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Benefits of XBRL


XBRL is:

  • An open technology standard for reporting and analyzing business and financial information
  • Software agnostic, or independent
  • Accounting framework neutral


XBRL is not:

  • A standardized chart of accounts
  • A way to require the reporting of specific information
  • A transaction level activity (although it can summarize general ledger transactions)

XBRL offers major benefits at all stages of business reporting and analysis by way of automation, cost saving, faster, more reliable and more accurate handling of data, which in turn helps in improved analysis and in better quality of information and decision-making.

XBRL enables users of financial data to switch resources away from costly manual processes, typically involving time consuming comparison, assembly and re-entry of data. They are able to concentrate effort on analysis, aided by software which can validate and manipulate XBRL information. For example, information search which would otherwise have taken hours can be completed with XBRL before one blinks his eye.

Governments, regulators, economic agencies, stock exchanges, financial information companies, those who produce or use it, including accountants, auditors, company managers, financial analysts, investors and creditors, etc. stand to benefit from the use of XBRL. Accountancy software vendors, the financial services industry, investor relations companies and the information technology industry – all have a huge business opportunity to develop XBRL compliant packages.

The following table gives a bird’s eye view of the benefits that different stakeholders would derive out of XBRL:

Steps involved in implementing the XBRL project

  • define requirements towards future reporting platform
  • analyze them regarding their fulfillment when XBRL is used
  • what are the driving forces of XBRL implementation
  • changes in legal regulations
  • technical issues
  • international adoption


Conclusion

When it comes to XBRL, much is still unknown. This is true not only at the individual accounting and finance professional level, but also among the very regulators who are leading this call to action. Regardless of the many variables involved, implementation is becoming inevitable. Rather than being reactive and scrambling once mandated, forward-looking and strategic finance executives and organizations will take proactive steps to ensure their employees are ready to implement the most time- and cost-effective implementation possible.

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