The Accountant's Guide to XBRL (4th Edition)
Clinton E. White, Jr., DBA, MBA
Professor of Accounting & MIS
Univesity of Delaware |
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Chapter 1: The Accountant's Guide to XBRL
Overview
The Accountant's Guide to XBRL is designed to help those with a background in accounting and finance understand the basics of XBRL:
the Extensible Business Reporting Language. Although a basic knowledge of accounting is necessary to understand this book, it is not
about debits and credits but about how to use XBRL in financial reporting. XBRL adds meaning and context to accounting, financial,
and other business performance data, making it understandable, reusable, and precisely interpretable by computer applications.
Although raw data are easily processed by computer applications, processing data with meaning and context represents a new and higher
level of processing because XBRL tagged data is considered to be information (i.e., it is surrounded by meta data that gives it meaning).
As information it can be more effectively exchanged and transmitted across networks and it allows formerly manual processes to be automated.
Although XBRL is a technical computer language designed to standardize business and financial reporting, you do not need a degree in
Computer Science to understand it. The Accountant's Guide to XBRL is written from a non-technical perspective. It reflects the way the
author teaches XBRL to senior accounting majors and graduate students at the University of Delaware and to accounting educators and
practitioners in workshops and seminars.
This chapter introduces The Accountant's Guide to XBRL. It starts with an overview of XBRL and its role in computerized financial and
business operations reporting and concludes with a preview of each chapter. New words and phrases are introduced and explained throughout.
Each is also defined in the Glossary at the end of each chapter. If you don't understand a term in context, be sure to refer to its formal
definition in the glossary; all entries are in alphabetical order. XBRL is an emerging technology that is impacting accounting, financial,
and business reporting. Well educated accounting and finance professionals should have a familiarity with the basics of XBRL. The Accountant's
Guide to XBRL is designed to provide you with those basics. With this knowledge, you will have the foundation on which to investigate further
and build an expertise in the area or simply be comfortable with the technology.
XBRL
The Extensible Business Reporting Language is a "vocabulary," a special purpose language, of the Extensible Markup Language (XML). XML is a toolkit for adding meaning to data and storing and processing it as information. "Extensible" means that as long as you follow the rules, it can be extended or added to. "Markup" means surrounding pieces of data with tags that add meaning. "Language" means a method of communication. Using the XML toolkit, a piece of data, such as the amount of accounts payable at a specific point in time for a specific business, can be stored in an XML document as: 1234567890. In this form, the piece of data, 1234567890, is surrounded by tags - a beginning tag and an ending tag , that give it meaning and differentiate it from other pieces of data. The piece of data is no longer raw data. It is information because it is contained within tags that give it "meaning," and it can be stored and communicated as such. XML provides the general tools, rules, and syntax with which to build vocabularies for specific purposes, such as XBRL for financial and business operations reporting. XBRL provides us with an additional set of tools, rules, and syntax with which to build business reporting applications, such as U.S. GAAP financial statements.
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XBRL
The Extensible Business Reporting Language is a "vocabulary," a special purpose language, of the Extensible Markup Language (XML).
XML is a toolkit for adding meaning to data and storing and processing it as information. "Extensible" means that as long as you follow
the rules, it can be extended or added to. "Markup" means surrounding pieces of data with tags that add meaning. "Language" means a
method of communication. Using the XML toolkit, a piece of data, such as the amount of accounts payable at a specific point in time
for a specific business, can be stored in an XML document as: 1234567890. In this form, the piece
of data, 1234567890, is surrounded by tags - a beginning tag and an ending tag , that give it meaning
and differentiate it from other pieces of data. The piece of data is no longer raw data. It is information because it is contained
within tags that give it "meaning," and it can be stored and communicated as such. XML provides the general tools, rules, and syntax
with which to build vocabularies for specific purposes, such as XBRL for financial and business operations reporting. XBRL provides
us with an additional set of tools, rules, and syntax with which to build business reporting applications, such as U.S. GAAP
financial statements.
