XBRL for financial statements - question and answers
XBRL for financial statements is something intricate and hence a lot of questions may be in your mind. Hopefully, this write-up will eliminate the majority among them.
XBRL for financial statements is something intricate and hence a lot of questions may be in your mind. Hopefully, this write-up will eliminate the majority among them.
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<strong>XBRL</strong> <strong>for</strong> Financial Statements: Questions<br />
<strong>and</strong> Answers<br />
Have a look on some the following <strong>XBRL</strong> <strong>financial</strong> <strong>statements</strong> <strong>question</strong>s <strong>and</strong> <strong>answers</strong> to<br />
get a comprehensive idea regarding the entire affair.<br />
Question: Help me underst<strong>and</strong> what Extensible Business Reporting Language is?<br />
Formerly gone by the acronym XFRML, Extensible Business Reporting Language—is an<br />
easily available free electronic language, extensively used <strong>for</strong> <strong>financial</strong> reporting. Being<br />
an XML-based framework, it provides immense opportunities <strong>and</strong> possibilities <strong>for</strong> the<br />
<strong>financial</strong> communities to take the published <strong>financial</strong> <strong>statements</strong> of a public<br />
organization <strong>and</strong> the in<strong>for</strong>mation they enclose so as to create, trans<strong>for</strong>m <strong>and</strong> publish<br />
them in a multitude of <strong>for</strong>mats, dependably extract <strong>and</strong> without human intervention<br />
replace the same. It is important to underst<strong>and</strong> that it does not attempt to usher in any<br />
novel bookkeeping st<strong>and</strong>ards. Instead, it strives to enhance the serviceability of the<br />
existing st<strong>and</strong>ards through the versatile digital lingo of commerce, which is <strong>XBRL</strong>. As a<br />
matter of fact, <strong>XBRL</strong> <strong>for</strong> <strong>financial</strong> reporting does not need the companies to provide<br />
additional disclosure to external audiences.<br />
Question: What are the applications of <strong>XBRL</strong>?<br />
The first <strong>and</strong> <strong>for</strong>emost goal is to help in publishing various monetary <strong>statements</strong> of<br />
businesses that are issued to outside users. In a nutshell, <strong>financial</strong> <strong>statements</strong> are<br />
nothing but a digitally improved version of normal paper-based <strong>statements</strong>, which
consist of the income <strong>statements</strong>, <strong>statements</strong> of equity, the balance sheet, <strong>statements</strong><br />
of money flows, <strong>and</strong> all the notes made <strong>for</strong> the various <strong>financial</strong> <strong>statements</strong> along with<br />
the report created by an accountant or a bookkeeper. If considered, <strong>XBRL</strong> <strong>for</strong> <strong>financial</strong><br />
<strong>statements</strong> can drastically improve the efficiency of processing various <strong>financial</strong><br />
<strong>statements</strong> reducing the manpower <strong>and</strong> time required <strong>for</strong> the same, considerably. <strong>XBRL</strong><br />
brings with it a myriad of leverages such as enhanced efficiency, assured exchanging<br />
reliability, easy publishing, better analytical flexibility, simple retrieve options <strong>and</strong><br />
providing insights to better investments.<br />
Possible <strong>XBRL</strong> applications:<br />
Financial Statements: Irrespective of the sort, nature <strong>and</strong> size of various <strong>financial</strong><br />
<strong>statements</strong>, extensible business reporting language can be used to exchange <strong>and</strong><br />
trans<strong>for</strong>m <strong>financial</strong> in<strong>for</strong>mation. This is a great boon.<br />
Taxes: <strong>XBRL</strong> will become the preferred specifications <strong>for</strong> the tax-returns filed <strong>and</strong><br />
<strong>for</strong> all the items that appear on tax-returns.<br />
Regulatory Filings: <strong>XBRL</strong> is expected be the preferred specification <strong>for</strong> a wide<br />
variety of filings required <strong>for</strong> governmental <strong>and</strong> other regulatory bodies <strong>for</strong><br />
smooth processing.<br />
For secretarial <strong>and</strong> commerce in<strong>for</strong>mation: All the reports that are generated by<br />
the accounting system in place will be made available in <strong>XBRL</strong> <strong>for</strong>mats to enable<br />
re-use of the same possible <strong>and</strong> viable.<br />
Authoritative Literature: In order to enable easy, quicker <strong>and</strong> reliable use of<br />
various accounting related literature <strong>and</strong> resources published by FASB, AICPA,<br />
ASB <strong>and</strong> many others, <strong>XBRL</strong> will be the preferred <strong>for</strong>mat <strong>for</strong> the published<br />
resources.
