Extensible Business Reporting Language (XBRL) aims at enhancing the electronic dissemination of financial information and the reporting process at lower cost. The real benefits of XBRL can be realized only when it is properly planned and implemented. This article explores the benefits and challenges in implementing the reporting language and how it is evolving. Though there are some risks associated with the implementation and adoption of XBRL, the potentials of XBRL outweigh those risks. The acceptance of XBRL in an increasing number of countries and by many statutory authorities points to its bright future.
Extensible Business Re- porting Language (XBRL), also known as `Interac-tive Data', is the buzz word among regulators, investors, corporate and analysts today. Business reporting involves exchanging financial data between corporate, regulators and investors. Regulatory and accounting bodies apply different reporting standards for different users. A major problem in financial reporting is that financial information is not readily available and has to be converted into different formats, based upon the users' needs.
Exchanging financial information digitally is a driving need in financial reporting. XBRL, an open standard reporting language, provides a solution facilitating electronic transfer of financial statements easily. This reporting language is designed to enhance and meet various business reporting requirements like corporate reporting and tax return filings. This emerging language improves data accuracy and generates reports faster.
XBRL had come into existence in the late 1990s as a result of the efforts taken by Charles Hoffman, popularly known as father of XBRL, to improve the business reporting process. However, this reporting language was slow to attract users initially and is gaining importance only in the recent years. The regulatory bodies worldwide as well as vendors and analysts have realized the potentials of XBRL to revolutionize business reporting and are moving towards the path of adopting this reporting language. Box 1 lists some XBRL implementation worldwide.
On the other side, vendors are also conscious that XBRL is gaining momentum and are extending their support to adopt XBRL. "Many vendors have committed themselves to supporting XBRL as an interchange format for importing and exporting data from their systems." Software giants like Microsoft, SAP and Oracle have released products that support this reporting language like Microsoft's FRX financial software, Oracle's Enterprise Performance Management System, mySAP, SAP SEM and NetWeaver.
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