XBRL – the standard format for future financial reporting? 

The aim of XBRL is to reduce inefficiencies in the data exchange and analysis process and make it easier to compare financial information. As a result, there are benefits to using XBRL both for the reporting company and for the users of the information, such as analysts, investors and regulatory authorities.

XBRL (“eXtensible Business Reporting Language”) is a freely licensed computer language developed by the non-profit organization XBRL International, specifically for the application of automating financial information.

• XBRL tags a company’s financial and other information with encoding from standard electronic lists (“taxonomies,” which are similar to standard charts of accounts) that the company can expand with further encoding (“eXtensible”), thus helping analysts, investors and regulators to find this clearly labeled information. 
• XBRL makes it possible to structure and define raw data from accounts or other sources on the basis of a taxonomy, in a similar way to barcodes. This enables the originator and recipient to have a common understanding of a certain piece of financial information. Data is exchanged between different information systems and is immediately useable without any manual intervention.

This compatibility is one of the key benefits of XBRL. There are already various taxonomies in the international environment, including ones for the US GAAP and IFRS accounting standards.

Worldwide, however, XBRL is becoming increasingly important due to regulatory requirements. Swiss companies, among others, that are registered with the US Securities and Exchange Commission (SEC) must, as foreign private issuers, provide their corporate data in XBRL using the IFRS or US GAAP taxonomy from 2011 at the latest.

In comparison, the use of XBRL in Switzerland is in its infancy. Here, the merits of this standard are only now starting to become recognized. We can, however, assume that the benefits mentioned from using the standard far outweigh the costs in the long term and XBRL will one day be the standard format for financial reporting in Switzerland as well.

KPMG AG has been a member of the XBRL Schweiz association since 2010. This association, as a formal full jurisdiction of the worldwide XBRL International umbrella organization, promotes the use of XBRL in a national and international context. XBRL Schweiz completed its first major project on September 9, 2011, a taxonomy for the financial reporting regulations of the Swiss Code of Obligations. This certainly represents an initial major milestone in increasing the use of XBRL in Switzerland.

We realize that there is already a need in certain interested circles for general information on the subject, training, more detailed advice as well as actual taggings. And although to date no audits of XBRL data and its processing are (yet) prescribed by regulatory authorities, an audit of this data is conceivable even at present and gives the originator increased assurance of the quality of the tagged data.