatory XBRL reporting to the central government
  • U.K. HM Revenue & Customs: XBRL is being used for tax filings

XBRL Organizations

The central organization that maintains the XBRL language for defining taxonomies is XBRL International. There are satellite organizations for local jurisdictions, such as XBRL US, XBRL Germany, and so on. XBRL US maintains the US GAAP Taxonomy.

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