XBRL is a product that was created by XBRL International Inc (XII). This consortium consists of many members like government agencies, software companies and accounting firms. The basic specifications about the working of XBRL have been clearly defined. The format does not vary the content of the financial information; it merely puts it on a global level. The financial information is disseminated successfully in a digital format, where the information is swiftly analysed with the help of analytical readers. The global format that is given to such information is very useful because it eliminates the room for errors or misinterpretation. When it is used, all the financial information is classified according to their category, with the help of a tag or a label. Then, this financial information is ready to be put through various financial models for the purpose of processing it further.
As directed by the Securities and Exchange Commission, It is the format that is to be followed when filing the financial statements. This is becoming increasingly popular in US and across the globe as well. XBRL International CEO, John Turner has also emphasized on the fact that more and more countries are moving on to using XBRL. When the advantages are more than enough, it is evident why the numbers of countries implementing XBRL are increasing manifold. Particularly, industries in Asia and Europe have started using the XBRL format. All the specifications that are needed to be understood while using XBRL have been clearly given by XBRL International. The directions include the way in which the financial information has to be reported to avoid unnecessary repetitions or missing out on important data. It has been understood that a major way by which businesses can increase their transparency and accountability thereby improving their overall performance is when digital formats like XBRL are used.
Using xbrl for financial statements means a better transmission of financial information, which is very important to carry out any business, be it banks, companies or firms. When information is passed in a better manner, it automatically indicates an improvement in their performance. Reliable resources state that there exist approximately 140 regulators all across the globe in about 70 countries that use XBRL. Security regulators are coming up in a new way. One of the major reasons for the same is that there is transmission of a really large amount of data that is very difficult to be analysed by high functioning data analytics software. It is imperative that this data is organized in advance.
Making huge quantities of data available, xbrl for international financial reporting has done something that was not achievable before its inception. Structured data now heavily relies on technology. Progressing slowly, one now understands the importance and the need to have an organised set up of all the information that needs to be used or studied. Extensible business reporting language makes it possible to give a proper structure to the financial data because xbrl tagging process can be carried out based on its category and classified accordingly.
Inline extensible business reporting language is the new mandate that was made the preferred format in June, 2016 by the US Securities and Exchange Commission. This filing system is going to be involuntary till the year 2020, proceeding which it might just become the compulsory format. Seeing as how it is more cost effective and saves time, companies are already voluntarily gravitating towards the utilization of iXBRL format. On the other hand, in the European Union, the European Securities and Markets Authority is making the use of XBRL compulsory by 2020.
XBRL is a global format. It has been adopted by various countries like Japan, Australia, China, Korea and the Middle East. It allows the user to access the financial data in their native language. It has the feature of automatically translating the information according to one’s preference and this is a really attractive feature as it increases the accessibility of such information by making it easier to understand for people, going beyond the language barriers. Pointing at the increase in the popularity of Standardized Business Reporting, it is being engaged beyond financial reporting. Starting in Netherlands, Standardized Business Reporting or SBR is active in about five countries where the use of XBRL is compelling government agencies to team up and stand against red tapism. Netherlands has managed to lower the production cost of data in the context of business to government. Now, every company in that country can easily produce data in extensible business reporting language format.
Interestingly, even the solar industry has started to use XBRL. When a huge amount of money is involved in a project, there is a lot of data that has to be understood and interpreted. Working via the Energy Department, the solar industry is making efforts to generate XBRL taxonomies and definitions for this kind of data. This helps in reducing plenty of soft costs. The solar industry is an excellent example of how a company or a project can save money as the production costs are lowered when the work is being carried out on the basis of a structured body of data and this has been made possible with the use of XBRL.
Developing countries like India too have realized the potential of XBRL. In fact there are even many XBRL service providers in India who assist businesses from across the world.