Data & Analytics

03:33 PM
Connect Directly
RSS
E-Mail
50%
50%

XBRL Moves Toward Adoption

Adoption of standard requires motivation, technical standards, taxonomies, software and implementation, says XBRL chair.

What will it take to achieve adoption of XBRL, eXtensible Business Reporting Language? XBRL is an XML-based standard intended to automate the flow of financial information by "tagging" each line item with a description of its contents.

Paul Penler, the current chair of XBRL-US and a Cleveland-based principal at Ernst & Young LLP, global auditing and assurance services, listed five things that have to happen in order for XBRL to gain adherents in the financial world:

Motivation: "The motivation is low right now," says Penler. "It's not regulated yet in many places, and secondly, people don't understand what benefits they would obtain from it." Nevertheless, the benefits exist and are substantial, according to Penler, who expects that financial institutions can eliminate keystroke errors, reduce headcount, gain faster access to data, conduct richer analysis and institute more robust risk management practices.

Technical standards: The XBRL specification is at version 2.1, with a supplement coming out within weeks. "Custom solutions providers can feel confident that there's a solid technical specification that's out there," says Penler.

Taxonomies: Working together with the AICPA, the big four accounting firms, FASB, and the SEC, the XBRL-US consortium has released a draft version of a taxonomy for classifying financial statements under Generally Accepted Accounting Principles, or GAAP. The taxonomy "covers about 90 percent of the financial statement line items," according to Penler. "A company will start with the U.S. GAAP XBRL and then create extensions for additional items that aren't in the taxonomy."

Software: Once the XBRL technical standards and the taxonomies have gelled, software makers are expected to find ways to incorporate the standard into their existing systems. "XBRL has to be embedded into dozens of different software packages - Oracle, SAP, and a lot of other ERP vendors," says Penler. "There are other vendors putting it into Word and Excel through plug-ins, as well as custom XBRL tools."

Implementation: "The whole idea behind XBRL is that data's being moved around by applications, as opposed to people having to input and cut-and-paste," says Penler. "If you have a system that moves the same number from the general ledger to Hyperion to a Word document to a Web site, there's a high likelihood that it's the same number, than if it had to be reentered five times during the process."

Comment  | 
Print  | 
More Insights
Register for Bank Systems & Technology Newsletters
White Papers
Current Issue
Bank Systems & Technology Dec. 2, 2014
BS&T's 2014 Elite 8 executives are leading their banks to success, whether it involves leveraging the cloud, modernizing core systems, or transforming into digital enterprises.
Slideshows
Video
Bank Systems & Technology Radio
Archived Audio Interviews
Join Bank Systems & Technology Associate Editor Bryan Yurcan, and guests Karen Massey and Jerry Silva from IDC Financial Insights, for a conversation about the firm's 11th annual FinTech rankings.