Assignment on XBRL

Course: Accounting Information Systems

Course ID: ACT 4103

Prepared by:

MD Ibnul Alavee Chowdhury; 17211001

Ayndrilla Hossain Oishi; 17211005

Aushaf E Rabbi, 17211007

Arijit Barua Chowdhury; 17211009

Sadman Hossain Shihab; 17211015

Rabiul Islam; 17211039

Prepared For:

Dr. MD Musfiqur Rahman, PhD FCMA

Adjunct Faculty

Department of Accounting & Information Systems

Faculty of Business Studies

Bangladesh University of Professionals

Date of Submission:

May 10, 2020

Table of Contents
What is XBRL?..........................................................................................................................2
Origin and Development of XBRL:...........................................................................................2
What does XBRL do?................................................................................................................3
XBRL Process:...........................................................................................................................4
Who Uses it?..............................................................................................................................4
Regulator................................................................................................................................5
Companies..............................................................................................................................5
Governments..........................................................................................................................5
Data Provider.........................................................................................................................5
Analysts and Investors...........................................................................................................5
Accountants............................................................................................................................6
XBRL in Financial Reporting:...................................................................................................6
What are some of the most important features of XBRL?.........................................................7
 Clear Definitions.............................................................................................................7
 Testable Business Rules..................................................................................................7
 Multi-lingual Support......................................................................................................7
Benefits of XBRL:.....................................................................................................................8
 Flexibility:.......................................................................................................................8
 Labor and Cost Savings..................................................................................................8
 Data Exchange and Merger:............................................................................................8
 External User Analysis....................................................................................................8
 Credit risk management..................................................................................................8
 Business Intelligence.......................................................................................................8
 Portfolio management and market data providers..........................................................8
 Transaction cost analysis.................................................................................................9
 Transparency and Public Interest....................................................................................9
Challenges of XBRL:.................................................................................................................9
References...............................................................................................................................10
What is XBRL?
XBRL (Extensible Business Reporting Language) is an XML-based computer language for
the electronic transmission of business and financial data. The goal of XBRL is to standardize
the automation of business intelligence (BI).

XBRL is an open standard which is overseen by a not-for-profit organization called XBRL

International. XBRL uses tags to describe and identify each item of data in an electronic
document. The tags allow computer programs to sort through data and analyze relationships
quickly and generate output in various formats. Because the tags are standardized, analysis
can be conducted across multiple documents from multiple sources, even if the text in the
documents is written in different languages.

XBRL (eXtensible Business Reporting Language) is a declarative language based on the

XML (eXtensible Markup Language) standard, designed to be a universal language for
expression, dematerialization and electronic transmission of financial data but not limited to,
regulatory filings such as annual and quarterly financial statements, general ledger
information, and audit schedules. It is a global effort to build a coding structure, following
Generally Accepted Accounting Principles (GAAP) which is freely licensed, thus allowing it
to become the digital language of business reporting and facilitating the automatic exchange,
recyclable and reliable extraction of financial information among various software
applications anywhere in the world (Hoffman, 2001).

The change from paper, PDF and HTML based reports to XBRL ones is a little bit like the
change from film photography to digital photography, or from paper maps to digital maps.
The new format allows you to do all the things that used to be possible, but also opens up a
range of new capabilities because the information is clearly defined, platform-independent,
testable and digital. Just like digital maps, digital business reports, in XBRL format, simplify
the way that people can use, share, analyse and add value to the data.

Origin and Development of XBRL:

In the early 1990’s it was discovered that Hypertext Markup Language (HTML) was not
adequate for all users, since HTML could not interpret the content of a Web site. A group of
engineers, with the help of the World Wide Web Consortium (W3C) developed eXtensible
Markup Language (XML), and version 1.0 was released in 1998. XML uses generalized
codes for tagging data, and these tags better represent the data and make it easier to utilize
and manipulate. Members of the accounting industry became early adopters of XML and they
created a prototype language called Extensible Financial Reporting Markup Language
(XFRML), specialized for their specific industry requirements (Mall Manmohan, 2014).

