XBRL

XBRL, eXtensible Business Reporting Language, is a royalty-free, international information format designed specifically for business information, also referred to as ‘interactive data’ by the SEC. The idea behind XBRL is simple: instead of treating business information as a block of text – as in a printed paper document or a standard Internet page – it provides a unique, electronically readable tag for each individual disclosure item within business reports. For example, ‘Gross Margin’ has its own unique tag. The tags for common disclosure items are contained in taxonomies (dictionaries that define common disclosure items and relate them to other financial concepts) that are being developed by market constituents and are available on the XBRL Web site. The use of XBRL will provide major benefits in the preparation, analysis, and communication of business information through cost savings, greater efficiency, and improved reliability to all those involved in supplying or using financial data.

Background

In 1998, Charlie Hoffman, a single CPA who worked for a small CPA firm in Washington state, had the idea of XBRL as a way of totally transforming business reporting. (Read XBRL: It’s Unstoppable – A Conversation with the Father of the Digital Language of Business.) Charlie enlisted the support of the AICPA to spearhead the development of XBRL with the goal of providing a standard, XML-based language for digitizing business reports in accordance with the rules of accounting in every country around the world. XBRL International is a global consortium with over 250 leading organizations concerned with the exchange and timeliness of financial and business reporting data. Through the efforts of the AICPA and its members, a framework of specifications and taxonomies was produced to support providing a standard, XML-based language for digitizing business reports. XBRL US (the US jurisdiction of XBRL International) operated under the AICPA volunteer committee structure from 1999-2006 until it became a separate, not-for-profit organization in September 2006. As a founder and an active member of XBRL US, the AICPA supports adoption through the development of education and tools to help our members implement and adopt XBRL. AICPA staff and its members are represented on many committees and task forces of XBRL US and XBRL International, including a seat on the XBRL International Steering Committee.

New The Story of our New Language

This paper, based on a chronicle of Charles Hoffman and Louis Matherne, documents the story of XBRL told from the perspectives of many key influencers of XBRL throughout its history. The AICPA interviewed many of the XBRL contributors in order to encapsulate the journey from its original development to the creation of a consortium of over 550 organizations who work together to continue to build a common language for business reporting and support its adoption.

Download the full document: The Story of Our New Language

What are the Potential Uses of XBRL?

XBRL can be applied to a very wide range of business and financial data. Among other things, it can handle:

company internal and external financial and business reporting;
business reporting and exchange of information within all types of regulators, including tax and financial authorities, central banks, and governments;
filing of loan reports and applications;
credit risk assessments;
authoritative accounting literature, providing a standard way of describing accounting documents provided by authoritative bodies.

What are the Benefits of using XBRL?

By using XBRL, companies and other producers of financial data and business reports can automate the processes of data collection. For example, data from different company divisions with different accounting systems can be assembled quickly, cheaply, and efficiently if the sources of information have been upgraded to using XBRL.
For AICPA members who serve in financial management, auditing, and information technology roles, XBRL will streamline the preparation of business and financial reports for internal and external decision making. XBRL will significantly improve the ability of CPAs in financial management to more precisely direct and publish financial information to investors, regulators, analysts, lenders, and other key stakeholders.
XBRL is not just for reporting to the SEC. The possible future uses for XBRL include reporting to lenders, IRS and other regulating bodies.
XBRL facilitates convergence of accounting standards by the ability to align financial concepts among public taxonomies.
XBRL facilitates principle-based accounting because it reduces the need to worry about where the item is reported, but only that it is.
XBRL drives transparency and improves the efficiency of capital markets by helping analysts and other users of financial and business information find relevant facts.
XBRL improves the efficiency of the capital markets by reducing the cost associated with covering a company and making the market more accessible to small and mid-cap companies.
XBRL better enables the CPA profession to proactively fulfill its primary mission to protect the public interest by improving investor access to the capital markets and increasing analyst coverage of both small and large companies through a reduction in the cost associated with covering a company.

SEC Rules for reporting financial statements in XBRL format

On January 30, 2009, the SEC adopted rules that would require companies to provide to the Commission financial statements in XBRL format, as well as posting to corporate websites (if companies maintain websites). These rules will apply to domestic and foreign companies using U.S. GAAP and to foreign private issuers using International Financial Reporting Standards as issued by the International Accounting Standards Board. These rules are effective April 13, 2009.