Question: Explain <strong>XBRL</strong> <strong>for</strong> Financial Statements advantages?<br />
One of the most exciting versatilities is that, it can be used to efficiently prepare<br />
<strong>financial</strong> <strong>statements</strong> in multiple <strong>for</strong>ms. And, it also provides <strong>for</strong> a unique option where<br />
any specific detail in<strong>for</strong>mation can be extracted from any of the <strong>for</strong>ms of the thus<br />
prepared <strong>financial</strong> <strong>statements</strong> easily.<br />
Let us consider the scenario where an organization needs to prepare a fiscal report <strong>for</strong><br />
printing, a website <strong>and</strong> <strong>for</strong> filing. In doing so, with current technologies <strong>and</strong> methods,<br />
the organization—or the one that carries out the tasks, <strong>for</strong> that matter—needs to enter<br />
the same details <strong>for</strong> at least three times. However, with <strong>XBRL</strong>, the in<strong>for</strong>mation is only<br />
entered once; same data will be rendered in the printable <strong>for</strong>mat, in the required HTML<br />
<strong>for</strong>mat <strong>for</strong> a website <strong>and</strong> in any of the preferred reporting <strong>for</strong>mats <strong>for</strong> banking <strong>and</strong><br />
other authoritarian report creations.<br />
Another issue that concerns most <strong>financial</strong> institution today is that it is extremely<br />
difficult to extract required data from a monetary report. Even <strong>for</strong> the widely used<br />
statement <strong>for</strong>mat such as EDGAR filing, one has to get the details manually. This is<br />
indeed a frustrating <strong>and</strong> increasingly time-consuming disadvantage of the existing<br />
system. However, with <strong>XBRL</strong>, it is quite easy to prompt a program to fetch any <strong>financial</strong><br />
details from the statement <strong>and</strong> get the required details right away, which makes <strong>XBRL</strong><br />
increasingly popular making a wider audience dem<strong>and</strong>ing quality <strong>XBRL</strong> conversion<br />
services.<br />
Question: Who st<strong>and</strong>s to gain by using <strong>XBRL</strong>?<br />
Take a look at the various stakeholders of <strong>financial</strong> data supply chain who st<strong>and</strong> to gain<br />
from using extensible business reporting language.
Organizations that make <strong>financial</strong> <strong>statements</strong>: <strong>XBRL</strong> will provide <strong>for</strong> efficient <strong>financial</strong><br />
statement preparation as the time <strong>and</strong> manpower required <strong>for</strong> the same is considerably<br />
less with extensible business reporting language <strong>for</strong>mats, <strong>and</strong> once created it can be<br />
used <strong>and</strong> rendered <strong>for</strong> multiple purposes such as printing, websites, regulatory filings<br />
<strong>and</strong> the like.<br />
Regulators, Investors <strong>and</strong> Analysts: It provides <strong>for</strong> better sharing <strong>and</strong> usability of the<br />
current <strong>financial</strong> in<strong>for</strong>mation available. Because of the flexibility of the <strong>for</strong>mat, it would<br />
be easier, simpler <strong>and</strong> effective to carryout automated analyses <strong>and</strong> insight generation.<br />
Since various types of <strong>financial</strong> <strong>statements</strong> are available at easily usable <strong>for</strong>mat, it would<br />
also facilitate less re-entering of details from one <strong>for</strong>mat to another.<br />
Monetary publishers <strong>and</strong> in<strong>for</strong>mation collectors: Providing room <strong>for</strong> better <strong>and</strong> more<br />
efficient data collection, <strong>XBRL</strong> <strong>for</strong>mats will enable to reduce the cost associated with<br />
data collection. It will also significantly reduce the errors that might come up otherwise.<br />
At the same time, it will improve the overall value of the collected data <strong>and</strong> its<br />
transactional value <strong>and</strong> capacity.<br />
Third-party software merchants: This can be used by any software program created to<br />