Charles Hoffman, a CPA, and Wayne Harding, chairman of the AICPA’s high tech task
force; had partnered and realized a need for a tagging system that identified financial data and
directed the computer, in respect to the handling of the data. They started the development of
financial statements in XML, which helped lay the foundations for XBRL. In 2000, an
accounting industry specific language was released, this was version 1.0 and it was renamed
the eXtensible Business Reporting Language (XBRL). Currently, the industry standard is
XBRL 2.1.

What does XBRL do?

It is termed as Barcode of reporting which makes the reports more authentic, accurate and
efficient. It allows rare tags to be associated with the following facts:

 People to use information in a way which they need as example different language,
foreign currencies etc. and in their preferred style.
 People to consume the information so confidently as the data provided to them
conform with a set of sophisticated rules.
 People to publish report confidently that the information they are giving will be
consumed and analyzed accurately.
 People to accept reports to test them against a set of rules in order to avoid and find
out mistakes at the source.

Comprehensive definitions and accurate data tags allow the preparation, validation,
publication, exchange, consumption and analysis of business information of all kinds.
Information which is prepared through XBRL can be used in any system of any organization.

XBRL Process:
XBRL is a language, which has its own set of special words (codes) that make up a
communications system. The XBRL specification is explained to computers through the use
of two computer files, which contain the fundamental building blocks of XBRL; and these
are the XBRL core schema and the XBRL meta-model. The XBRL specification describes
how XML elements and attributes are organized and structured to create XBRL instance
documents and taxonomy documents. The XBRL core schema describes, via a computer
language called document type definition (DTD), how XBRL instance documents will be
created; while the meta-model describes, via a computer language called XML Schema, how
XBRL taxonomy documents will be created.

The instance documents contain the data of a business report, such as a financial statement,
and the taxonomy documents describe the financial facts used in the business reports. The
taxonomy documents contain the vocabulary of financial facts or dictionary of terms that will
be used in an instance document. More than one taxonomy document may be used to describe
an instance document. The instance document might have to derive information from the
company taxonomy, media taxonomy, taxonomy for financial report, taxonomy for industry
sector/jurisdiction, and various other taxonomy documents.

After the instance document has been created, the taxonomies are checked to be XBRL
compliant and the instance document has been validated; the resultant is a valid XBRL
document. Now the information can be shared with others and can be used by computer
applications. Presenting the information in another form, requires to create a style sheet to
express the XBRL instance document in the desired format. Different style sheets render
information in different ways, for instance, financial information would need to be in HTML
form before being placed on a Web site. The real benefit and associated cost savings results
from the fact that no information needs to be re-keyed at any time during these style sheet
applications (Srivastava, 2002).

Who Uses it?

The international XBRL consortium is supported by more than 600 member organisations,
from both the private and public sectors. The standard has been refined over and decade for
more than 10 years and supports almost every conceivable report. It provides a wide range of
features that enables many authorities to use it.
Regulator
 Financial regulators that need significant amounts of complex performance and risk
information about the institutions that they regulate.
 Statistical and monetary policy authorities that need financial performance
information from many different organisations.
 Tax authorities that need financial statements and other compliance information from
companies in order to process and review their corporate tax affairs.
 Business registrars who needs to publish many corporate data both public and private
along with financial statements.
 SEC needs to analyse the performance and compliance of listed companies and make
sure that the data available in the market are ready to analyse and consume.

Companies
 Companies who need to report to the mentioned authorities.
 Enterprises who need to share their information among a complex group.
 Supply chain that needs to exchange information to reduce risk.

Governments
 Government agencies who are trying to simplify the business process and reducing
red tape by either harmonizing data definitions or consolidating it.
 Government agencies who are trying to simplify and consolidate the methods and
improving the quality of the government reports who publish public data.

Data Provider
 Specialist data providers who use performance and risk information published into the
market place and create comparisons, ratings and other value-added information
products for other market participants.

Analysts and Investors

 Analysts who try to understand potential risks and performance
 Investors who like to compare the investment before investing by measuring the risk
and performance.

