Cheryl Boggs Savage, C.P.A.
Reliable Professional Solutions

What is XBRL?

XBRL, or eXtensible Business Reporting Language, is an electronic information format designed to define, report, and analyze financial information. In XBRL, companies “tag” financial line items and concepts to unique taxonomy elements in order to make their financials machine-readable. These taxonomy elements were originally developed by XBRL US, Inc. under contract by the Securities and Exchange Commission (SEC). Recently, the Financial Accounting Foundation (FAF) and the Financial Accounting Standards Board (FASB) assumed the ongoing development and maintenance of the more than 13,000 plus elements in the US GAAP Financial Reporting Taxonomy (UGT).

The idea behind XBRL is simple. XBRL establishes common standards of report and a dictionary of financial concepts companies use to tag their financials. With XBRL, every financial number and footnote is made completely unique through the tagging process, which includes assigning a contextual and unit attribute. These attributes make it possible for a computer to read financial statements and disclosures intelligently. In the past it, financial information was seen as blocks of text and lacked any potential for electronic analysis.

What are the benefits of XBRL?

The use of XBRL tags enables automated processing of business and financial information by computer software. Hours of manual entry, validation and review can be eliminated through the use of XBRL tagged data’s persistent, validated and reusable context. Computers can intelligently utilize XBRL contextualized data to select it, analyze it, store it, and exchange it with other computers thereby greatly increasing the speed of handling financial data while also reducing the chance of error and permitting automatic validation of information.

By using XBRL consumers of business and financial information can find, receive, compare and analyze data without error prone manual re-entry. Companies that use XBRL can reduce costs, automate processes and improve accuracy of collecting and reporting business and financial information.

XBRL enables movement of resources away from costly manual processes by automating and eliminating steps that once required human intervention. Use of XBRL thereby frees resources to focus effort on value added business decision support. Consumers of business and financial information like governments, regulators, stock exchanges and analysts benefit from XBRL use as do producers of business and financial information like accountants, auditors, financial analysts, managers and directors. In addition, the use of XBRL enforces standardized reporting rules through the use of common tagging standards while allowing sufficient extensibility (the “X” in XBRL) to fit every company’s specific situation.

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