XBRL is an emerging technology under the auspices of XBRL International. XBRL International is a world-wide consortium of over 400
companies, organizations, and government entities dedicated to creating an open international standard for computerized representation
and reporting of financial and business operations information (see www.xbrl.org). XBRL is used to tag each piece of data in a standard
way so that it becomes a piece of business information that can be validated, stored, and processed by computerized applications. It is
an emerging technology in that there is now a core specification defining the XBRL vocabulary around which new XBRL extensions are
being developed, one of which is the US GAAP taxonomy.
The core specification, XBRL Specification 2.1 (November 7, 2005), defines the rules and syntax for XBRL documents and for XBRL
taxonomies. XBRL documents are referred to as "instance documents" because they are an instance of a class of documents defined by
this specification. XBRL taxonomies define tag names to represent accounting and financial terms used to report data in XBRL instance
documents. XBRL instance documents follow a standard format and contain pieces of data, each tagged with a name representing an accounting
or financial reporting concept from an XBRL taxonomy. Therefore, each piece of data in an XBRL instance document is identifiable
as information being reported by a specific entity, at a specific point in time, in a specific currency, and for a specific purpose.
The result is that the XBRL instance document and the data it contains can be validated, stored, and processed by software applications.
Of equal importance, the data it contains can be efficiently analyzed, compared, and used for other purposes by software applications.
The major benefit is the standardized representation of accounting and financial information so that it can be reported in such a way that
it can be validated, analyzed, used for multiple purposes by multiple parties, and unambiguously understood. In addition, once tagged in
XBRL format, the data does not need to be re-entered multiple times and it can be communicated in its original form by software
applications on computer networks.
Markup is very important in computerized systems. Every piece of data that is processed by a software application is marked up in
some way to distinguish it from any other piece of data. Consider the Excel spreadsheet in Figure 1-1.
Figure 1-1: An Excel spreadsheet - 3M Company, Inc.’s current assets and liabilities
Anyone familiar with accounting or finance recognizes this as a spreadsheet reporting 3M Company, Inc.'s current assets and
liabilities, in millions of dollars, as of September 30, 2009. In an Exce spreadsheet, each piece of data is separated from every
other piece of data and marked up by its physical location in Excel format. Cell A6 contains the text string "Cash and cash equivalents"
and cell B6 contains the number "3239" formatted for currency, and so on. With this data in this spreadsheet, we could jump to
another cell and write a formula to calculate 3M Company's current ratio or we could email the entire spreadsheet to someone else
connected to our network or the Internet. Those we send it to could, if they also had the same version of Excel, open it and see
the same spreadsheet. We could not, however, query the Excel spreadsheet to find a value for "Cash and cash equivalents." Likewise,
we could not have a separate software application read a value in a cell and understand what it represents.
A basic problem with proprietary software like an Excel spreadsheet is that data are marked up by their physical location or by a
proprietary method that makes sense for the software application itself. XML is different. It is a special purpose language that
enables the marking up of data in a universal, non-proprietary fashion so that they can be unambiguously interpreted and processed
by any XML-enabled software application. Markup that adds meaning to data is referred to as meta-data. XBRL is an XML vocabulary for
adding standardized meaning to data for accounting and financial reporting so they can be unambiguously reported, stored, analyzed,
and communicated over computer networks. We could query an XBRL instance document with the information found in the spreadsheet in
Figure 1-1 and find a value for "Cash and cash equivalents" because the value is surrounded by standardized meta-data.
So, why is it important to markup accounting, financial, and business operations data with meta-data so they are specified
precisely in a standard format? Answer: For better computer processing!
In today's interconnected world of computerized applications, processing, analyzing, reporting, and understanding data are
critical activities for business success. Accounting is "an information system that measures, processes, and communicates financial
information about an identifiable economic entity" (Needles and Powers, Financial Accounting, 2004, pg. 4). Most accounting employs
computerized applications. XBRL is a tool box to make computerized accounting and financial and business reporting in general more
effective and efficient.
