The House Bills encourage XBRL use

The House passed two bills in early December 2009 with provisions related to the use of XBRL (eXtensible Business Reporting Language). The SEC currently requires the largest accelerated filers to file an XBRL exhibit with their annual 10-K and quarterly 10-Q’s. Remaining SEC filers will be required to file the XBRL exhibits beginning in 2010 and 2011.

The Government Information Transparency Act (H.R. 2392) will require federal agencies to collect their data in a uniform, searchable format using XBRL thereby simplifying mandatory financial reporting for companies that receive federal funds. The bill calls on the White House to issue rules within 18 months that direct every agency to use XBRL. It would also require companies to file activity reports to agencies in XBRL and require agencies to make the reported financial information viewable by the public.

H.R. 4173, the Wall Street Reform and Consumer Protection Act, also encourages the use of XBRL. The bill makes it easier to scrutinize complex financial results filed by public companies with government regulators such as the SEC and banking regulators. According to the legislation, financial market regulators must report to Congress for each of the next five years on how they are “encouraging the use and acceptance of interactive data” to increase transparency in financial reporting.

XBRL linking with codification

The FASB Codification and XBRL have recently conjoined within the Codification website. The FASB says that some XBRL elements are now electronically linked into the Codification. The Codification now provides a list of the XBRL links to the paragraphs in the Codification. For an example see ASC 840-10-75. The FASB’s Notice to Constituents provides further details about the references to XBRL imbedded within the Codification.

“The new XBRL functionality provided by the Codification website will help entities as they prepare or plan to prepare XBRL financial statements using the U.S. Financial Reporting Taxonomy,” states FASB Chairman Robert Herz. “Users will be able to very easily identify the XBRL elements associated with specific Codification paragraphs.”

XBRL US announced previously that it had released two XBRL taxonomies that link to the Codification to assist users as they verify that they have reported their transactions according to current US GAAP pursuant to the FASB Codification.

XBRL 2.1 version is out with corrections and new features

The XBRL International Domain Working Group developed a detailed set of requirements which were then implemented by the XBRL International Specification Working Group. The conformance suite consists of over 250 example taxonomy fragments (XML Schema and XLink files) and instance documents, containing both valid and invalid usage.  It will help application developers ensure their software processes XBRL correctly.

 It is expected from taxonomy authors gradually to upgrade their taxonomies to 2.1.  This is a prerequisite for conformance with the Financial Reporting Taxonomies Architecture (FRTA) 1.0.  However, 2.0 versions of these taxonomies may also be made available at the discretion of the taxonomy authors.

Domain experts and application developers can now encode more precise information about financial reporting concepts in XBRL taxonomies.  They can also define the handling of new relationships not defined by XBRL itself.  New relationships allow taxonomy authors to connect taxonomy definitions to authoritative definitions and other supporting documentation.

There have always been restrictions on what are a meaningful taxonomy schema, meaningful linkbase, and meaningful instances.  In the past many of these criteria were implicit. These criteria are now part of the specification.  In some cases, they may be enforced using XML Schema, requiring no new code to be written, and in other cases the specification enables vendors to write correct validation code.  Examples of these technical enhancements include:  A detailed exposition of handling variable precision numbers, prohibitions on certain kinds of loops in relationships, and prohibition of duplicated data in instances.  The meaning of calculation links and their ability to express relationships between items in different tuples has been specified precisely.

How can companies benefit from adopting XBRL

XBRL increases the usability of financial statement information.  The need to re-key financial data for analytical and other purposes can be eliminated.  By presenting its statements in XBRL, a company can benefit investors and raise its profile.  It will also meet the requirements of regulators, lenders and others consumers of financial information, who are increasingly demanding reporting in XBRL.  This will improve business relations and lead to a range of benefits.


With full adoption of XBRL, companies can automate data collection. For example, data from different company divisions with different accounting systems can be assembled quickly, cheaply and efficiently.  Once data is gathered in XBRL, different types of reports using varying subsets of the data can be produced with minimum effort.  A company finance division, for example, could quickly and reliably generate internal management reports, financial statements for publication, tax and other regulatory filings, as well as credit reports for lenders.  Not only can data handling be automated, removing time-consuming, error-prone processes, but the data can be checked by software for accuracy.

F.A.F. maintains XBRL taxonomy for GAAP

The Financial Accounting Foundation (FAF) recently announced its new responsibility for the ongoing maintenance of the U.S. GAAP Financial Reporting Taxonomy applicable to public issuers registered with the U.S. Securities and Exchange Commission (SEC). The FAF and Financial Accounting Standards Board (FASB) will assemble a small team of technical staff dedicated to maintaining the taxonomy and will work towards the release of the next taxonomy update in early 2011. Today’s announcement is the culmination of several months of discussions between the FAF and the staff of the SEC. 

The U.S. GAAP Financial Reporting Taxonomy is a list of computer-readable tags in extensible Business Reporting Language (XBRL) that allows companies to label precisely the thousands of pieces of financial data that are included in typical long-form financial statements and related footnote disclosures. The tags allow computers to automatically search for and assemble data so it can be readily accessed and analyzed by investors, analysts, journalists, and the SEC staff. 

FAF Chairman Jack Brennan stated, “The FASB team assigned to taxonomy maintenance will work closely with the SEC, investors, issuers, accounting firms, and other stakeholders to develop updates that are of the highest quality.” 

The FAF’s maintenance activities will be focused on updating the taxonomy for changes in U.S. GAAP, best practices in taxonomy extensions, and technical enhancements.

Taxonomies

Taxonomies are the reporting-area specific hierarchical dictionaries used by the XBRL community. They define the specific tags that are used for individual items of data (such as "net profit"), their attributes and their interrelationships. Different taxonomies will be required for different business reporting purposes. Some national jurisdictions may need their own reporting taxonomies to reflect local accounting and other reporting regulations. Many different organizations, including regulators, specific industries or even companies, may require taxonomies or taxonomy extensions to cover their own specific business reporting needs. Taxonomies which have been officially recognized by XBRL International are listed under the "XII Recognized Taxonomies" tab. Details on how the taxonomy recognition process operates along with instructions on submitting taxonomies can be found under the "Taxonomies Recognition Process" tab. A special taxonomy developed and recommended by XII itself has also been designed to support collation of detailed, drill-down data focusing on internal reporting within organizations. This is the Global Ledger taxonomy.

Elements included in the XBRL

One of the best ways to get to know a new metadata scheme is to dive in and look at the specific elements. XBRL is simply not that simple. XBRL is more than just a metadata scheme. It is a framework for developing standardized taxonomies that can be used to create metadata for specific business reporting needs. So before we look at elements, we have to understand the basic structure of XBRL.

XBRL consists of the following:
-Instance document. This is the actual XBRL marked-up document.
-Taxonomies. Basically a document of concept definitions, or a dictionary. In terms of metadata terminology we used in class, the taxonomy document provides the semantics for a particular XBRL instance document. The taxonomies also define hierarchies of concepts. If necessary, taxonomy could describe one item in more than one language. The taxonomy itself is extensible, that is, a user can split one item into two different items (i.e., instead of just "sales," “equipment sales” and “consumables sales” could be used).
-Linkbases. Unlike the taxonomies which define the elements (called "items" in XBRL), linkbases are documents that define various relationships between items. The five types of linkbases are reference, label, definition, calculation, and presentation.
The instant document, taxonomies and linkbases are all connected using an XML linking standard called xlink