Announcements from the US Securities and Exchange Commission (SEC) and XBRL-US describe a new initiative of the SEC regulatory body to assess the benefits of XML-tagged data and consider a proposal to accept voluntary supplemental filings of financial data using the XML-based Extensible Business Reporting Language (XBRL).
The goal of using XML-tagged financial reporting data is to provide "greater context for data through standard definitions, enabling investors and other marketplace participants to analyze data from different sources and to support automatic exchange of financial information across various software platforms, including web services."
XBRL is a "royalty-free, open specification for software that uses XML data tags to describe financial information for public and private companies and other organizations. It supports all members of the financial information supply chain by utilizing a standards-based method with which users can prepare, publish in a variety of formats, exchange and analyze financial statements and the information they contain. XBRL is being developed by an international non-profit consortium of approximately 250 major companies, organisations and government agencies."
SEC's new initiative is being developed by the SEC Division of Corporation Finance, Office of the Chief Accountant, Division of Investment Management, and Office of Information Technology. The initiative is aimed at determining "the benefits of tagging to reporting quality and efficiency, the implications of tagging data for filers, investors, the Commission and other market participants, and the compatibility of existing tag definitions with current disclosure requirements."
In its own announcement, XBRL-US expressed confidence in the SEC initiative "to leverage this private sector collaboration consisting of companies, financial data providers, accounting firms, standard setters, investors and all participants in the business information supply chain."
According to XBRL's report, the SEC announcement "is one of a series of XBRL initiatives that are being put in place by financial regulators around the world including: the US Federal Financial Industry Examinations Council (FFIEC) which includes the FDIC, Federal Reserve Board, OTS, NCUA and OCC; the Inland Revenue and Financial Services Authority in the United Kingdom; Japan's National Tax Agency and Financial Services Authority; the Bank of Spain; and the Dutch Tax Authority."
XBRL-US "represents the United States as part of XBRL International. Approximately fifty (50) of the world's leading accounting, financial, government, and software organizations are involved in the adoption and use of XBRL-US."
XBRL taxonomies are "the dictionaries which the XBRL language uses: these are the categorisation schemes which define the specific tags for individual items of data such as 'net profit'. National jurisdictions have different accounting regulations, so each may have its own taxonomy for financial reporting. Many different organisations, including regulators, specific industries or even companies, may also require taxonomies to cover their own business reporting needs." A recent Yankee Group report "XBRL Enables Sarbanes-Oxley Compliance and Speeds Web Services Adoption for the Financial Services Industry" provides an overview of the XBRL taxonomies:
"XBRL syntax is provided by several different taxonomies. A taxonomy is a descriptive classification system for the data elements in business reporting. XBRL taxonomies can be thought of as extensions of XML Schema. Taxonomies express unique business reporting concepts that are quantitative, qualitative, and descriptive. Several common taxonomies include:
- General concepts (usfr-gc): Provides high-level accounting terms for the creation of geographic and industry taxonomies that comply with accounting standards for tagging XBRL instances.
- Primary terms (usfr-pt): Provides detailed accounting terms for the creation of geographic and industry taxonomies that comply with accounting standards for tagging XBRL instances.
- Financial services terms (usfr-fst): Provides detailed accounting terms for the creation of geographic and industry taxonomies that comply with accounting standards for tagging XBRL instances specific to the financial industry.
- US GAAP C & I (us-gaap-ci): Provides detailed accounting terms for the creation of geographic and industry taxonomies that comply with accounting standards for tagging XBRL instances that enable commercial and industrial companies to conform to US GAAP.
- US GAAP BASI (us-gaap-basi): Provides detailed accounting terms for the creation of geographic and industry taxonomies that comply with accounting standards for tagging XBRL instances specific to banking and savings institutions.
- Other taxonomies: Exist for global common document (int-gcd), accountant's reports (int-ar), management report (usfr-mr), note and management discussion and analysis (usfr-namda), and SEC Certification (usfr-sec-cert)."
From the XBRL-US Announcement
XBRL-US announced today it is confident that the U. S. Securities and Exchange Commission (SEC) program to assess the benefits of data tagged with XBRL (Extensible Business Reporting Language) will demonstrate that adoption of XBRL will bring broad benefits. "Companies, markets and investors will benefit from improving the timeliness and accuracy of corporate reporting and simplifying analysis of SEC filings," said Eric E. Cohen, chair of the XBRL-US Steering Committee. "We applaud the SEC's initiative to leverage this private sector collaboration consisting of companies, financial data providers, accounting firms, standard setters, investors and all participants in the business information supply chain."
