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The XBRL data format could help companies more quickly create reports on business conditions and thus comply with the Sarbanes-Oxley Act reporting requirements, say proponents of the format.
Extensible Business Reporting Language provides a means for IT departments to aggregate and consolidate financial information that is accurate, timely and reliable and to present that information to the accountable executives. It uses XML metadata tags to describe financial information. Applications that include XBRL tags, specifications and taxonomies are being used in financial statements, general ledger transactions, regulatory filings and other business reports.
An XBRL taxonomy, which is akin to an XML schema, describes a standard way to report business information.
Because XBRL is an Internet-oriented language, advocates say it can gather information from sources more quickly than a traditional data warehouse methodology.
“Most companies would like to have a one-stop shop for reporting, but that is the exception, not the rule. [Instead,] they depend on graphite and swivel-chair integration—Excel being the primary aggregation,” said Mike Willis, a partner with PricewaterhouseCoopers and the founding chairman of XBRL International, a 200-member nonprofit group that provides royalty-free XBRL licenses.
XBRL eliminates what Willis calls the West Palm Beach effect—hanging chads and errors in accounting.
New York-based XBRL International is scheduled this month to review the draft Version 2.1 of XBRL, which is focused on increased interoperability with non-XBRL-compliant systems.
The specification has been adopted by 24 regulators—the Federal Deposit Insurance Corp., in the United States; Inland Revenue, in the United Kingdom; and Deutsche Bank AG, in Germany, for example—as their mandatory electronic filing formats. XBRL is making headway in packaged applications as well. Microsoft Corp. plans to release an XBRL plug-in for the Excel 2003 spreadsheet, Willis said.
“All the major [enterprise resource planning] vendors have supported it—its just a file format,” said Willis, in Tampa, Fla.
Other experts said top management does not always understand the difficulties IT faces when called on to aggregate all the financial data to present a unified version of whats going on in a company. Sarbanes-Oxley provides an instance where IT can bend the executives ears, they said. “Theres a big opportunity for increased awareness,” Willis said.