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XBRL – AN OVERVIEW

Introduction

eXtensible Business Reporting Language (XBRL) is a language for the electronic communication of business and financial data revolutionizing business reporting around the world. XBRL is a member of the family of computer languages based on XML (Extensible Markup Language), which is a standard for the electronic exchange of data between businesses and on the internet. Under XML, identifying tags are applied to items of data so that they can be processed efficiently by computer software.

It provides major benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data.

Origin

XBRL is being developed by XBRL International, an international non-profit consortium of approximately 450 major companies, organizations and government agencies working together to build the XBRL language and promote and support its adoption. This collaborative effort began in 1998 and has produced a variety of specifications and taxonomies to support the goal of providing a standard, XML-based language for digitizing business reports in accordance with the rules of accounting in each country or with other reporting regimes such as banking regulation or performance benchmarking.

Concept

As a concept, XBRL enables various systems and software to exchange business information using common, standardized, universal terminology. Instead of treating financial information as a block of text as in a standard internet page or a printed document – it provides an identifying tag for each individual item of data. This is computer readable.

It is a technical supply chain standard for moving financial and business reporting information into an interactive, comparable, intelligent, machine-readable information format. XBRL takes financial and business reporting frameworks developed by regulatory agencies and other financial and business reporting stakeholders and tag that data to an agreed upon XBRL taxonomies (classification) which then turns this information into intelligent information that can be consumed and understood by machines.

Meaning of Taxonomy

Taxonomies are the reporting-area specific hierarchical dictionaries used by the XBRL community. Specific tags are coined for each item and their attributes and interrelationships are defined. Different taxonomies are required for different business reporting purposes. Some national jurisdictions may need their own reporting taxonomies to reflect local accounting and other reporting regulations. Many organisations, including regulators, specific industries or even companies, may require taxonomies or taxonomy extensions to cover their own specific business reporting needs. In the Indian context for example XBRL India has developed draft General Purpose Financial reporting XBRL taxonomy for Commercial and Industrial Companies.

Example of ‘Tag’ in XBRL Taxonomies

Company’s net profit has its own unique tag. Computers can treat XBRL data “intelligently”: they can recognise the information in a XBRL document, select it, analyze it, store it, exchange it with other computers and present it automatically in a variety of ways for users. XBRL greatly increases the speed of handling of financial data, reduces the chance of error and permits automatic checking of information.

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