Accounting adds value to business processes and decision making through standardized computer reporting of financial and business
operations information. XBRL instance documents contain "facts" reported by a specific entity, at a specific point in time, in a
specific currency, and under identifiable accounting guidelines, such as U.S. GAAP or IFRS. Each fact reported in an XBRL instance
document can be identified, addressed individually, analyzed in relation to other facts, and reused for other purposes. These are
distinct business advantages because of the large amount and variety of accounting, financial, and operations reporting that business
entities must do and because of the interpretability and comparability of the items and facts reported.
Consider, for example, a publicly-traded company's annual reporting of operations, including its annual 10-K report to the
SEC (U.S. Securities and Exchange Commission) in HTML (Hypertext Markup Language) format, the glossy printed annual report for
shareholders, and its Web page for Internet consumption. Typically, each of these reports is created individually, even though
each is based on the same basic items of information in one form or another, including the company's financial statements with
and without detailed footnotes, its management discussion and analysis, its auditor's report, and its discussion of operations.
The detailed items of information that make up these reports can be tagged with XBRL and stored in instance documents. They can
then be processed by software applications for filings with the SEC, the printed annual report, the Web page, or any other
reporting purpose without time-consuming, error-prone human intervention.
In addition, when the SEC receives a company's 10-K in HTML format, each document is a block of text marked up for presentation
purposes (i.e., HTML is a presentation format understood by Web browsers), making automated analysis difficult at best. The same
is true for users of the company's Web page. Try searching for "Net income" for a specific time period in either an SEC filing
in the EDGAR (Electronic Data Gathering and Retrieval) database or a company's Web page. You will find the words "Net income"
and, with additional visual searching, the value you are looking for. If you then want to use that value in a spreadsheet, or
any other software application, you have to read the value, type it in to your application, and go from there.
With an XBRL instance document as your source document, on the other hand, you could write a few lines of code to perform
the same search, find each reported value for "Net income," each tagged with its specific time period and currency, and copy them
into your application. You could reuse each value individually or in total along with relevant footnotes in any other application
without human intervention. You could even compare them to similar values found in other XBRL instance documents of other companies.
If all companies reported 10-K information in XBRL instance document format, the efficiency and effectiveness of the analyses that
the SEC, as well as all users of the EDGAR database, could do would be improved exponentially. XBRL instance documents are a tool
to support transparency flexible usage of accounting and financial information.
The SEC began a pilot program in 2005, referred to as their "interactive data initiative," to encourage companies to voluntarily file
XBRL financial statements as supplemental documents. In 2007, after analyzing the participant company filings, they issued contracts
worth many millions of dollars to upgrade their 20-year old databases to handle XBRL instance documents. As of June 2009, the SEC began
the phase in of reporting in XBRL format. As of June 15, 2009, the 500 largest publicly traded companies must "furnish" their financial
reports in XBRL format, with all others following suit in 2010 and 2011. The U.S. Federal Deposit Insurance Corporation (FDIC) has
required since October 2005 that member banks submit quarterly "Call Reports" in XBRL format directly to a Central Data Repository
established by the U.S. Federal Financial Institutions Examination Council (FFIEC). The FDIC reports dramatic improvements in the
accuracy of the data that its 8,300 member banks submit and the ability to analyze the information in the reports in days rather than months.
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Chapter 1 contents:
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A Preview of The Accountant’s Guide to XBRL
Since XBRL is a vocabulary of XML, you must understand some of the basics of the XML foundation before jumping into XBRL. XML is
not like other computer languages with which you may be familiar. XML is a set of rules and syntax, a meta-language used to create
other languages. Chapter 2 describes the rules for XML documents in the context of the Universal Business Language (UBL) - a new XML
vocabulary for creating business documents. XML documents and their behavior when processed are the foundation of the formal XML
specification. XML documents contain data surrounded by tags that add meaning to them. Data are tagged with XML "elements" and
"attributes." Properly formatted XML documents can be processed by any XML-enabled software application. In the examples and exercises
in this book, we will use the MS Internet Explorer as our XML processor. The XML documents that you create in the end-of-chapter exercises
will be used in other exercises in later chapters.
