eXtensible Business Reporting Language
XBRL, much in the same way as IFRS, aims at standardising financial reporting in order to promote transparency and improve the quality and comparability of business information. As such, XBRL and IFRS complement and supplement each other.
XBRL is an acronym for eXtensible Business Reporting Language and is a subset of the eXtensible Mark up (XML) family of languages. XML is a mark up language designed to structure, transport, and store data, and it provides a foundation upon which other languages such as XBRL are built. In essence, XML is a Meta language comprised of sets of rules and syntax, and it is independent of any specific computing platform or application.
XBRL, which is a flexible and potent derivative of XML, transforms financial data into financial information. However, XBRL is neither an accounting standard nor a chart of accounts; nor is it a method of disclosures and presentation. Benefits of XBRL include:
- XBRL transforms disorderly financial data into meaningful financial information useful to the decision-making process.
- XBRL is independent of accounting frameworks or computing platforms and, hence, facilitates comparative analysis of financial statements and other information.
- XBRL can indicate interrelationship between items and how they are calculated. It can also show groupings of these items in the presentational hierarchy.
- XBRL is easily extensible and, hence, can be easily extended and customised to satisfy the specific requirements of an entity.
- XBRL supports all of the customary tasks involved in compiling, storing and using business data. Such data can be converted into XBRL by suitable mapping processes or generated in XBRL through software. It can then be searched, selected, exchanged, analysed or published by computer software applications. Also, XBRL tags allow automated processing of business information by computer software and, thus, eliminate repetitive processes of manual re-entry and comparison. These capabilities of XBRL greatly enhance the effectiveness and efficiency of business information reporting and analysis processes.
XBRL is a composite of Taxonomy, Taxonomy extensions and Discoverable Taxonomy Set (DTS). The end product is an instance document including Footnotes and Facts (Contexts and Values) that is an electronic business report in compliance with XBRL rules and syntax. In essence, XBRL is a programming language, a variation of XML.
The following is a high level non-technical description of XBRL anatomy, its major components and its working.
XBRL Taxonomy
XBRL taxonomy serves much in the same way as a dictionary and describes information contained within an XBRL instance document – but unlike a dictionary, it also describes relationship hierarchies among the records in the taxonomy. An XBRL taxonomy consists of one or more schemas and linkbases. The schema contains the definition of elements such as Assets and Liabilities, while linkbases describe relationships between these elements.
XBRL schemas are based on XML schema technology and schema files end with the extension “xsd” (XML Schema Definition). Since an element can be defined by many schemas (for example, IFRS and US GAAP), a unique namespace is assigned to each element. A namespace resembles an internet address, but it is not, and can be more conveniently replaced by a prefix which has pre-defined that namespace.
An element is a business concept such as “Income” or “Expense”, defined in a machine-readable form and contained in a schema. The most important attributes that are described for an element are listed below:
- name: A valid name should comply with XML rules and syntax. As stated earlier, elements defined in different schemas are distinguished by the namespaces or corresponding prefixes.
- periodType: This attribute describes the time dimension associated with an element. For elements describing the items in financial statement of position, the value is “instant” while those describing the items in the statement of income and expense, the value is “duration”.
- balance: The value for this attribute may be “debit” or “credit”, depending upon what is described as an asset, expense, liability, equity or income.
- type: The value for this attribute may be “monetaryItemType”, “stringItemType”, or “decimalItemType”, depending upon the nature of element that is being described.
In addition to regular accounting concepts, there are additional concepts such as tables with unknown structures. They are defined by elements called tuples whose structures differ from those described above.
The interrelationships between the elements are described by the linkbases. The linkbases can be any one of the five types described below:
- Presentation linkbase provides information for the proper classification and hierarchical relationships of the elements in the schemas.
- Calculation linkbase provides validation rules for the elements and specifies hierarchy of monetary elements such that the algebraic sum of lower level elements is equal to upper level elements. For this purpose, “periodType” and “balance” attributes are taken into consideration.
