What is XBRL?
XBRL stands for eXtensible Business Reporting Language, and it is a language for the electronic communication of business and financial data worldwide. As one of the family of "XML" languages, it is becoming a standard means of communicating information between businesses and on the internet.
XBRL is being developed by an international non-profit consortium of approximately 450 major companies, organisations and government agencies. It is an open standard, free of licence fees. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world. (Source: http://www.xbrl.org/)
Providing major benefits in the preparation, analysis and communication of business information, XBRL offers cost savings, greater efficiency, and improved accuracy and reliability to all those involved in supplying or using financial data.
How XBRL works?
Under XML, identifying tags are applied to items of data so that they can be processed efficiently by computer software. XBRL is a powerful and flexible version of XML which has been defined specifically to meet the requirements of business and financial information. It enables unique identifying tags to be applied to items of financial data, such as ‘net profit’. However, these are more than simple identifiers. They provide a range of information about the item, such as whether it is a monetary item, percentage or fraction. XBRL allows labels in any language to be applied to items, as well as accounting references or other subsidiary information.
XBRL can show how items are related to one another. It can thus represent how they are calculated. It can also identify whether they fall into particular groupings for organisational or presentational purposes. Most importantly, XBRL is easily extensible, so companies and other organisations can adapt it to meet a variety of special requirements.
The rich and powerful structure of XBRL allows very efficient handling of business data by computer software. It supports all the standard tasks involved in compiling, storing and using business data. Such information can be converted into XBRL by suitable mapping processes or generated in XBRL by software. It can then be searched, selected, exchanged or analysed by computer, or published for ordinary viewing. (Source: http://www.xbrl.org/)
XBRL works by adding “information about information”, through the use of “metadata” or “descriptive data” (tags). This allows computers to relate to or communicate with one another without human intervention.
Benefits of XBRL
Adopting XBRL is aligned with ACRA’s overall strategic direction of enabling a pro-enterprise financial reporting environment for businesses in Singapore and a value enhancing financial information flow to the international business community. ACRA also seeks to achieve the following strategic goals with XBRL:
Unlocking new value from financial information filed with ACRA
With XBRL, corporate financial information is readily available for use by consumers of financial information as opposed to the current PDF enabling an effective access and analysis of financial data. Financial ratios and industry trend analyses are useful information that could be computed efficiently;
Facilitating a “one-stop” portal for businesses
In time, it may be possible for financial statements to be filed only once with a central filing Government agency for transfers to other regulatory agencies with similar filing arrangements; and
Strengthening regulatory vigilance
ACRA is tapping on XBRL to improve the efficiency and the effectiveness of its regulatory functions.