Continuing with the XML foundation, Chapter 3 discusses the XML Schema language and two companion XML languages used in XBRL,
Namespaces and XLink. XML documents contain data, while XML languages are used to validate and process XML documents. The XML Schema
language is a very technical computer language used to define XML elements and attributes and the structure of XML documents. The
formal UBL and XBRL specifications are written in the XML Schema language, as are all UBL and XBRL taxonomies. A basic knowledge of the
principles, not the technical details, of the XML Schema language is helpful for understanding XML vocabularies such as UBL and XBRL.
Two additional supporting languages, XML Namespaces and XLink, are also covered from a non-technical perspective.
Building on the XML foundation, Chapter 4 describes XBRL instance documents and taxonomies. You can think of XML as the foundation
toolkit and UBL and XBRL as the business document and financial reporting toolkits. The XBRL Specification defines the rules and
structure that XBRL documents must follow and a language for building XBRL taxonomies, which are dictionaries of elements and relationships
for specific reporting purposes, such as the U.S. GAAP XBRL 2009 taxonomy. Like all XML documents, XBRL documents contain data surrounded
by tags that add meaning. XBRL tags have very specific accounting and financial reporting meanings (i.e., each tag represents a well-defined
accounting/financial reporting concept) and are defined in XBRL taxonomies (e.g., the U.S. GAAP XBRL 2009 taxonomy). And, each XBRL document
is linked to at least one XBRL taxonomy that supports the document's specific reporting purpose (e.g., reporting financial information under
U.S. GAAP for Commercial & Industrial companies).
XBRL documents contain data representing business facts reported for a particular purpose, such as sending a financial statement to your
bank or filing a 10-K with the SEC. Although XBRL documents are human-readable, they are meant to be processed by software applications.
Chapter 5 explains how to transform XBRL documents into human-readable output using the Extensible Stylesheet Language for Transformations
(XSLT). XSLT is a relatively simple scripting language for transforming XML documents for other purposes, such as presentation as a Web page.
Chapter 5 presents the basics of the XSLT language and uses it to build the code to transform UBL and XBRL instance documents into Web pages
for human consumption.
There are currently a growing number of software tools available for the creation and validation of XBRL instance documents. Chapter 6
introduces one of these, Rivet Dragon Tag (Rivet Software). The chapter contains a tutorial on creating, validating, and rendering XBRL
instance documents and the creation of a SEC filing package. It also discusses the current state of XBRL in financial and business operations
reporting and the potential impact of XBRL on accounting, auditing, and financial reporting.
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A Note on Teaching
The Accountant's Guide to XBRL is designed as a textbook on XBRL for those with an accounting or finance background. It is based on
the way the author teaches XBRL in six weeks in his Accounting Information Systems class at the University of Delaware. Week one includes
coverage of Chapters 1 and 2 and requires students to create two basic XML documents using the UBL vocabulary. The author uses a
combination of lectures and a computer lab in which students create a simple XML documents as presented in Chapter two. Students then
complete as a homework assignment one of the end-of-chapter exercises. Week two includes coverage of Chapter 3 along with a simple
in-class exercise as presented in the chapter. Students then complete as a homework assignment one of the end-of-chapter exercises; building
a UBL document schema. Week three includes coverage of Chapter 4 and requires the creation of two XBRL documents - a simple one in class
followed by a more complex one as homework using one of the end-of-chapter exercises. Week four includes coverage of Chapter 5 and requires
the creation of at least two XSLT documents - one to transform a simple UBL document to a Web page in class and another as homework to
transform an XBRL instance document into a financial statement using one of the end-of-chapter exercises. Week five includes coverage of
Chapter 6 and the use of Rivet Dragon Tag in a computer lab and a homework exercise (Exercise 6-1). Week six includes the analysis of an
SEC XBRL filing (as in Exercise 6-2) and coverage of the Appendix and the creation of a basic XBRL GL instance document using the
end-of-chapter exercise. Instructors can register for detailed lesson plans, PowerPoint slides, instructor's notes, and exercise solutions.
