The Guide & Workbook for Understanding XBRL (3rd edition)
Clinton E. White, Jr., DBA, MBA
Professor of Accounting & MIS
Univesity of Delaware |
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Table of Contents
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Preface
The SEC has passed a new rule titled "Interactive Data to Improve Financial Reporting" (SEC, 2009). In summary, it
requires that all large domestic and foreign accelerated files (i.e. those with common equity float above $5 billion)
begin including financial statements in XBRL format as exhibits with their quarterly or annual reports on or after
June 15, 2009. The financial statements must be tagged in their entirety using tags from the U.S. GAAP or IFRS
taxonomies including footnote disclosures tagged as blocks of text; deeper detailed tagging of the footnotes and
schedules will be phased in with their second year filings. The new rule also requires companies to provide their
financials in XBRL format on their corporate Web sites. All other SEC filers are required to follow suit in 2010 and
2011 depending on their size.
With this rule, accounting and financial reporting has entered the 21st century. XBRL (the eXtensible Business
Reporting Language) is an XML vocabulary for business operations and financial reporting. The Guide & Workbook for
Understanding XBRL is designed to help you understand the basics of the XBRL vocabulary and how to create standard
financial reports known as XBRL instance documents. At its heart, XBRL is a set of rules and syntax for standardized
financial and business operations reporting in computer-readable format.
XBRL has reached a tipping point. XBRL initiatives are in place all over the world. The SEC and XBRL U.S. are
working closely to make financial information "interactive" (i.e. it can be transmitted on computer networks,
accessed by software applications, analyzed, and reused without human re-entry or other inefficient, error-prone
processes). The FDIC, which is part of the larger FFIEC (Federal Financial Institutions Examination
Council), requires member banks to file quarterly call reports in XBRL format. Regulatory authorities in Europe,
Australia, Singapore, Japan, Korea, and China are endorsing financial reporting in XBRL format. And large banks are
beginning to require companies to use XBRL in their loan application and credit granting processes.
For businesses the world over, Internet-based forms of e-business are now imperative for success. One of the more
recent events is the emergence of "the semantic Web." The semantic Web is a phrase that captures the basic principle
that data in digital form can now be captured, transmitted on networks (including the Internet), and stored in
databases, with meaning and context; making it "information" as opposed to simply data. One of the enabling technologies
of the semantic Web is XML (the Extensible Markup Language) and, as mentioned earlier, XBRL is an XML vocabulary
for financial and business operations reporting.
We have reached the point where every well-educated accountant and financial professional should understand XBRL
and be able to understand XBRL instance documents and taxonomies. I have received invaluable input and feedback
from a number of professors at Universities around the U.S. I want to especially thank Professor Brad Tuttle,
University of South Carolina, Professor Uday Murthy, University of South Florida, Professor Andy Luzi, California
State University at Fullerton, and Professor Graham Gal, University of Massachusetts.
Who Should Read This Book
This book is for accounting academics and their students, practicing accountants, and anyone else involved
with computerized financial and business operations reporting. If you fit into one of these categories, you
will get the following from this book:
- A basic understanding of XBRL
- A basic understanding of how to build XBRL instance documents
- An understanding of the structure and use of the XBRL US GAAP v1.0 taxonomies
- A basic understanding of using a spreadsheet based tool to create XBRL instance documents
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Organization of This Book
This Guide and Workbook is organized so that an accounting student or a financial professional can learn the
basics of XBRL and create instance documents using the XBRL US GAAP v1.0 taxonomies. The Chapters are designed
to be read sequentially while the reader is actively participating by using a Web browser to access materials
being discussed and by making entries on paper or in a text editor in response to the Test Yourself questions.
The project section requires the reader to create XBRL instance documents.
- Chapter 1: Introduction, The Guide & Workbook for Understanding XBRL
This section briefly introduces XBRL and why we need it.
