RESEARCH & RESOURCES

eXtensible Business Reporting Language Gaining Ground

The eXtensible Business Reporting Language (XBRL) standard is gaining solid support, momentum

XBRL—or the extensible business reporting language—has been a long time coming. It’s the still-gestating ward of XBRL International Inc., a not-for-profit consortium of approximately 450 organizations (in almost every country) working to develop taxonomies that define the information exchange requirements for common business domains.

With the publication of a new draft taxonomy this month, mounting pressure from regulatory agencies (including the Securities and Exchange Commission and the Federal Deposit Insurance Corporation), and budding support from a number of key industry players, XBRL seems to momentum on its side.

Proponents argue that XBRL provides a common means to define and exchange business and financial performance data. XBRL can be used to standardize everything from basic ledger transactions and accounts receivable (AR) to accounts payable (AP) for companies in all verticals. What’s more, advocates maintain, XBRL is flexible enough to support the reporting requirements of a range of different business processes and activities, outside of the financial loop.

Vendor support continues to grow. Players such as IBM Corp., Information Builders Inc. (IBI), Oracle Corp., Microsoft Corp., and SAP, among others, all support XBRL. Both IBI and Oracle, in fact, recently announced expanded XBRL support. IBI’s XBRL adapter for WebFOCUS (shipping for over a year) supports the latest revision of the (U.S.) XBRL taxonomies, while Oracle announced expanded XBRL support (via a new XBRL Manager component) in its upcoming Enterprise Performance Management System release.

Meanwhile, enterprise adoption continues to grow. Industry players say they’re seeing more interest in XBRL—most of it in just the last year.

"In my opinion, [XBRL is] becoming more and more common in the U.S. over the past year. It really started out in Europe and in Japan. They were the leaders," says Efram Litwin, who heads up IBI’s WebFOCUS reporting product. "Now with the SEC buying into XBRL, it’s becoming more and more of a requirement for companies. Right now, [companies] are still voluntarily exporting their information, but the SEC is really pushing this."

IBI first introduced XBRL support for WebFOCUS (via an adapter) last year. Since then, Cohen says, it has continued to revise its XBRL adapter in lockstep with the still-evolving (U.S.) XBRL taxonomy.

Oracle, for its part, plans to release an XBRL Manager component that will help standardize XBRL reporting between and among its constituent Hyperion Financial Management, Oracle Essbase (nee Hyperion) and Hyperion Planning applications. According to Oracle officials, the new XBRL capability will let customers create XBRL-tagged financial statements using current definitions of the XBRL taxonomies. If customers choose to do so, these statements can be submitted to a regulatory body for collection – or (alternately) publicly made available (via the Web) to investors or other stakeholders.

If or when XBRL support becomes mandatory, adapters will be ready to roll. XBRL adoption in the U.S. is still a voluntary proposition, but that seems likely to change. The SEC has taken a lead role to help spur XBRL adoption. It has even contributed funding to XBRL taxonomy development efforts. At this point, the SEC’s XBRL push is limited to a pilot program (which kicked off more than two years ago) that involves the collection of quarterly financial statements from participating organizations.

Other advocates include the FDIC. It sponsored an XBRL implementation in which banks use a form-based template to submit their data. The FDIC’s implementation of XBRL, which involves more than 8,000 banks, is the largest to date in the U.S.

A Mandatory Standard?

With such strong backing from two prominent organizations (as well as interest from the Federal Reserve Board and the Office of the Comptroller of the Currency, many industry players believe that XBRL-based reporting will become a mandatory requirement at some point.

"Anyone who wants to can [adopt XBRL] now. There’s some speculation it [XBRL adoption] will become mandatory some day. Right now, the companies that are part of the voluntary program submit [their financial information to the SEC in XBRL format, and that becomes public information. It really helps increase transparency," says Litwin. There are competitive benefits, too, says Litwin. "If companies want to see their competitor’s information to do a comparison, [XBRL] makes it very, very easy … to compare different XBRL documents together," he indicates.

Although XBRL itself might seem like an accounting- or finance-only play, proponents say subsets of the standard—such as XBRL General Ledger (GL)—have a much greater potential applicability, at least for enterprise users.

"XBRL GL is in many ways far more relevant to [BI professionals] than traditional XBRL—which focuses on end reports—as it is a standardized, generic and holistic way to represent the business facts that flow from transactions and business events," said Eric Cohen, XBRL Global Technical Leader with PricewaterhouseCoopers (PwC), in an interview early this year.

Because XBRL GL starts with generic representations of business documents (such as orders, invoices, and checks), it provides a single framework for representing data as it flows from system to system.

"The goal [is to have] a seamless audit trail for financial reporting, tax reporting, statutory and statistical reporting, and management reporting," Cohen said. "It is not just about accounting and tax, but also about operational and business information." Few XBRL advocates position the technology as a replacement for data warehouse-driven reporting, either. Cohen, for example, argued that XBRL GL can complement or facilitate to an even greater degree the use of DW-driven reporting schemes. "[It can standardize] the flow of data into data warehouses, and [standardize] the flow of data from the data warehouse," he said.

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