- Definition linkbase provides information regarding the interrelationships among the elements.
- Reference linkbase provides information relationships between elements and external regulations and standards. This facilitates understanding of the meaning of each element and justification for its inclusion in the taxonomy.
- Label linkbase assigns attributes such as language, reporting period and currency to the elements.
XBRL Taxonomy Extensions and DTS
XBRL is flexible enough to allow the entities to create unique taxonomy extensions without any loss of comparability or integrity of data. For this purpose, extensions should not in any way alter the base taxonomy. Such taxonomy extensions satisfy the entity’s own specific requirements which cannot be met by the base taxonomy.
Discoverable Taxonomy Set (DTS) contains more than one taxonomy and refers to the group of extended and public taxonomy schemas and linkbases that come together to support an XBRL instance document.
XBRL Instant Documents, Facts and Footnotes
The instance documents report Facts tagged with agreed upon concept names defined in XBRL taxonomies and may contain Footnotes.
A Fact is the information that is reported, and it has a Value as well as Context. A Footnote provides additional information on elements by linking them to a footnote element containing a block of text that discloses such additional information.
XBRL and Standard Setters
The XBRL Team of the IFRS Foundation is responsible for developing and maintaining the XBRL representation of the IFRS Taxonomy. This Taxonomy is used increasingly around the world to facilitate the electronic use and exchange of financial data prepared in accordance with IFRSs.
The XBRL project of the International Auditing and Assurance Standards Board (IAASB) has adopted a two-phased implementation approach:
- The objective of Phase 1 is to consult with key stakeholders to understand how XBRL is actually being used in different jurisdictions as it relates to the filing of an entity’s financial statements, and how the IAASB should address the public interest considerations when auditors are using XBRL data.
- The primary objective of Phase 2 is to apply the findings of the consultation process in developing a pronouncement for addressing the performance and reporting expectations of an auditor in connection with audited financial statements that are accompanied by XBRL data. If deemed necessary, it will also discuss the considerations relevant when audited financial statements are only filed in XBRL.
Subsequent to its June 2010 meeting, the IAASB Steering Committee agreed that the pace of work on the XBRL project should be slowed, pending findings from research on user perceptions, which is expected in fall 2011, and further developments in the environment that provide clear impetus and direction for how the project should be taken forward.
XBRL in Canada
Impacting Canadian public companies listed on US stock exchanges, the US Securities and Exchange Commission (SEC) has mandated a three-year phase-in of XBRL. It is uncertain at this time when the remaining Canadian preparers will adopt XBRL, although the Canadian Securities Administrator (CSA) and the Ontario Securities Commission (OSC) have both endorsed adoption of XBRL. There is a general consensus among stakeholders that adoption should be now made mandatory, given that transition to IFRS is progressing as planned. The CSA has already introduced, since January 2007, a voluntary XBRL filing program, which allows preparers to submit their tagged financial statements to the System for Electronic Document Analysis and Retrieval (SEDAR). However, very few Canadian companies have adopted such voluntary filing. XBRL Canada is actively promoting adoption of XBRL domestically and internationally.
XBRL is potentially a disruptive technology so far as financial reporting is concerned. The developed countries, as well as emerging economies around the world, have recognised its critical importance, and are aggressively promoting its adoption in their respective jurisdictions. Some warn that Canadian stakeholders can delay recognition and unconditional adoption of XBRL at their own peril.
Additional Resources
Illustrative Examples:
For XBRL tagged illustrative financial statement, please follow the link below:
http://www.ifrs.org/XBRL/Resources/XBRL+Illustrative+examples.htm
Suggested list of XBRL learning and information resources:
http://www.xbrl.org/Home/
http://www.ifrs.org/XBRL/XBRL.htm
http://xbrl.us/Pages/default.aspx
http://xbrl.sec.gov/
http://www.xbrl.ca/
http://www.xbrleducation.com/
http://www.tryxbrl.com/Default.aspx
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