Accountants
 Accountants use XBRL in support of clients reporting requirements and are often
involved in the preparation of XBRL reports.
XBRL in Financial Reporting:
Since XBRL has the ability to be programmatically integrated upon its reception, and the fact
that pre-outlined business rules can be applied to the XBRL instance file, the speed and
efficacy of XBRL is what makes it favored by marketing and regulatory analysts. It is a cost-
effective way to reduce the analysis time, electronically communicate reports using the
internet and make information easier to combine and compare using web-based investor
relations portals, which can even add value, and generate revenue. This, in turn, means that
XBRL can even facilitate a greater frequency of financial reporting and improve the quality
and availability of information.

It is taxonomy- a system of classifying, identifying and structuring information so consumers

can find information easily which is a crucial part of XBRL. A good example of taxonomy in
use would be in retail, to facilitate the retrieval, review and selection of products in online
sales: taxonomy in this context would be inclusive of codes and labels (categories such as
size, color and price range) to identify products and uses short descriptions, delivery times
and references to real-life retail spaces to quickly offer information about the products to the
consumer. The capacity of taxonomies in structuring information electronically means it is
easily accessible and processed effectively in terms of cost by the intended receiver of that
information (laa A. Qaffas, 2018).

The International Financial Reporting Standards (IFRS) Taxonomy was first published in
2002 and was a collaborative product from XBRL International and IASB. Their taxonomy
falls in line with IFRS and includes IAS (International Accounting Standards) and
incorporates the IFRS for Small and Medium Enterprises (SMEs). A guide was given
alongside this which offers technical advice and support for IFRS taxonomy users. This
combined approach using XBRL along with IFRS uses best practices and creates a
regularized system with a view to improving transparency and quality for users and
shareholders in the field of financial reporting. The IFRS foundation thus plays an integral
part in the adoption of XBRL.

The benefits of XBRL as a means of financial reporting has derived when tagged information
started to become readily available from all companies and can be accessed electronically for
analysis, benchmarking, and reporting uses and financial modeling. Potential benefits of
XBRL rests in cost efficiency, automated exchange, great scope and reach of business
information, frequency, timeliness, accuracy, reliability and accessibility of information.
XBRL has the prospective to support most of the goals of corporate governance stakeholders
and to significantly improve governance although these benefits can only be realized under
satisfactory IT and social environments. XBRL is also developed to increase transparency
through the use of official taxonomies so the reported facts are clear and well documented for
the users. Not only can XBRL enhance external financial reporting, but it can also be applied
internally for cost accounting, performance measurement, analysis and decision making
purposes. Analysts and investors will be able to dramatically increase their breadth of
knowledge with financial data readily available that does not require hours of manual
manipulation for improved financial decision making.

What are some of the most important features of XBRL?

 Clear Definitions
XBRL allows the creation of reusable, authoritative definitions, called taxonomies, that
capture the meaning contained in all of the reporting terms used in a business report, as well
as the relationships between all of the terms. XBRL doesn’t limit what kind of information is
defined: it’s a language that can be used and extended as needed.

 Testable Business Rules

 To stop poor quality information being sent to a regulator or third party, by being run
by the preparer while the report is in draft.
 To stop poor quality information being accepted by a regulator or third party, by
being run at the point that the information is being received.
 To flag or highlight questionable information, allowing prompt follow up, correction
or explanation.
 To create ratios, aggregations and other kinds of value-added information, based on
the fundamental data provided.

 Multi-lingual Support
XBRL allows concept definitions to be prepared in as many languages as necessary.
Translations of definitions can also be added by third parties. The XBRL community makes
extensive use of this capability as it can automatically open up reports to different
communities.
Benefits of XBRL:

