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An Introduction to XBRL

What is XBRL?

The short answer is that XBRL (short for eXtensible Business Reporting Language) is an XML-based standard for handling corporate financial information.

For a more complete definition I’ll leave it to the experts. From XBRL International’s website:

XBRL (Extensible Business Reporting Language) is an electronic format for simplifying the flow of financial statements, performance reports, accounting records, and other financial information between software programs. This royalty-free, open specification is being developed collaboratively to make it less costly for companies to publish financial information in a format that can be easily viewed and used by management, investors, regulators, and all of the participants in financial markets. It is an XML-based framework that provides the financial community a standards-based method to prepare, publish in a variety of formats, reliably extract and automatically exchange the financial statements of public and private companies, public sector agencies. XBRL enhances the usability and transparency of financial information reported under existing accounting standards, simplifies disclosure, and allows companies to communicate financial information more readily via the Internet.

In simple terms, XBRL is trying build upon the foundation that XML provides for data manipulation, specifically for those dealing with financial data. It is designed to provide a platform-independent way of describing, transferring, and utilizing financial information.

Who Came Up With XBRL?

XBRL International is the organization which is directly responsible for developing and maintaining the XBRL specification. XBRL International is made up of numerous companies from the accounting, technology, government, and financial services fields all working together to ease information transfer.

If you’re curious about a specific company, you can find a list of all the companies participating in XBRL development on XBRL International’s website. I’ve included a link to the member list at the bottom of this page.

Who Would Use XBRL and Why?

Corporations

Since XBRL was designed to handle corporate financial information, it logically follows that corporations would be one of the primary users. These days most major corporations provide some sort of company financial information via the Internet. Both the corporations providing this information and the investors who are receiving it need an easy way to do so. XBRL provides a method via which financial information can be delivered to end users quickly and easily.

The main benefit to the corporation is that the information can be entered once and maintained in a standard format. Required forms and documents can then be automatically generated from the XBRL formatted document. This prevents the duplication of financial data and thereby helps prevent errors and inconsistencies.

Investors, Accountants, and Other Users of Corporate Financial Data

Having a standardized and machine-readable format is invaluable to consumers of corporate financial information. XBRL provides just such a format. Without it, consumers of the data would be stuck trying to negotiate a format for a data feed with each corporation they wished to receive data from or would be forced to manually enter data obtained from a non-machine-readable source. In addition to the lessening the time and expense involved with either of the alternatives, XBRL also helps prevent the errors they can cause. By having a standardized format, developers can share code designed to read XBRL or purchase tools with XBRL support built in. On top of preventing errors, being able to use previously tested XBRL tools also increases productivity and brings the data to those who might otherwise not have the time, money, know-how to retreive it on their own.

Where Can I Find Out More?

There are a number of useful resources which you can utilize to further research XBRL. I’ve included links to some of the best resources below. If you find a resource that you feel should be included please don’t hesitate to let me know so I can post it here for others to find.

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