IMPACTED DISCLOSURES:
The XBRL data will be required, as an exhibit, with a company's annual and quarterly reports, transition reports, and Securities Act registration statements as well as reports on Form 8-K or Form 6-K that contain revised or updated financial statements. The tagged disclosures will include companies' primary financial statements (including balance sheet, income statement, statement of comprehensive income, statement of cash flows and statement of owners equity), footnote disclosures, and financial statement schedules. The disclosure in XBRL format will be submitted as an exhibit along with the traditional electronic filing formats in ASCII or HTML.

PHASE-IN:
The final rules will require a three year phase-in schedule beginning with a company’s first quarterly report on Form 10-Q, or annual report on Form 20-F or Form 40-F, that contains financial statements for fiscal periods ending on or after:
- June 15, 2009 - the proposed rules would apply only to domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public float above $5 billion (determined as of end their 2nd fiscal quarter of the most recent fiscal year), which is estimated to cover approximately 500 companies.
- June 15, 2010- all other domestic and foreign large accelerated filers using U.S. GAAP would be subject to interactive data reporting (public float above $700 million determined as of end their 2nd fiscal quarter of the most recent fiscal year).
- June 15, 2011- all remaining filers using U.S. GAAP, including smaller reporting companies, and all foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB would be subject to the same interactive data reporting requirements.

INFORMATION TO BE TAGGED:
The information to be tagged would include document and entity identifiers including: form type, company name and public float. §232.405 discusses content requirements and states that Interactive Data exhibit include no more no less than information in the elements of the primary financial statements, footnotes and financial statement schedules. GAAP filers will be required to select tags from the most recent list of tags for U.S. financial statement reporting, as released by XBRL U.S. and required by the EDGAR Filer Manual

This would be accomplished by tagging the footnotes using four different levels of detail:
1. Each complete footnote tagged as a single block of text;
2. Each significant accounting policy within the significant accounting policies footnote tagged as a single block of text;
3. Each table within each footnote tagged as a separate block of text; and
4. Within each footnote, each amount (i.e., monetary value, percentage, and number) separately tagged. The requirement to tag narrative disclosures was changed from the proposal as the SEC will permit, but not require, filers to tag, to the extent they choose, each narrative disclosure within the footnotes and financial statement schedules.
In the first year of filing, a company will be required to tag at level one. After the first year, the company will be required to file at all four detail levels.

Providing interactive data for Management’s Discussion and Analysis (MD&A), executive compensation, or other financial, statistical or narrative disclosure is not required or permitted under the rules.

TIMING:
The XBRL exhibit will be required to be submitted to the SEC the same time as the related report or registration statement, with two exceptions.
- A 30 day grace period will be permitted for the first interactive data exhibit of each filer (level 1 footnote detail),
- A 30 day grace period will be permitted for the first interactive data exhibit that is required to include the footnotes and schedules tagged in detail (levels 2-4 footnote detail).
Grace period submissions will be required to be filed with amended periodic reports (i.e., 10-KA, 10-QA). However, these submissions will only need to contain the relevant interactive data as an exhibit and therefore should not cause confusion that the amended report is being filed for any other reason.

Filers will be required to provide the same interactive data that is submitted to the Commission on its corporate Web site, if it has one, on the earlier of the calendar day it filed or was required to file the related registration statement or report and remain posted for a period of at least 12 months.

LIABILITY:
The SEC will provide filers with limited liability for their XBRL financial statements for a period that will phase out over two years; the limited liability provision would terminate completely on Oct. 31, 2014.

ASSURANCE:
Interactive Data submissions will not be required to involve 3rd parties such as auditors or consultants for assurance. Auditors will not be required to apply AU Sections 550, 711 or 722 to interactive data provided in an exhibit or to the related viewable interactive data.

Issuers can obtain third-party assurance under the PCAOB Interim Attestation Standard—AT sec. 101, Attest Engagements on interactive data, and can start and stop obtaining assurance whenever they choose. The rules do not require auditors’ reports to be tagged, however issuers are permitted to indicate in the financial statements (such as in a footnote) the degree of auditor involvement in the tagging process (i.e. disclosures regarding the level of auditor involvement or lack thereof in the creation of the interactive data exhibit).