 Flexibility: Accounting standards provide significant choices for accounting

professionals who can disaggregate data in the ways that they choose. They can move
individual components of financial data around or introduce entirely unique reporting
ideas through XBRL.
 Labor and Cost Savings; Due to the fact, that under the current non-XBRL financial
reporting environment; data retrieval, extraction and input throughout the information
supply chain is repetitive and results in exorbitant costs. This inefficient use of labor
resources wastes a lot of money, increases errors, and decreases worker productivity
which is resolved by XBRL.
 Data Exchange and Merger: XBRL provides tremendous benefits to the businesses
at the time of data exchange or merger if implanted within the businesses ERP
system, making them easier to consolidate companies when it comes to merger and
acquisitions and fair value can be arrived.
 External User Analysis: XBRL streamlines the preparation of business and financial
reports for internal and external decision making and significantly improves the
ability in financial management to more precisely direct and publish financial report
to investors, regulators, analysts, lenders, and other key stakeholders.
 Credit risk management: With the choice of a fast loan application, a small business
can provide its bank, financial and administrative information in XBRL format and
get a loan in days rather than weeks. The use of XBRL in credit risk calculation
algorithms, financial analyses by rating companies certainly improve the effectiveness
of credit risk analysis.
 Business Intelligence: Decision support tools will take off considerably with the
XBRL format. With up-to-date and reliable data available in the firm, managers and
financiers have new sources of control and monitoring of activity and performance.
Analysis, modeling, forecasting and reporting are greatly facilitated using XBRL.
 Portfolio management and market data providers: Portfolio and market data are
more accurate and more easily obtained and integrated. The banking sector is a major
 provider of financial data. Some banks that have developed their own ticker system
may benefit from XBRL integration solutions.
 Transaction cost analysis: Institutions that process a lot of data, such as banks,
brokers, data providers, statistical agencies, are constantly analyzing their costs and
trying to reduce them. Organizations have hundreds of different mechanisms to
consider when conducting their transactions. The initiative to reduce the complexity
of these processes is called Straight-Through Processing (STP). All stakeholders have
an interest in achieving STP, which can greatly benefit from the interests of XML and
XBRL.
 Transparency and Public Interest: XBRL drives transparency and improves the
efficiency of capital markets by helping analysts and other users of financial and
business information find relevant facts. On the other hand, it enables the
professionals to proactively fulfill its primary mission to protect the public interest by
improving investor access to the capital markets and increasing analyst coverage of
both small and large companies through a reduction in the cost associated with
covering a company (Muhammad, 2018) (Kloeden, 2006).

Challenges of XBRL:
 Not used by all publicly traded companies as of now
 Tags may be wrongly assigned to financial terms
 There is still a lack of consistency in the use of standards
 Wrong definitions (taxonomies) may be given to certain financial terms
 It may pose security risks for companies publicly reporting their financial information

Although, the implementation of XBRL process throws many challenges, yet it should not
deter the company from the path of the bigger goal in sight. The obstacles in the path of its
adoption are largely outweighed by its latent benefits to all the stakeholders of a business
[ CITATION Ang09 \l 1033 ].
 References

Hoffman, C. &. (2001). XBRL Essentials. New York: American Institute of Certified Public
Accountants (AICPA).

Jarrouj, A. (2009, May 30). XBRL:Advantages and Disadvantages. Retrieved from IT

103:Information Technology: http://ajarrouj.blogspot.com/2009/05/xbrladvantages-
and-disadvantages.html

Kloeden, P. (2006). XBRL Cost-benefit analysis: In Theory and application. RIT Scholar
Works. Retrieved from https://scholarworks.rit.edu/cgi/viewcontent.cgi?
referer=https://www.google.com/&httpsredir=1&article=2629&context=article

laa A. Qaffas, A. Z. (2018). Xbrl technologies for financial reporting in information systems.
International Journal of Management & Information Technology, 13(1).

Mall Manmohan, M. P. (2014). A Study on Cost-Benefit Analysis of XBRL Reporting on

Financial Data Ecosystem. International Journal of Advances in Management,
Economics and Entrepreneurship, 1(1).

Muhammad, D. E. (2018). XBRL: Issues and Challenges. Retrieved from FACT Periodicals:
https://accountancy.uitm.edu.my/v2/index.php/ricaen/periodicals/89-2018-
august/510-xbrl-issues-and-challenges

Srivastava, V. K. (2002). eXtensible Business Reporting Language (XBRL) –The Digital

Language of Business: An Indian Perspective. Indian Accounting Review, 6(1).