- Chapter 2: XML elements and XBRL element names
XBRL is built on the XML foundation. In this chapter, you are introduced to the basic rules for creating well-formed
XML documents, the importance of elements and element names, and the role of XBRL taxonomies; which are essentially
dictionaries of standard element names for accounting and financial reporting concepts.
- Chapter 3: Creating XBRL Instance Documents
XBRL has its own set of rules. In this chapter, you are introduced to the rules that XBRL instance documents must
follow, the importance of namespaces, and the role of context and business facts.
- Chapter 4: XBRL Instance Document Projects
In this chapter, you will find four projects/exercises each requiring you to create an XBRL instance document
(financial statement) for Bicycles OnLine, Inc.:
- Exercise 1: A balance sheet in XBRL format
- Exercise 2: An income statement in XBRL format
- Exercise 3: Financials with footnote disclosures in XBRL format
- Exercise 4: Instance documents using Rivet Dragon Tag
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Table of Contents
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Chapter 1: Introduction
The objective of The Guide & Workbook for Understanding XBRL is to help you understand the Extensible Business
Reporting Language and to create XBRL instance documents for U.S. GAAP reporting. It is intended to be used by
accounting students, practicing accountants, and others involved in the financial reporting process. It is designed
to be used as part of an accounting class or as an independent study guide and workbook. If you are using The Guide
& Workbook as supplemental material in an accounting course, your instructor may have specific guidance and
assignment information. In any case, the following instructions will help you get the most out of your experience:
- The Guide & Workbook is designed to be used while you are in front of a computer connected to the Internet.
You should also have a current Web browser and a text editor. In all examples, the author uses the Internet Explorer
8.0 and MS Notepad. As you read the material and work through the examples, point your Web browser to the indicated
URLs, download the example files, and use the text editor to build XBRL documents.
- In Chapters 2 and 3, you will find "Test yourself exercises" designed to reinforce your learning. Space is
provided to accommodate your answers.
- In Chapter 4, you will find exercises which require you to create XBRL documents for Bicycles OnLine, Inc.
The exercises pull together the concepts covered in The Guide & Workbook and are designed to be completed as
assignments or self-directed exercises.
XBRL is a set of rules and syntax for computerized financial reporting
XBRL (the eXtensible Business Reporting Language) is a set of rules and syntax for creating computer-readable
documents to report financial and business operations information. Consider the consolidated balance sheet information
in the MS Excel spreadsheet for Bicycles OnLine, Inc. in Figure 1.
Figure 1: Bicycles OnLine, Inc. Consolidated Balance Sheet Information
Any computer with the same version of MS Office can process this file and we as humans can read and interpret the
information. For example, if you were asked "what is the balance of Accounts payable for November 30, 2008, for
Bicycles OnLine, Inc." you would answer $50,921,000." However, the spreadsheet simply knows that cell F8 contains a
piece of data (50921) formatted as currency. In an Excel spreadsheet, as well as in most software applications, data
is simply "data" - it has no meaning associated with it. We as humans ascribe meaning to it by reading and understanding
the context surrounding the data.
XBRL is an XML (Extensible Markup Language) vocabulary for adding meaning and context to pieces of data associated
with financial and business operations reporting so that it becomes "information" - it has meaning associated with it
and can be interpreted in context by software applications as well as humans. This is done by surrounding each
individual piece of data with a tag representing a standard financial reporting concept. To report a balance in
"current accounts payable," we would tag the piece of data (simplified for illustration purposes) as follows:
50921000.
This is a simplified example and there is much more to XBRL than tags. However, when a piece of data is tagged with
a standard term, a human or a computer application knows more about the piece of data and can process it with meaning
and in context. XBRL consists of a dictionary of tags for various types of financial and business reporting, a specific
syntax for documents, a host of files defining relationships, and rules for extending it.
XBRL is not a programming language. It is a technical specification for facilitating financial and business operations
reporting through an open standard for the creation and processing of computer-readable documents. The Guide &
Workbook will help you to understand what XBRL is, how it works, and how to create and validate XBRL financial
documents and SEC filings.
Why do we need it?