For those with less than five or six weeks to devote to XBRL, there are several recommended alternatives. A four week introduction to
XBRL would simply not include week number five or six. A three week introduction to XBRL would include weeks one, two, and three - covering
Chapters 1,2,3, and 4. A two week introduction to XBRL would include coverage of Chapters 1, 2, and 4 as follows: Week one - cover Chapters 1
and 2 and assign the creation of at least one XML document; Week two - cover Chapter 4 and assign the creation of at least one XBRL instance
document. Another suggestion would be to cover Chapters 1, 2, 3, 4, and 6, thus gaining exposure to the XBRL foundation and experience with
Rivet Dragon Tag.
For software, you can use MS Notepad, or any other "text editor" (i.e., not a Word processor), to create XML, UBL, and XBRL documents and
the Internet Explorer, or any other current browser, to process them. The basics of using Notepad, which can be found under Accessories
on a Windows computer, are explained at the end of Chapter 2. A more sophisticated text editor for the Windows environment is the free
Programmer's File Editor, available from various archive sites, including http://www.lancs.ac.uk/staff/ steveb/cpaap/pfe/default.htm. A more
sophisticated text editor for the Macintosh OSX environment is TextMate, a commercial package with a 30-day free trial version available
from http://macromates.com/.
I hope you enjoy the Fourth edition of The Accountant's Guide to XBRL and find it to be a useful tool for learning about this emerging
technology that is changing the face of accounting, financial, and business operations reporting. It will be important in your future as a
professional!
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Glossary of new terms introduced in Chapter 1
EDGAR (The Electronic Data Gathering and Retrieval database): The public database in which all submissions to the SEC are stored.
FDIC (The U.S. Federal Deposit Insurance Corporation): The regulatory authority to which all federally insured banks in the U.S.
must report.
FFIEC (The U.S. Federal Financial Institutions Examination Council): A U.S. regulatory authority consisting of the FDIC, the
Federal Reserve Board, and the Controller of the Currency.
Instance documents: An XBRL document. It is referred to as an "instance" document because it is an instance of the class of
documents described in the XBRL Specification 2.1.
Meta-data: Data about data. It means data describing data by adding meaning to it.
SEC (The U.S. Securities and Exchange Commission): The regulatory authority to which all publicly-traded companies must report
financial performance. The annual 10K report is a complete, audited report of financial and performance information required
from all publicly-traded companies.
XBRL (Extensible Business Reporting Language): A toolbox for creating accounting, finance, and business reports.
XBRL Specification 2.1: The most recent XBRL specification. It was issued on December 31, 2003 and reissued with errata corrections
on November 7, 2005. It is a formal specification of the rules and syntax that XBRL instance documents and taxonomies must follow
to be valid.
XBRL taxonomies: Lists of elements and relationships for specific reporting purposes, such as reporting financial information under
U.S. GAAP. Each tag used in an XBRL instance document must be defined as an element in an XBRL taxonomy.
XML (Extensible Markup Language): A toolbox, including a meta-language, a language for creating other languages, that forms the
foundation for all XML vocabularies, such as XBRL. Following the rules of the XML language, data are surrounded with tags that add
meaning and allow them to be processed as information.
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Downloadable files & References
Downloadable files:
Available at: http://www.skipwhite.com/guide2009/chapter1/3massetsandliabs.xlsx
- 3MAssetsAndLiabs.xlsx (Figure 1-1)
References:
Needles, Belverd E. and Marian Powers, Financial Accounting, Houghton Mifflin Company (NY) 2004
Programmer’s File Editor, http://www.lancs.ac.uk/staff/steveb/cpaap/pfe/default.htm.
SEC (U.S. Securities & Exchange Commission), http://www.sec.gov/.
TextMate, http://macromates.com/.
XBRL International, www.xbrl.org.
XBRL US, http://xbrl.us/Pages/default.aspx.
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