Robert H. Herz, Chairman of the Financial Accounting Standards Board (FASB), said, "FASB supports the SEC's program to assess the potential benefits of XBRL as a new and powerful medium for increasing the usability of financial information and believes that it will help enhance and modernize U.S. financial reporting. In September 2003, the Board established an XBRL fellowship position. Through this fellowship, the FASB expects to be in a stronger position to track new technology developments that impact financial reporting. This, in turn, should assist the Board in advancing the financial reporting model in response to evolving technology and changing financial statement user needs."
"XBRL as a framework can strengthen financial management, reporting and corporate governance," said Financial Executives International (FEI) President and CEO Colleen Sayther. "XBRL empowers investors by enhancing their ability to compare companies across many variables. XBRL has the power to improve the transparency and accessibility of information."
"We applaud the SEC for exploring the benefits of XBRL-tagged data," said Barry Melancon, President and CEO of the American Institute of Certified Public Accountants, a founding member and sponsor of XBRL-US. "We believe XBRL will have a positive impact on preparers of financial reports by streamlining the process and benefiting investors by improving their access to financial information."
The SEC is seeking public comment on alternative methods and the costs and benefits associated with XBRL-tagged data. The SEC also announced that it will consider an SEC staff proposal to accept voluntary supplemental filings of financial data using XBRL. This voluntary program would enable the SEC to further investigate the types of data tagging currently available in the marketplace. The Commission may propose a rule this fall that would, if adopted, establish the voluntary XBRL-tagged filing program beginning with the 2004 calendar year-end reporting season.
John Connors, CFO of Microsoft, said, "Microsoft already voluntarily produces its quarterly and year-end financials in XBRL and is encouraged by the SEC proposal to accept these voluntary filings in XBRL format. XBRL will help ensure the integrity and quality of corporate financial data by removing the need for manual re-entry throughout the process."
Susan Strausberg, CEO of EDGAR Online, said, "XBRL tagging of SEC disclosures at the source by public companies enhances the ability of those companies to communicate in their own direct way with investors and the financial community, and it further expands the ability of data intermediaries to augment their intelligent, sophisticated analytic solutions."
Trevor Harris, Head of the Global Valuation and Accounting Group in Research at Morgan Stanley pointed out that it is by no means only the regulators that benefit. "Investors have a continuing need for more timely and more accurate information that they can integrate into their own analyses. As we move our own analytical framework to work with XBRL the disclosures of any company when delivered in XBRL are intrinsically of greater timeliness, interest and value to investors. We're hoping for broad participation in this voluntary program and will continue, as we have done in the past, to publish our own financial statements in XBRL."
From the SEC Announcement
The U. S. Securities and Exchange Commission is assessing the benefits of tagged data and its potential for improving the timeliness and accuracy of financial disclosure and analysis of Commission filings.
The Commission will seek public comment on alternative methods and the costs and benefits associated with tagged data. In addition, the Commission will consider a staff proposal to accept voluntary supplemental filings of financial data using eXtensible Business Reporting Language (XBRL). This voluntary program would enable the Commission staff to further investigate the types of data tagging currently available in the marketplace. The Commission may propose a rule this fall that would, if adopted, establish the voluntary program beginning with the 2004 calendar year-end reporting season.
SEC Chairman William H. Donaldson said: "This initiative is part of the Commission's broader effort to improve the quality of information available to investors and the marketplace. By working to enhance the Commission's filing and disclosure process through the use of new data formats, including tagged data, the Commission can improve how content is organized and analyzed — improvements that will benefit everyone who utilizes the SEC's public disclosure process."
Data tagging is gaining prominence as a format for enhancing financial reporting data using eXtensible Mark-Up Language (XML) derivatives, such as XBRL. Tagging provides greater context to data through standard definitions that turn text-based information, such as the filings currently contained in the Commission's EDGAR system, into documents that can be more efficiently and effectively retrieved, searched and analyzed through automated means. Data tags describe information such as items included in financial statements. This enables investors and other marketplace participants to analyze data from different sources and allows for the automatic exchange of financial information across various software platforms, including web services...
FASB XBRL Fellowship Position
The Financial Accounting Standards Board (FASB) was established to "improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information." As described in the The FASB Report Number 252 Financial Accounting Series, "Technical Plan for the Six-Month Period Beginning January 1, 2004 (January 30, 2004):
"In September 2003, the Board established an XBRL fellowship position. The XBRL Fellow will be responsible for furthering XBRL awareness at the FASB and liaising with the XBRL Consortium, a group of more than 200 leading accounting, technology, and financial services companies and government agencies.
The XBRL Fellow's initial focus will be on increasing the Board and staff's understanding of XBRL and its implications on the standard-setting process. In addition, the XBRL Fellow will follow the development of GAAP taxonomies by the XBRL Consortium. It is also anticipated that the XBRL Fellow will provide feedback to the XBRL community about matters that are relevant to the FASB and other similar standard-setting bodies in other jurisdictions.
