Abstract
This research paper will discuss Extensible Business Reporting Language (XBRL). The SEC is now requiring companies to submit financial statements in the XBRL format. (XBRL) is a language for the electronic communications of all sort of businesses and the exchange of financial data that is transforming business reporting around the globe. First in this research, I will discuss the definition and origins of (XBRL), and then I will summarize how (XBRL) works. Later, I will emphasize the main gains that XBRL provides in terms of cost savings, better efficiency and enhanced accuracy. Finally, it’s important to debate the disadvantages of Extensible Business Reporting Language (XBRL).

History and definition Presented in the 1990‟s by Charles Hoffman, Extensible Business Reporting Language (XBRL) is a reforming business reporting throughout the world. This language has being used for reporting financial data around the globe, and the Securities and Exchange Commission (SEC) is serious about transforming corporate filings into an XBRL-based electronic reporting system. SEC started to get involved and requires (XBRL) to be phased in for U.S. financial reporting over the next few years (Hannon, 2005). The three year schedule phase-in plan is as follows: * 2009 – “Large accelerated filers”: (1) Use U.S. Generally Accepted Accounting Principles and (2) have a market capitalization of $5 billion as of the end of the most recent second fiscal quarter. (Estimated to cover approximately 500 companies.) * 2010 – “All other large accelerated filers”: (1) Market capitalization above $700 million and (2) using U.S. GAAP”. * 2011 – “All remaining filers”: (1) Using U.S. GAAP, including smaller reporting companies, AND “All foreign private issuers”: (1) Prepare their financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board” (Haley, 2009)
According to Hannon (XBRL) is “XBRL is a framework for simplifying the exchange of financial statements, performance reports, accounting records, and other business information between software programs. By providing a common platform for critical business reporting processes, XBRL facilitates the conversion of business data into individual, universally recognized XML-compliant tags within an XML document. This act enables financial information to be easily extracted, exchanged, analyzed, and further processed by systems regardless of the underlying operating system or accounting programs that generated the data. In other words, XBRL frees up business data from its proprietary origins allowing for multiple use and reuse. In addition, (XBRL) is a method of communicating business information in a uniform way for the quick and accurate distribution of data.” (Hannon, 2005)
The (XBRL) can be used for to internal and external financial reporting, reporting to IRS for tax purposes, credit risk valuations, and most important exchanging information between firms, and analyzing all forms of financial data (xbrl, 2009).
How XBRL works
In 2009 The SEC has revealed the final version of its regulation obligating Extensible Business Reporting Language for public companies. The XBRL mandates moving to an Interactive Data Electronic Applications (IDEA) system from EDGAR system to store or access financial data. Thus, a company may either upgrade its systems to produce XBRL financial statements internally and integrate the use of XBRL throughout its systems or continue to prepare its financial statements as it has before and work with an XBRL service provider to have them converted to XBRL (WebCPA, 2009).
XBRL is a follower languages based on Extensible Markup Language (XML) which allow the exchange for the electronic data between businesses and the internet. According to Garbelletto, XBRL is a great and elastic form of XML which has been created precisely for the requests of business and financial information. “Under XML, identifying tags are applied to items of data so that they can be processed efficiently by computer software…It enables unique identifying tags to be applied to items of financial data, such as ‘net profit’… XBRL allows labels in any language to be applied to items, as well as accounting references or other subsidiary information” (xbrl, 2009)
Extensible Business Reporting Language (XBRL) permits users to relate one item to another and to understand how they are designed. In addition, XBRL recognizes whether any item falls into certain groupings for structural or presentational intentions. The richness and the powerful arrangement of XBRL permit more efficiency in the control of business data by computer software. It backed all the standard jobs involved in collecting, keeping and consuming business data. All these data can be altered into XBRL by suitable mapping processes or generated in XBRL by software. “It can then be searched, selected, exchanged or analyzed by computer, or published for ordinary viewing.” (Xbrl, 2009)
For instance, creating an XBRL document in Excel using software such as Rivet Dragon Tag is not that problematic. Some few steps have to be followed in order to effectively tag financial data. First, the Dragon Tag software should be downloaded and installed, then input the financial data into an Excel spreadsheet, and a company profile must be formed. The company profile contains the company name, ID, and website. When creating this profile, taxonomy is also selected (Mahoney & White, 2007). After all these steps it’s important to tag the data. Therefore, reporting elements are gathered in categories that correspond to the financial statement being tagged such as income statement or balance sheet. The income statement components must be distinct and separate from all Balance Sheet components. Thus, these components are additionally grouped into different account types like assets, and further into current assets and long-term assets. The finale step is to define when the date is going to be reported and then to apply this date to the data in the worksheet. Next, the final step is to export the XBRL instance document (Mahoney & White, 2007).
