Chapter 0 -
Introduction to XBRL
Learning Objectives
• Understand why XBRL is changing the business reporting landscape.
• Understand how XBRL complements other major developments in financial reporting
such as IFRS.
• Identify your position in this exciting new era.
Introduction
Since the collapse of Enron and other high-profile corporate scandals, there have been increased
calls from investors, regulators, employees, and lenders for more comprehensive and faster
communication of financial information. Interactive data technologies based on Extensible
Business Reporting Language (XBRL) provide a way to improve the timeliness, accuracy, and
accessibility of business information. XBRL is an international standard for the tagging of
business information in machine-readable formats. The U.S. Securities and Exchange
Commission and other regulators around the world have launched initiatives to promote
reporting in XBRL.
The main value proposition for companies is that XBRL can streamline internal reporting, assist
with migration of data to new systems, and integrate data across platforms and spoken languages.
The use of XBRL facilitates the audit of financial information across industries. There is a clear
opportunity to offer services and products in this burgeoning industry.
This course will help you understand the global phenomenon of XBRL and how it is affecting
the entire business reporting supply chain. Whether you are practicing as a CPA or working for a
public company, private enterprise, government agency, or other entity dealing with business
information, it pays to know about XBRL. Enjoy the course!
Course Content
This course is organized as follows and will help you answer the following questions:
• Chapter 1: A Tectonic Shift in Financial Reporting – Why is XBRL recognized as a
compelling technology that will change the landscape of business reporting?
• Chapter 2: XBRL: A Global Phenomenon – How is XBRL being used around the
world? How is XBRL connected to International Financial Reporting Standards (IFRS)?
• Chapter 3: Basic XBRL Concepts – What are the terms used in XBRL and how does it
work?
• Chapter 4: Mapping and Validation – How do you “translate” traditional financial
statements into XBRL?
• Chapter 5: XBRL and Internal Reporting – How do you leverage XBRL for the
benefit of the company or organization? What is XBRL Global Ledger? What is
Enhanced Business Reporting (EBR)?
• Chapter 6: Building the High-Quality XBRL Process – What determines a world-class
XBRL process? How do you build internal assurance that your XBRL files are properly
prepared?
• Chapter 7: XBRL and the SEC – What are the SEC mandates for using XBRL? How
do you prepare and what is the cost?
• Chapter 8: Making a Difference – How can you get involved with XBRL and help
define the future?
• Appendices:
• A: Glossary of Terms
• B: Review of Instance Documents
• C: SEC Public Validation Criteria
• D: Sources of Additional Information
Chapter 1 -
A Tectonic Shift in Financial Reporting
Learning Objectives
• Understand why XBRL is changing the business reporting landscape.
• Understand the history of XBRL.
• Identify some of the benefits and limitations of XBRL.
Key Terms
• Business Reporting Supply Chain
• GAAP
• Markup language
• XBRL
• XBRL International
• XBRL-US
Introduction
Since the collapse of Enron and other high-profile corporate scandals earlier this decade there
have been increased calls from investors, regulators, employees, and lenders for more
comprehensive and faster communication of financial information. Extensible Business
Reporting Language (XBRL) provides a way to improve the timeliness, accuracy, and
accessibility of business information. XBRL is an international standard for the tagging of
business information in machine-readable formats that is being adopted around the world.
The main value proposition for companies is that XBRL can streamline internal reporting, assist
with migration of data to new systems, and integrate data across platforms and spoken languages.
The use of XBRL facilitates the audit of financial information across industries. There is a clear
opportunity to offer services and products in this burgeoning industry.
In this chapter we look at why XBRL is such a persuasive new technology that is having a
tectonic impact on business reporting around the world.
Why Tectonic and Not Tsunami?
We are all awe-struck when we see the natural event known as a tsunami. This giant mass of
water washes on-shore with a severe impact on land, structures, and people. The power of a
tsunami is sometimes used to describe how businesses feel when new regulations or technologies
overwhelm corporate resources and psychic bandwidth. XBRL may have the feel of a tsunami to >
some but the position of this course is that XBRL will actually raise the tide of possibilities in
business reporting. Taking advantage of those possibilities will depend on your preparation,
strategy, and ability to implement a high-quality process around this new technology.
A tsunami is created when a body of water is rapidly displaced by large events such as volcanic
eruptions or underwater explosions or earthquakes. Tsunamis can therefore be created by
“deeper” or tectonic events that have significant impact on your personal reality. XBRL
represents such a seismic shift in how business reporting is accomplished.
One of the key concepts in XBRL is that the core meaning of numbers and text (business
information) is embedded in computer code. We have all had the experience of sharing with
friends or family a favorite vacation photo. Though it may be a great picture, it does not have as
much meaning unless you know the context and story surrounding the event. XBRL provides
meaning and context to what may otherwise be just a string of text, dates, and numbers.
Consequently, well-formed XBRL files help convey the true meaning of business information.
The files have the added advantage that they follow a global standard of construction (the XBRL
Specification) such that your computer can instantly “understand” what a company is trying to
communicate. The only way this is possible is through a herculean effort to gain agreement in
the professional community as to what specific business concepts mean. In the case of the US
GAAP Taxonomy, that means thousands of concepts that have been defined and translated into
tags for your benefit.
•
GAAP (Generally Accepted Accounting Principles) – The standard financial
accounting rules and regulations governing the recording of accounting transactions and
the preparation of financial statements. Countries may have their own GAAP established
by governing bodies.
In this course, we will address the felt needs (tsunamis) of dealing with XBRL. We hope, though,
that the reader will learn and understand why XBRL is catching on around the world at a deeper
tectonic level. XBRL is a game-changer.
As alluded to above, the growing use of XBRL is shaking the foundations of how we
communicate business information. Historically, we have depended on form-based
communications whether it was a quarterly compilation report for a small business or a quarterly
10Q filed with the SEC. XBRL is benefiting from a “perfect storm” of developments as indicated
in the following graphic:
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