Global

Report analysis with XBRL 

What is different?

What Does XBRL mean for corporate analysis?

Consumers of business information will find that XBRL puts the right information into analytical reports, systems and models instantly , whether that information comes from disparate sources in and outside the organization or from a single source across the room.

 

Such a feat has been nearly impossible until now. We understand that reporting business performance electronically is complex. To be effective, it needs to take into account the myriad of differences in corporate disclosures as well as the similarities. XBRL is the standard that brings it all together.

 

Moving reporting information between users—from an operating division of a company to the CFO’s office or across the world to a bank, a customer, a stock exchange, a ratings agency, or a regulator —involves huge amounts of effort on the part of the producers of a report, and similar levels of work and manual re-entry for the consumers of that report. As a result, far more time goes into producing the information and getting it ready for investigation than into the actual analysis. XBRL provides a better way.

 

Digital business reporting facilitates:

Fast, accurate data interchange

Automated extraction of relevant information

Improved comparability and analysis

 

Fast, accurate data interchange

Consider some of the issues:

  • The investment analysts who wait for an earnings release to appear on a Bloomberg or Reuters screen, only to retype that information into a spreadsheet or database of their own
  • The bank officers who take the faxed financial statements of corporate customers and type them into their analysis package in order to determine the ongoing credit-worthiness of those clients
  • The CFO's staff that receives countless reports from different parts of the company and spends days reformatting them to ensure they can be analyzed consistently

 

All struggle with the fact that it is extremely difficult and expensive to move information from system to system; and even when that's possible, it is difficult to reconcile the subtle but important differences among the definitions in the mix.

 

The efforts of the XBRL consortium are now providing both technical standards and the support of the accounting profession to ensure that reporting concepts are mapped into this new language. The resulting vocabularies allow reporting information and all its supporting definitions to jump from system to system. As we have described elsewhere on this site, XBRL tags are similar to bar codes, providing an unambiguous label for each item that appears in a set of financial statements or other kinds of business reports.

 

With XBRL it is possible to associate, or 'tag', a value in a manner that makes it possible for other systems to identify that value in context. XBRL makes clear (1) what an amount represents, (2) the company or part of a company involved, (3) the relevant reporting period, (4) the relationship of an item to others in a report, and (5) the item’s definition, including the relevant accounting policy or authoritative accounting standard. The entire financial statement can be tagged, and, perhaps more importantly, it is possible for companies to apply the core disclosure obligations set out in accounting standards to their individual circumstances, adding new concepts as needed.

 

The standards are important because they make it possible to move business reporting information among the various users of this information without building proprietary interchange systems, or worse (and far more common), re-keying the information that appears in a printed report. With XBRL, consumers of business reports can acquire all or some of the report automatically, with the confidence that they can put the information in the right place in their own reports.

 

Because the information carries its definitions in XBRL (see content and context ), the transfer of information is faster, less ambiguous and more accurate.

 

Automated data extraction

XBRL is based on core Internet technologies, so it is possible to search across XBRL documents and extract individual concepts that might be needed for particular types of analysis. It is also possible to transform XBRL reports into essentially any other kind of format, including HTML and PDF files, or to convert the file into a proprietary format, perhaps to include it in a consolidation system or internal data warehouse.

 

Improved comparability and analysis

The tags provide an unambiguous way to identify facts being presented in a business report. So if a report prepared in XBRL format includes a fact such as the International Financial Reporting Standards (IFRS) concept 'Proceeds from the disposal of property, plant and equipment' (with a machine-readable tag something like, iascf-pfs:ProceedsDisposalPropertyPlantEquipment), then, since it references the IFRS standards, the report user can know with certainty that that fact is being disclosed in accordance with those definitions.

 

If the tag were, for instance, xyz:ProceedsDisposalPropertyPlantEquipment, then the system knows it needs to use the definitions prepared by XYZ Limited—which might be pro forma definitions. This level of certainty is a huge improvement for users of business reports.

 

Enhanced exception reporting : In addition to picking up anomalies in reports through preset tolerances and more sophisticated statistical analysis, XBRL opens up new types of exception handling. For instance, if an analyst is interested in whether a company has reported in compliance with a rule or common practice (e.g., a statutory obligation to disclose related-party dealings), it will be possible to look for those facts immediately—something that once required several hours of manual review in a complex set of accounts.

 

XBRL also enables a user to select the components of an analytic ratio (such as earnings per share for market analysts or solvency coverage for insurance regulators) and compile the ratio according to his or her set of criteria.

 

Customized presentation : It is possible to rearrange a digital business report provided by a third party so that it suits a user’s purposes, as well as highlight items that might be of particular interest, such as items that have pro forma definitions or items that the company has added beneath required disclosures.

 

For additional examples as to how digital business reporting can affect the enterprise, explore the Corporation part of this site.

 

For a better understanding as to how XBRL functions, read how XBRL is transforming data exchange .