USE OF EXTENSIONS:
The rule states that there should be limited use of extensions to circumstances where the appropriate financial statement element does not exist in the public taxonomy. In addition, wherever possible and when a standard element is appropriate, preparers change the label for a financial statement element that exists in the standard list of tags, instead of creating a new customized tag.

Detail text of the entire rule can be found at:
http://sec.gov/rules/final/2009/33-9002.pdf

AICPA Comments on SEC Rule Proposal

The AICPA brought together a Working Group of public company financial reporting executives from among our membership to provide written comments on the SEC rule proposal regarding the use of Interactive Data to Improve Financial Reporting on behalf of our members in business and industry. Download Comment Letter.

Basics of XBRL and How It Works

XBRL enables preparers to utilize software to tag all financial items in their business reports to the elements within a taxonomy. This is accomplished with an Instance Document which can be electronically exchanged and validated between computers or viewed in a human readable format (this is called rendering).

XBRL US has published a guide which is available on the XBRL US Web site to help preparers of financial statements get started in creating XBRL financial statements. The XBRL US Preparers Guide, which the AICPA was involved in creating, provides rules and rule of thumb for using XBRL technology for financial statement reporting.

What is a Taxonomy?

A taxonomy is a grouping of financial concepts (known as “elements”) in which each concept is defined and assigned a relationship to other concepts within the group. Therefore, if we are working with a balance sheet item such as Cash, the taxonomy would include the definition of Cash and would also demonstrate how Cash may relate to other balance sheet items (within the taxonomy) such as rolling up to Current Assets and eventually Total Assets. All three of these items (Cash, Current Assets, and Total Assets) are financial concepts that are defined and presented in the taxonomy. Public taxonomies have been developed by market constituents and are maintained by XBRL.

The US GAAP Taxonomies contain over 15,000 elements representing commonly reported financial concepts for US GAAP financial statements and are available and maintained by XBRL US.

What is a Taxonomy Extension?

The X in XBRL stands for extensible. Therefore, if a particular concept does not already exist in a public taxonomy there is the ability to add to or change the elements to meet the company’s needs; called extending the taxonomy. This extensibility is one of the most important aspects of XBRL because it allows for wide adaptation and uses of XBRL as demonstrated in potential uses section above.

What is Tagging?

Tagging is the process of mapping the entity’s financial data to a unique element within the taxonomy. The tagging process is performed during the creation of an instance document.

What is an Instance Document?

An instance document is the vehicle to transmit the company specific business reporting information in a structured manner that computers can intelligently recognize and exchange. It is expected that instance documents will be created for individual financial reports (e.g., annual reports, earnings releases, submissions to creditors, etc.). The instance document is an XML file where everything comes together; here the entity specific data links (tags) to the elements in the taxonomies to form the XBRL document that can be validated and transmitted automatically for utilization by numerous consumers.

What is Rendering?

As we stated above, an instance document is an XML file that is computer readable. Rendering is the process in which XBRL software will translate an instance document into a human readable format.

XBRL Tools

In order to work in XBRL, you will need software. There are a number of XBRL tools in the marketplace today. Some tools enable you to work with taxonomies (i.e., creation, extension, and validation), others focus on the instance document (creation and validation). There are also tools that will specialize in rendering, analysis, and reporting. Some tools may offer one or more of these services within the application while others may only focus on one function. You can refer to the XBRL US Web site for details on vendors that support XBRL.

XBRL Q&As

The ASEC has developed a series of questions and answers to educate accounting professionals about XBRL and the SEC’s Final Rules on XBRL. Click the following links to download the documents.

Webcast Series

XBRL-Transforming Financial Reporting
In April 2009, the AICPA hosted a live webcast that explains the new SEC rules on XBRL. A panel of key experts from the SEC and the Preparer and Audit communities participated in this event and discussed the requirements for SEC reporting, considerations for implementing XBRL and auditor involvement with the XBRL Exhibit.

XBRL Public Review Webcast Replay
In December 2007, the AICPA hosted a webcast introducing XBRL with a demonstration on tagging data and how to review the U.S. GAAP Taxonomies.

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