Advantages of XBRL
XBRL allows variety of benefits to entity who implements it. Some of these benefits include: * The automated data processes and the Extensible Business Reporting Language identification tags decrease and may exclude the need for employees to manually input data into software applications like Excel. Since, computers can identify and read the documentation tags easily, data entry errors are rapidly detected and underlined using XBRL (Beer, 2006). * The exclusion of reentering data more than once decreases costs and time. Using (XBRL) to Tag data enables that data to be used with other software without it having to be reentered. This process means that data can be deal with quicker and cheaper. Now, these tagged data is uploaded into tax forms, financial statements, and company websites easily (Beer, 2006). * Multi-Language Capability gives Extensible Business Reporting Language (XBRL) a great ability to read and apprehend all sort of data exchanged between different computers using diverse languages. The users of XBRL, preparing their financial statements will not worry about laws and regulations of GAAP or IFRS. Thus, auditors around the globe can dedicate more time to evaluate data imputed by companies from all countries instead of wasting time compliance with GAAP or IFRS rules and regulations. Increased accessibility: Once financial data are uploaded into the internet, it’s instantly presented to anyone who needs it. Hence, users will be capable to quickly take business decisions, as well as compare one company to another (Beer, 2006).
DISADVANTAGES
Extensible Business Reporting Language (XBRL) was developed to improve the examination of financial information for interested party and to advance the comparability and consistency of businesses information. The creation of (XBRL) does not come without its drawbacks. These drawbacks are heavy in the first few years of employment of (XBRL) due to the lack of familiarity and understandability of this process. Some believed that even if company managers are acquainted with (XBRL) limited number of them have completed and detailed knowledge (Harding, 2010). The presence of inexperienced managers will upsurge the chance for inaccuracies which will be a sufficient reason for investors to lose their confidence. Thus, many companies will outsource the application of (XBRL).
(XBRL) has more disadvantages than the ones mentioned previously: * Company transparency: Extensible Business Reporting Language (XBRL) eliminates a company's capability to hide some of their financial behaviors presented in some accounts. For instance, although (XBRL) facilitate the filing of financial information, shareholders may need to dig profounder to discover the correct data reported. * Security: Extensible Business Reporting Language (XBRL) necessitates higher security to sustain its integrity because of the constant availability (Harding, 2010). If implemented correctly, this security would stop outside and inside security breaches. If a data break happens and few stakeholders have access to the breached data then incorrect speculation could rise from this breakthrough. * Costs are the main drawback of using (XBRL). According to Hannon “the Extensible Business Reporting Language (XBRL) has no doubt heard the claim that XBRL will increase costs for companies who prepare Securities & Exchange Commission (SEC) filings in XBRL. Critics complain that additional costs will be required to convert normal filings into the SEC voluntary filing program format” (Hannon, 2006). Without an automated tagging process implemented, this process would exhaust more hours of labor and would escalate the cost associated with it.
Adoption of (XBRL)
(XBRL) has been already used across the globe as a method of business reporting. Companies around the world took huge compulsory or voluntary steps in applying (XBRL) in their procedures. In Europe, Countless groups have different motives pushing for the change and the embracement of Extensible Business Reporting Language (XBRL). The situation in Europe is well explained by Beer in article “Why XBRL?” According to her: * “In Europe, jurisdictions for the United Kingdom, the Netherlands, Spain, Ireland, Germany and the International Accounting Standards Board (IASB) have been established. Sweden, Denmark, Belgium and France are now provisional. * After having extended its voluntary program to investment companies, the US Securities and Exchange Commission is soliciting the software industry's input for helping manage (received, store, view and analyses) interactive financial data. * XBRL in Europe, along with the Committee of European Banking Supervisors, held the third European Banking Supervisors XBRL workshops in Brussels on 13-16 September 2005. * XBRL in Europe, along with XBRL International, submitted a response paper to a call for evidence on mandate to the Committee of European Securities Regulators (CESR) regarding technical advice on possibly implementing measures concerning the Transparency Directive on 30 August 2005. The response paper outlined and explained that XBRL, thanks to its technological features and its widespread use in business and financial reporting, might play a significant role for (CESR) in the storage and filing of regulated information. * The Bank of Spain has developed an XBRL-based financial information exchange system to support XBRL-based reporting of the public financial statements defined in Circular 4/2004 by credit institutions to the Bank of Spain. * The final version of the (IFRS) taxonomy with Belgian extensions has been issued by the Belgian Banking supervisor. This taxonomy will be used for banking financial reporting for the first quarter 2006. * The Dutch Taxonomy Project team issued the first version of the taxonomy that will be used to contribute to the effort to reduce the administrative burden. Moreover, in the third phase of the Dutch Taxonomy Project, a business case is being performed. Interested parties started 'Proofs of Concepts' showing that it is possible to draft the different reports with the Dutch taxonomy and that any inaccuracies will be revealed. Software suppliers, accounting firms, governmental bodies, advisors and companies are participating in the business case.” (Beer, 2006)
Identical the U.S., Asia has developing (XBRL) for use in capital markets. (XBRL) is being recommended by the stock exchanges in countries such as China and Japan. In one hand Japan has obligated all public companies to adopt (XBRL) format in their financial statements. In the other hand China has become the first country to formally embraces (XBRL) for equity markets in 2004 (Kernan, 2008).
Conclusion
Ultimately, Extensible Business Reporting Language (XBRL) will develop to be the standard for reporting and exchanging financial data among stakeholders. It can facilitate this exchange worldwide for the advantages discussed above. Obviously, when managers are accurate and efficient tagging data, they would create key cost savings and would save sufficient time wasted in reformatting data. Consequently, in the upcoming years (XBRL) and financial reporting will be identical.

References
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