XBRL stands for eXtensible Business Reporting Language. It is an XML (Extensible Mark- up Language) dialect developed for business reporting purposes. Instead of treating financial information as a block of text, as found in a printed document or on an internet page, XBRL provides a tag for each and individual item of data. In XBRL, financial data is tagged so that it can be easily understood and processed by computers, for example 1000. Once tagged the data can be read by computers and subsequently processed, thus eliminating the need for any form of manual conversion or intervention. The XBRL tag is like a barcode for financial data. The word Assets together with brackets < and > is called a tag. XML distinguishes opening tags: <…> and closing tags: . Between the tags there is a value. What computers understand from the example above is that something called Assets has the content 1000. But how do they know what Assets are?

This is where XBRL uses the concept of metadata. In brief, metadata is data about data. For example, a programmer has to explain to a computer how it should understand the term assets and what kind of values should be assigned to this concept. From the accounting perspective, Assets should have a monetary value (type attribute) and its balance nature is debit. This refers to the basic rule of double entry accounting where Assets and Expenses have a normal balance of a debit while Equity, Liabilities and Revenues have a normal balance of a credit. Another characteristic of Assets is that they represent resources available to an entity at a particular point in time. They appear on the balance sheet, which is a snapshot of an entity’s financial position at a specified date. The opposite of a resource presented at a point specified in time is a flow, which occurs during a period. The description above shows that information for at least three characteristics should be provided to a computer in order for it to understand in an accounting manner.

Of course, thousands of hours spent on developing XBRL were not devoted to simply telling computers what assets are. In accounting there are many concepts that could be described using XBRL. Moreover, there are different regulations concerning financial reporting which means that the definition of Assets under International Financial Reporting Standards (IFRSs) may differ from the one provided by a national set of generally accepted accounting principles (GAAP). Therefore, there is a need to describe interactions between financial concepts for each regulation of GAAP. This is to define whether or not there is any relation between Assets and, for example, Receivables and if there is, how this looks in terms of accounting knowledge and how to create references for elements to express the accounting standard to which they are applicable. To do that, XBRL uses technology called XML Linking (XLink).

To relate the information provided above it should be stated that:

• values between tags (for example 1000) are found in instance documents;
• information on what Assets are and how a computer should treat them is provided in taxonomy schema files;
• relationships are described in taxonomy linkbases which are segregated into different categories depending on what is described and how it is done.

Taxonomy

The word taxonomy is derived from the Greek verb tassein, which means to classify, and the noun nomos, which means law or science. When combined and interpreted word for word it means classification of some kind of knowledge. Initially, it was used in science to classify living things, but over time it’s meaning has widened and it is currently applied to either the classification of things in general or rules governing classification. Frequently, taxonomies are given hierarchical structures or are built in the form of networks, therefore as well as the elements they also represent relationships.

Virtually everything can be a subject of classification under taxonomy. In XBRL, a taxonomy consists of the core part which is a schema (or multiple schemas) and linkbases. If compared to the body of a crab, the schema would be its head and trunk (where all the major organs are situated) and the linkbases would be its limbs. Of course, a schema could exist without linkbases in the same way that a crab could theoretically live without limbs, but in order for a crab to survive and for the taxonomy to be optimal all parts of the body are necessary. In an XBRL taxonomy, the schema is the part that contains definitions of elements (such as assets) whereas linkbases provide relationships between them.

Instance document

An XBRL instance document is a business report in an electronic format created according to the rules of XBRL. It contains facts that are defined by the elements in the taxonomy it refers to, together with their values and an explanation of the context in which they are placed.

What benefits do businesses derive from the adoption of XBRL?

When financial data is exchanged between organizations, it is often in a format, which cannot be consumed without by a different system without a conversion process or by manually keying it into another system. XBRL tags are computer readable and this increases the usability of financial statement information. The need to re-key financial data for analytical and other purposes is totally eliminated. By presenting its statements in XBRL, and making it readily available for instant consumption, a company brings benefit to its investors and other stakeholders. Further it meets the requirements of regulators, lenders and others consumers of financial information, who are increasingly demanding reporting in XBRL. This will improve business relations and lead to a range of benefits.

With full adoption of XBRL, companies can automate data collection. For example, data from different company divisions with different accounting systems can be assembled quickly, cheaply and efficiently. Once data is gathered in XBRL, different types of reports using varying subsets of the data can be produced with minimum effort. A company finance division, for example, could quickly and reliably generate internal management reports, financial statements for publication, tax and other regulatory filings, as well as credit reports for lenders. Not only can data handling be automated, removing time-consuming, error-prone processes, but the data can be checked by software for accuracy thus bringing transparency and efficiency in the process.

For more information about XBRL and XBRL International Inc. please visit www.xbrl.org