Through this fellowship, the FASB expects to be in a stronger position to track new technology developments that impact financial reporting. This, in turn, should assist the Board in advancing the financial reporting model in response to evolving technology and changing financial statement user needs..."
- Announcement from U.S. Securities and Exchange Commission : "SEC Announces Initiative to Assess Benefits of Tagged Data in Commission Filings."
- Announcement from XBRL-US: "SEC to Assess Benefits of XBRL-Tagged Data in Commission Filings. Paves Way for Public Companies to Adopt XBRL Reporting Standard."
- "XBRL Enables Sarbanes-Oxley Compliance and Speeds Web Services Adoption for the Financial Services Industry. Enterprise Investment in XBRL Will Deliver Demonstrable ROI and Enable Employees to Concentrate on Business Velocity." "According to a recent Yankee Group survey of 400 enterprises, more than three-quarters of financial services firms are increasing their investment in Web services enablement. The Yankee Group believes that Extensible Business Reporting Language (XBRL) is quickly becoming the common language for business reporting based on Web services standards for Sarbanes-Oxley (Sarbox) compliance in the financial industry... While IT stakeholders envision XBRL as an enabling technology, engineers often view it as a programming language for linking content to application code and business logic. Current accounting software can automatically tag XBRL into a document, or users can manually tag documents with XBRL. XBRL is used for: (1) Sarbox compliance initiatives; (2) External and internal financial reporting; (3) Call reports to regulatory agencies, authorities, and governments; (4) Credit and loan applications; (5) Intra- and extra-departmental exchange of business information; (6) A range of financial and statistical data that needs to be saved and exchanged. Companies that encode their financial statements with XBRL and store them in a central repository create a workflow that allows a single XBRL document to be used and reused across the enterprise and value chain. Instead of having to integrate disparate systems and create redundant data stores, XBRL can be used as a single-source data structure for interfacing and exchanging with business applications across and outside the enterprise..."
- "Improving XBRL Implementation and Interoperability: The Case for XBRL 2.1 Today." XBRL International White Paper. 23-March-2004. 8 pages. "This XBRL International Whitepaper explains the technical improvements made in Version 2.1 of the Specification and how these benefit implementation and interoperability."
- "Financial Reporting Taxonomies Architecture 1.0. Edited by Walter Hamscher (Standard Advantage). Reference: FRTA-DCR-2004-05-17.doc. "This document describes the architecture of financial reporting taxonomies and their corresponding instances using the eXtensible Business Reporting Language (XBRL). The recommended architecture establishes rules and conventions that assist in comprehension, usage and performance among different financial reporting taxonomies. 'Financial reporting' encompasses disclosures derived from authoritative financial reporting standards and/or applicable generally accepted accounting practice/principles, regulatory reports whose subject matter is primarily financial position and performance, and data sets used in the collection of financial statistics; it excludes transaction- or journal-level reporting, reports that primarily consist of narrative (for example, internal controls assessments) and non-financial quantitative reports (for example, air pollution measurements). This document assumes use of the XBRL 2.1 Specification..."
- An Introduction to XBRL
- XBRL FAQ document
- XBRL Specifications
- XBRL Spec Recommendations
- Financial Reporting Taxonomies
- Index of Financial Reporting Taxonomies
- General Ledger Taxonomy
- XBRL Technical Guidance
- XBRL Software Tools
- The Electronic Business Reporting Showcase
- XBRL Consortium web site
- Financial Accounting Standards Board (FASB)
- About the US Securities and Exchange Commission (SEC)
- See also SEC EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system w/ SGML/XML support:
- "Extensible Business Reporting Language (XBRL)" - Main reference page.
- Related specifications in finance and trading:
- Financial Products Markup Language (FpML)
- Open Financial Exchange (OFX/OFE)
- Interactive Financial Exchange (IFX)
- FinXML - 'The Digital Language for Capital Markets'
- Investment Research Markup Language (IRML)
- Extensible Financial Reporting Markup Language (XFRML)
- Vendor Reporting Extensible Markup Language (VRXML)
- XMLPay Specification
- Treasury Workstation Integration Standards Team (TWIST)
- Market Data Definition Language (MDDL)
- Market Data Markup Language (MDML)
- Weather Markup Language (WeatherML)
- MarketsML Initiative
- Research Information Exchange Markup Language (RIXML)
- Data Link for Intermediaries Markup Language (daliML)
- swiftML for Business Messages
- Straight Through Processing Markup Language (STPML)
- FAML DTD for Financial Research Documents
- XML-MP: XML Mortgage Partners Framework
- Mortgage Bankers Association of America MISMO Standard
- EcoKnowMICS ML
- Trading Partner Agreement Markup Language (tpaML)
- Internet Open Trading Protocol (IOTP)
- XML Voucher: Generic Voucher Language