Everyone involved in financial and business operations reporting needs to understand the power of XBRL. The U.S.
Securities and Exchange Commission (SEC) has issued a new rule titled "Interactive Data to Improve Financial
Reporting" (SEC, February 2009). Beginning with their SEC filings after June 15, 2009, the 500 largest domestic and
foreign companies, those with common equity float above $5 billion (U.S. dollars), are required to include their
XBRL tagged financial statements along with their standard filings. The financial statements must be tagged in their
entirety using tags from the U.S. GAAP or IFRS taxonomies including footnote disclosures tagged as blocks of text;
deeper, more detailed tagging of footnotes will be phased in with their second year filings. All other accelerated
filers are required to do the same beginning in June 2010 with smaller companies following suit in June 2011. The new
SEC rule also requires all companies to provide their XBRL tagged financials on their corporate Web sites. Currently,
the SEC does not require the XBRL tagged financials to be audited, but they do have to meet accuracy guidelines.
In addition, the SEC has for now excluded other reports, such as the Management's Discussion and Analysis, executive
compensation, and other financial, statistical or narrative disclosures, from this rule but they continue to evaluate
its feasibility. In addition, the U.S. FDIC (Federal Deposit Insurance Corporation) now requires all member banks to
file quarterly "call reports" in XBRL format and in other parts of the world, including the UK, Belgium, Japan, Spain,
Korea, Australia, the Netherlands, and Singapore, XBRL tagged financial statements are being required by banks, stock
exchanges, and other regulatory agencies.
XBRL is gaining momentum for several reasons:
- Reporting financial and business operations information using standard XBRL tags and a standard reporting format
helps regulators and users of all types better understand what is being reported, which leads to more transparency,
less ambiguity, and easier comparability.
- Tagging data items using standard terms improves the efficiency and effectiveness of computerized processing for
both report preparers and receivers. From a report preparer's perspective, tagged data items with standard XBRL
tags makes the reported data items more readily understandable and usable for many different purposes because they
can be unambiguously interpreted, transmitted, used by software applications, stored in databases, and more easily
reused in both internal and external reports. In addition, standardized reports can be "validated" by software
applications to make sure they follow the rules for specific reporting purposes; like applying for a loan, reporting
to a business partner, or reporting to the SEC. From a receiver's perspective, data tagged using standard XBRL tags
and standard report formats can be automatically validated, more efficiently processed, more effectively analyzed,
and more easily compared to other data items from the same or other reporting entities.
- When XBRL tagging is built into business reporting processes, report users, including management, analysts,
investors, regulators, and business partners, will benefit from more timely, complete, and understandable reports.
Starting with the XML foundation, The Guide & Workbook is designed to help you understand XBRL and how it
works. In addition, by working through the Test yourself exercises and completing one or more of the projects/exercises
in Chapter 4, you will gain experience in creating XBRL instance documents/financial reports for Bicycles OnLine, Inc.
Projects/exercises include the following:
- A balance sheet in XBRL format
- An income statement in XBRL format
- Financials with footnote disclosures in XBRL format
- XBRL instance documents using Rivet Dragon Tag
By reading The Guide & Workbook, accessing the URLs, and working through the examples and exercises, you
will understand the basics of XBRL. To become expert with XBRL will require more study and experience with its
complexities.
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Table of Contents
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Chapter 2: XML Elements and XBRL Element Names
- The basic rules for creating well-formed XML documents
- XBRL element names are defined in XBRL taxonomies
- Finding and using pre-defined XBRL element names
Chapter 3: Creating XBRL Instance Documents
- The basic rules for creating XBRL instance documents
- XBRL instance documents and namespaces
- XBRL instance document context and items/business facts
Chapter 4: XBRL Instance Document Projects
- Projects scenario
- Exercise 1: A balance sheet in XBRL format
- Exercise 2: An income statement in XBRL format
- Exercise 3: Financials with footnote disclosures in XBRL format
- Exercise 4: Instance documents using Rivet Dragon Tag
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