Leading Edge Practices

Every month, ITAudit will provide information on existing IT frameworks, legislation, best practices, and industry-specific regulations and standards to enhance auditors' knowledge in the area.

What Is XBRL?

The extensible business reporting language, more commonly known as XBRL, is an Internet-based information standard that enables organizations to prepare, analyze, and communicate business and financial information electronically and promotes a seamless flow of information throughout the entire business reporting supply chain for internal and external reporting purposes. More specifically, XBRL is a technical specification and extension on how to use extensible markup language (XML) — a language that enables information and services to be exchanged by means of user- and industry-specific tags — to represent data with a specific set of syntax, taxonomies, and instance documents.

Originally, XBRL was created to help companies save costs and streamline their processes for collecting and reporting financial information. As a result, investors, analysts, financial
XBRL consists of the following elements:


  • The XBRL specification, a technical explanation of what XBRL is and how it works, which explains the syntax and semantics of XBRL taxonomies and instance documents.
  • XBRL taxonomies, documents that describe the key data elements to be included in an XBRL instance document for the purpose of a particular type of financial reporting.
  • XBRL instance documents, a collection of data elements that are tagged according to the concepts found in the taxonomy being used.
  • XBRL style sheets, which are used to produce reports.
institutions, and regulators can receive, find, compare, and analyze data much more rapidly and efficiently when it is in XBRL format. In the United States, the use of XBRL has been championed by the U.S. Securities and Exchange Commission under the leadership of Chairman Christopher Cox. As of 2006, more than 8,200 U.S. financial institutions were using XBRL to submit quarterly reports to banking regulators. XBRL use around the world is also widespread. Countries where XBRL projects are actively implemented include Australia, Belgium, China, Germany, Italy, Japan, Korea, The Netherlands, Singapore, South Africa, Spain, Sweden, and the United Kingdom.

Uses

Although originally used to report financial data, XBRL can be used for all kinds of business reporting. For example, many companies need to exchange information from application to application in an easy way. By tagging data, XBRL allows the entire organization to process data in the same way, thus the information is easier to find, download, and use. XBRL also can handle data in different languages and accounting standards and can be adapted to meet different requirements and uses. Data can be transformed into XBRL by suitable mapping tools or it can be generated in XBRL by the software used.

In addition, many organizations already have a variety of XML initiatives to move data from one place to another. For these companies, using XBRL can be seen as an extension of XML. Organizations using XML to tag data online, for instance, have to decide how to name each information element. Consequently, the tags could present problems when consolidating data or when exchanging information from one company to another because they are named differently. However, XBRL provides a standard way of tagging information so each company uses the same tag for the same information.

Benefits

XBRL enables organizations to securely share electronic data by using a specific taxonomy, thus reducing data conversion risks. Besides streamlining the data exchange process and reducing data conversion risks, XBRL benefits internal auditors in their day-to-day work. For example, when data is sent to the internal audit department in a standardized format, the work of internal auditors is streamlined. Hence, auditors are able to:

  • Conduct continuous compliance assessments and analysis.
  • Apply transparent rules and formulas to a range of analytical models.
  • Use predictive analysis techniques that are enabled by seamless, low cost access to data.
  • Automate audit trails, drill down information searches, and access different applications.
  • Use more explicit relationships between testing concepts and related compliance policy.

For more information about XBRL, auditors can read the following ITAudit articles: