XBRL (eXtensible Business Reporting Language) Frequently Asked Questions (FAQ)

XBRL(eXtensible Business Reporting Language) Frequently Asked Questions (FAQ) - XBRL FAQ

What is XBRL?

XBRL is a language for the electronic communication of business and financial data which is revolutionizing business reporting around the world. It provides major benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data. XBRL stands for eXtensible Business Reporting Language. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world. It is an open standard, free of licence fees, being developed by a non-profit making international consortium.

Why is XBRL different from XML?

At first glance, XBRL may not seem that different from XML since XBRL is an XMLbased markup language. However, XBRL provides a much richer set of critical capabilities that are available in standard XML. Examples are: user-definable extensibility of a given XBRL-based language, validation on syntax, semantics, and business rules.

Why is XBRL preferable to XML as a technical standard?

XBRL provides a very rich set of semantics while at the same time hiding much of the underlying XML Technologies (such as XSchema, XLink, XPath, etc. This makes it much easier to understand and deploy.

Who developed XBRL?

XBRL is an open, royalty-free software specification developed through a process of collaboration between accountants and technologists from all over the world. Together, they formed XBRL International which is now made up of over 650 members, which includes global companies, accounting, technology, government and financial services bodies. XBRL is and will remain an open specification based on XML that is being incorporated into many accounting and analytical software tools and applications.

What is the XBRL value proposition?

The implementation and deployment of XBRL will drastically reduce the costs of; information collection and validation, internal information conversion and dissemination and as a consequence drastically reduce the cost of information exchange.

The computational validation capabilities provided by XBRL will improve the quality and time performance of a company’s information exchange processes. Deployment of XBRL within an organization will increase the business value of data and provide data transparency, and engage employees at all levels to be empowered by internal and external data.

What are the potential uses of XBRL?

XBRL can be applied to a very wide range of business and financial data. Among other things, it can handle:

- Company internal and external financial reporting.

- Business reporting to all types of regulators, including tax and financial authorities, central banks and governments.

- Filing of loan reports and applications; credit risk assessments.

- Exchange of information between government departments or between other institutions, such as central banks.

- Authoritative accounting literature – providing a standard way of describing accounting documents provided by authoritative bodies.

How will XBRL affect the various participants in their financial supply chain?

Those who stand to benefit include all who collect business data, including governments, regulators, economic agencies, stock exchanges, financial information companies and the like, and those who produce or use it, including accountants, auditors, company managers, financial analysts, investors and creditors. Among those who can take advantage of XBRL include accountancy software vendors, the financial services industry, investor relations companies and the information technology industry. XBRL will impact: Organizations that prepare financial statements More efficient preparation of financial statements because they will be created one time and rendered many times, be it to the printer, to lenders, private investors, on Web sites, or as regulatory filings. Analysts, Investors and Regulators Enhanced distribution and usability of existing financial statement information. Automated analysis, significantly less re-keying of financial information, transformation from one form into another, receiving information in the format you prefer for their specific style of analysis. Financial publishers and data aggregation More efficient data collection lowers operating costs associated with custom, idiosyncratic data feeds and reducing errors while concentrating on adding value to the data and increasing transaction capacity. Independent Software Vendors Virtually any software product that manages financial information could use XBRL for its data export and import formats, thereby increasing its potential for full interoperability with other financial and analytical applications.

What are the advantages of XBRL?

XBRL offers major benefits at all stages of business reporting and analysis. The benefits are seen in automation, cost saving, faster, more reliable and more accurate handling of data, improved analysis and in better quality of information and decisionmaking. XBRL enables producers and consumers of financial data to switch resources away from costly manual processes, typically involving time-consuming comparison, assembly and re-entry of data. They are able to concentrate effort on analysis, aided by software which can validate and process XBRL information. XBRL is a flexible language, which is intended to support all current aspects of reporting in different countries and industries. Its extensible nature means that it can be adjusted to meet particular business requirements, even at the individual organization level.

What are the benefits of a company tagging their financial statements and putting them into the XBRL format?

XBRL increases the re-usability of financial statement information. Eventually the need to re-key financial data for analytical and other purposes should be virtually eliminated. This has the potential to reduce manual errors, and give companies the ability to proof and control their own data. As more tools are developed to take advantage of XBRL format information, and more companies embrace and support this new standard, financial information will be ready and available for next phase of web services.

Who can benefit from using XBRL?

All types of organizations can use XBRL to save costs and improve efficiency in handling business and financial information. Because XBRL is extensible and flexible, it can be adapted to a wide variety of different requirements. All participants in the financial information supply chain can benefit, whether they are preparers, transmitters or users of business data.

How can XBRL deliver on its promises?

By enabling a fully automated data exchange process. Human intervention will be needed only for exception handling and information management.

Adoption of XBRL for the information exchange process will enable a near fully automated information collection and validation process. By making the validation rule externally available, the recipient of the information can push the validation process further up stream into the information chain thus having the validation done at the source, resulting in prescreened accurate information.

What is the future of XBRL?

XBRL is set to become the standard way of recording, storing and transmitting business financial information. It is capable of use throughout the world, whatever the language of the country concerned, for a wide variety of business purposes. It will deliver major cost savings and gains in efficiency, improving processes in companies, governments and other organisations.

Why is XBRL preferable to XML as an information standard?

While XBRL can be used to define many languages just as XML there is need for only one set of value adding tools instead of either a very low-level set of XML tools with very little value add or value adding tools with limited, restricted domain applicability

Does XBRL benefit the comparability of financial statements?

XBRL benefits comparability by helping to identify data which is genuinely alike and distinguishing information which is not comparable. Computers can process this information and populate both pre defined and customised reports.

Does XBRL cause a change in accounting standards?

No. XBRL is simply a language for information. It must accurately reflect data reported under different standards around the world – it does not change them.

What are the benefits to a company from putting its financial statements into XBRL?

XBRL increases the usability of financial statement information. The need to re-key financial data for analytical and other purposes can be eliminated. By presenting its statements in XBRL, a company can benefit investors and other stakeholders and enhance its profile. It will also meet the requirements of regulators, lenders and others consumers of financial information, who are increasingly demanding reporting in XBRL. This will improve business relations and lead to a range of benefits.

Why is XBRL important as a reporting language?

The XBRL standard is an open specification that can be deployed in any business reporting domain or industry. It provides a very flexible means for information modeling and exchange, and supports many levels of validation to ensure data is correct and well-formed, and adheres to company information constraints.

How does XBRL work?

XBRL makes the data readable, with the help of two documents – Taxonomy and instance document. Taxonomy defines the elements and their relationships based on the regulatory requirements. Using the taxonomy prescribed by the regulators, companies need to map their reports, and generate a valid XBRL instance document. The process of mapping means matching the concepts as reported by the company to the corresponding element in the taxonomy. In addition to assigning XBRL tag from taxonomy, information like unit of measurement, period of data, scale of reporting etc., needs to be included in the instance document.

How do companies create statements in XBRL?

There are a number of ways to create financial statements in XBRL:

- XBRL-aware accounting software products are becoming available which will support the export of data in XBRL form. These tools allow users to map charts of accounts and other structures to XBRL tags.

- Statements can be mapped into XBRL using XBRL software tools designed for this purpose.

- Data from accounting databases can be extracted in XBRL format. It is not strictly necessary for an accounting software vendor to use XBRL; third party products can achieve the transformation of the data to XBRL.

- Applications can transform data in particular formats into XBRL. The route which an individual company may take will depend on its requirements and the accounting software and systems it currently uses, among other factors.

The route which an individual company may take will depend on its requirements and the accounting software and systems it currently uses, among other factors.

In what types of business scenarios could XBRL be used?

XBRL is part of the “information exchange” business processes. It can be used internally inside a company or by industry groups (such as the financial services, healthcare or insurance industries) as a basis for information standardization. This support for collaborative business processes holds the biggest promise by XBRL. It can be used by producers of information who want to make information available on the Internet or by information consumers who need to access published information. Also an information syndicator can use XBRL-based information for input, do value added processing and redistribute the information to consumers.

What processes would benefit from the use of XBRL?

Currently the processes that will show the biggest performance improvement of time, cost and quality would be those who collect information from external sources and those that need to validate the accuracy of the received information.

Is India a member of XBRL International?

India is now an established jurisdiction of XBRL International. A separate company, under section 25 has been created, to manage the operations of XBRL India. The main objectives of XBRL India are

- To create awareness about XBRL in India

- To develop and maintain Indian Taxonomies

- To help companies, adopt and implement XBRL

Which taxonomies developed for Indian reporting requirements? Where can one find the taxonomies?

Taxonomies for Indian companies are developed based on the requirements of:

- Schedule VI of Companies Act

- Accounting Standards, issued by ICAI

- SEBI Listing requirements

Taxonomies for Manufacturing and service sector (referred as Commercial and Industrial, or C&I) and Banking sector, is acknowledged by XBRL International. These taxonomies are available at www.xbrl.org/in

Why are Accounting Institutes like ICAI in India taking a major role in the XBRL consortium?

A core purpose of Accounting Institutes around the world is to enhance the access, quality and breadth of financial information available to the investing public. XBRL will help achieve this. Institutes also believe that the development of XBRL will help position their members as valued knowledge providers for their clients. Businesses, large and small, are undergoing fundamental change. Accountants, as the managers of the underlying language of business, can help organisations fit into the new digital world, solve business issues and capitilise on opportunities.

What are XBRL Documents?

An XBRL document comprises the taxonomy and the instance document. Taxonomy contains description and classification of business & financial terms, while the instance document is made up of the actual facts and figures. Taxonomy and Instance document together make up the XBRL documents.

What is Taxonomy in XBRL?

Taxonomy may be referred as an electronic dictionary of the reporting concepts and their relations. It defines the “Universe of Discourse” for the XBRL derived language. This means that if the concept is not defined in a given XBRL taxonomy you won’t be able to report information about it in an XBRL Instance based on that taxonomy. It consists of two “information containers” the XBRL Schema and the XBRL linkbases. Taxonomy consists of many data definitions of business reporting concepts (including text), the basic XBRL properties and the interrelationships amongst the concepts. It includes terms such as net income, EPS, cash, etc. Each term has specific attributes that help define it, including label and definition and potentially references. Taxonomies may represent hundreds or even thousands of individual business reporting concepts, mathematical and definitional relationships among them, along with text labels in multiple languages, references to authoritative literature, and information about how to display each concept to a user. The taxonomy provides categorization, grouping and details for each concept, including the labels, definitions, accounting balance (i.e., debit or credit), presentation and summation information.

What is Schema?

Schema is a file with '.xsd' extension and contains the set of all the concepts and their basic properties, defined as per XBRL 2.1 specification. It defines the actual concepts of an XBRL-based markup language. It gives their names, their data types, whether you can report about them etc. The properties of concepts (elements) are defined in the XBRL Specification. The basic properties typically include the nature of data that would represent the concept (monetary, shares, text etc.), time of measurement (as on a day or over a period), accounting balance (debit or credit) and so on. These properties are defined so as to make the accounting concepts system readable. The schema also contains attributes describing the taxonomy (namespace and prefix).

What are Linkbases?

The purpose of XBRL linkbases is to combine labels and references to the concepts as well as define relationships between those concepts defined in XBRL Schema. Linkbases have ".xml" extension. There are different kinds of linkbases, each having a special purpose.

Label Linkbase - provides human readable strings for concepts. Using this linkbase, multiple languages can be supported and also multiple strings within each language. It allows the user to attach labels with different roles and languages to a given concept.

Reference Linkbase - This linkbase associates concepts with citations of some body of authoritative literature. It allows the user to attach external information (sources) to concepts.

Calculation Linkbase - This linkbase associates concepts with other concepts so that values appearing in an instance document may be checked for consistency. These define how values of concepts should sum up from one to another.

Definition Linkbase - This linkbase associates concepts with other concepts using a variety of arc roles to express relations such as is-a, whole-part, etc. It allows the user to define additional semantics.

Presentation Linkbase - This linkbase associates concepts with other concepts so that the resulting relations can guide the creation of a user interface, rendering, or visualization. These define how concepts are nested and ordered.

Formula Linkbase - This linkbase can be used to define advance mathematical and logical rules for further enhancing the quality of data

What are Extended Links?

Within linkbases, there are many extended links, which are used to depict certain kinds of relationships. Extended link could be defined as a logical grouping of elements based on certain criteria. Usually the criteria are the types of relationships between the elements. To give examples, for financial reports, the possible extended links could be Balance Sheet, Income Statement, Cash flow Statement etc.

Now Balance Sheet itself can be prepared in two ways, i.e. in horizontal or vertical format. The contents of the Balance Sheet remain the same, only the presentation of certain elements is different. Taking example of current liabilities, in one method, it is included in total liabilities and in other method, current liabilities are deducted from current assets to arrive at Application of funds. To depict both the types of relationship, two different extended links, for Balance Sheet need to be created

What is meant by extending taxonomy?

Taxonomy is extended to incorporate items or relationship specific to the owner of the information. Taxonomy extension therefore can be:

a) Modification in the existing relationships

b) Addition of new elements in the taxonomy

c) Combination both a & b

Are Taxonomies based on any standards?

Yes, taxonomies are based on the regulatory requirements and standards which are to be followed by the companies. Accordingly, depending on the requirements of every country, there can be country-specific taxonomies.

What is an Instance document?

The XBRL Instance document, (or Instance), is the container document for reporting the actual facts and values. It is associated, one-to-one with an XBRL taxonomy. An XBRL instance document is a business report in an electronic format created according to the rules of XBRL. It contains facts that are defined by the elements in the taxonomy it refers to, together with their values and an explanation of the context in which they are placed. XBRL Instances contain the reported data with their values and “contexts”. Instance document must be linked to at least one taxonomy, which defines the contexts, labels or references.

Thus, in order to concluded the usage and explain the XBRL technology which leads to more information exchanges that can be effectively automated by use. This one standard approach leads to the best interest of the company or more so for the international business interests globally that warrant the accuracy of all the financial data for the end users and early collaborative decisions by the companies or those whose interst is involved for acquisition/ rights etc.

What is an XBRL Linkbase document?

The XBRL linkbase document is a physical file that contains one linkbase element with the extended link(s) in which the explicit relationships between the concepts are defined.

What is an XBRL Rulebase document?

The XBRL rulebase is a proposed mechanism for attaching business rules and information derivations to taxonomy concepts. It is defined in a satellite specification to the XBRL core specification. The XBRL – Rulebase specification is still under development. It will allow advanced levels of structure and value validation of reported instance document fact values.

If an element in taxonomy is not found, can a company specific element can be added in the taxonomy?

The circular as issued by MCA does not explicitly mention about extensions. However the indications are towards providing the fixed taxonomy. Hence company specific elements may not be permissible in the taxonomy.

Can a taxonomy be extended and used for internal purposes?

The taxonomy is a public document and companies are free to use this taxonomy for internal purpose by extending the same if required. However, for MCA reporting, the fixed taxonomy as specified by MCA needs to be followed.

There are many folders in the MCA taxonomy. Which file / folder needs to be used in order to see the taxonomy?

The MCA taxonomy has following files:

in-gaap - Contains elements based on existing Schedule VI, Accounting Standards and commonly reported elements, along with their labels.

ca - Contains the elements based on specific requirements of MCA or existing e-forms, linkbases and new data types created to meet the specific requirements.

ci - Contains the linkbases for commercial and industrial sector (Referred as C&I)

To view the taxonomy, the file "in-gaap-ci-2011-03-31.xsd" in "ci" folder needs to be browsed. This schema file, contains the imports of all related schema files and the linkbases.

Would there be industry specific taxonomies? Is the taxonomy available segment wise?

While designing the taxonomies for India, three main sectors were considered viz.

- Manufacturing and Service Industries (Referred in C&I - general manufacturing and service companies, covered by the Schedule VI and would typically cover industries like trading entities, oil and gas companies, service providing entities, real estate and construction companies and all other commercially operated companies

- Banking companies

- NBFC

At present, the MCA taxonomy includes the folder for C&I and going ahead folders for banking and NBFC will be introduced.

How often is taxonomy upgraded in countries where XBRL is established? How often is it expected that the MCA taxonomy would be upgraded?

U.S. taxonomy is the most advanced taxonomy in XBRL as on date. XBRL has additional feature of extensibility where companies can introduce their own specific elements in the taxonomy. As and when the creators of taxonomy feel that enough new elements have been suggested by companies which are actually generic ones, it includes them in the base taxonomy and the taxonomy changes.

However, in India, MCA has currently chipped of the Extensibility part. So, companies need to match their data to the elements currently present in the taxonomy. Looking at this, chances are, that the taxonomy will remain more or less same till the creators come up with the idea of extending it themselves.

If the taxonomy upgradation takes place, re-tagging of financials is required?

When the taxonomy is upgraded, it might introduce entirely new elements or it may deprecate the previous ones and introduce newer ones which are better representation of the previous ones. So, while tagging one only needs to ensure that he does not use the deprecated concepts/elements.