XBRL involves the application of computer-readable tags to business data. This enables the data to be processed automatically by software, bringing great gains in efficiency and providing an opportunity for high quality analysis of business information.
A company’s financial statements, which have been converted into Inline XBRL (iXBRL), may appear unchanged to a human reader, but they will contain tags, usually hidden to the eye, which can be accessed and used by software. XBRL can provide an identifying tag for each individual item of business data. For example, ‘operating profit’ has its own unique tag, as does ‘current assets’.
The use of XBRL for filing accounts in the UK is not new. Companies House has been accepting abbreviated and dormant accounts from audit exempt companies in XBRL for a number of years using a simple, template-driven system. Many hundreds of thousands of accounts have already been filed in this way.
Many types of software and data systems have been applying computer-readable tags to financial data for years. However, these have been defined differently for each purpose and each type of software. Tags in one system were meaningless to another. No generic processing of the data was possible.
XBRL is different. It is a world-wide standard, developed by an international, non-profitmaking consortium, XBRL International Inc. (XII). XII is made up of many hundred members, including government agencies, accounting firms, software companies, large and small corporations, academics and business reporting experts. XII has agreed the basic specifications which define how XBRL works.
Clearly, different countries use different accounting standards. Reporting under each standard reflects differing definitions. The XBRL language uses different dictionaries, known as ‘taxonomies’, to define the specific tags used for each standard. Different dictionaries may be defined for different purposes and types of reporting. A special taxonomy, the Global Ledger or GL Taxonomy, is intended to enable the efficient handling of financial and business information, at a transactional level, contained within an organization.
In the UK, three main taxonomies will be used for company reporting: Financial Reporting Council (FRC) Taxonomy set for accounts, the Corporation Tax or ‘CT’ Computational Taxonomy to for tax computations and the Detailed Profit and Loss taxonomy for detailed profit and loss statements that are attached to the accounts or computations.
The XBRL format being used in the UK for company reporting is known as Inline XBRL or iXBRL. This consists of a human-readable report, which has XBRL tags embedded in it. The human readable text is effectively HTML - the basic language of the web. The web file contains the XBRL tags, but they are usually hidden and are only displayed to human eyes when required by software - for example during a process to check the tags.