deal with <strong>financial</strong> <strong>statements</strong> as its data <strong>for</strong>mat exports <strong>and</strong> imports. Hence, it would<br />
be easy to integrate the same with various <strong>financial</strong> analytical applications <strong>for</strong> enhance<br />
inter-operability. In light of the said, <strong>XBRL</strong> <strong>financial</strong> analysis is very effective.<br />
Question: How <strong>XBRL</strong> work <strong>and</strong> make this possible? How to get the accurate<br />
in<strong>for</strong>mation while using <strong>XBRL</strong>?<br />
In order to employ effectively <strong>for</strong> the best results, there are 3 basic needs to get right.<br />
They are;
Creating a single specification that per<strong>for</strong>ms works <strong>and</strong> behaves in the same way<br />
<strong>for</strong> all the organizations using it <strong>and</strong> it must also be consistent across various<br />
<strong>financial</strong> <strong>statements</strong> irrespective of the type of the <strong>statements</strong>.<br />
An application allowing <strong>financial</strong> report creation “tagged” with XML which<br />
certainly stick to the specification.<br />
Style sheets that can render the pieces on in<strong>for</strong>mation from the <strong>statements</strong> to<br />
any specific <strong>for</strong>m or to any diversity of <strong>for</strong>mats.<br />
<strong>XBRL</strong> is normally explained through the concerns it addresses to solve <strong>and</strong> is thus best<br />
explained. The lack of a single requirement which works <strong>for</strong> all the organizations can ask<br />
<strong>for</strong> the creation of various automated in<strong>for</strong>mation rendering <strong>and</strong> mining tools <strong>for</strong> each<br />
<strong>and</strong> every specification used. This can only add to increased cost, reduced efficiency <strong>and</strong><br />
data discrepancies. This is the reason behind the continued endeavors of various<br />
accounting professionals to give rise to one single condition that all can take advantage<br />
of. Of course, there will be conditions that need to meet the requirements of different<br />
industries, but all such specifications will fall under the similar framework.<br />
The only means to attain the desired consistency is XML; not HTML, SGML, PDF or raw<br />
text. Here, the aim is to drive a st<strong>and</strong>ards-based system that facilitates to arrange, bring<br />
out in a wide diversity of <strong>for</strong>mats, barter <strong>and</strong> scrutinize <strong>financial</strong> <strong>statements</strong> irrespective<br />
of the software <strong>for</strong>mats.<br />
This establishes several uni<strong>for</strong>m categories <strong>for</strong> <strong>financial</strong> in<strong>for</strong>mation by providing accord<br />
on the conditions that dictate the usability of the <strong>for</strong>mat. Even then, the system is<br />
sensitive <strong>and</strong> flexible enough to resonate well with the varying processes, organizational<br />
environments, schemes <strong>and</strong> even their management styles.
Question: How are the <strong>XBRL</strong> <strong>statements</strong> created?<br />
This is one of the most common <strong>XBRL</strong> frequently asked <strong>question</strong>s. <strong>XBRL</strong> type tags are<br />
integrated by the third-party software merchants to the accounting systems of the<br />
organizations wanting to take advantage of the <strong>for</strong>mat. It further helps the clients to<br />
cross-reference their concerned account to the said framework effectively <strong>and</strong> improve<br />
ease of operation <strong>for</strong> users without the glitches that plagued the older system.<br />
Question: How can <strong>XBRL</strong> fit into the SEC’s EDGAR? Are they carrying it out right?<br />
As required by the user, <strong>XBRL</strong> can without human intervention ‘Edgar-ize’ the monetary<br />
reports in use into 10Q, 10K or any other filings <strong>for</strong> better efficiency of the <strong>statements</strong>.<br />
We can expect to see the SEC making use of XML as a <strong>for</strong>mat <strong>for</strong> filing; in fact, they<br />
already ‘tag’ the necessary in<strong>for</strong>mation. However, it does not gain the traction it must as<br />
XRBL as the ‘tagged in<strong>for</strong>mation’ is unable to provide the required details <strong>and</strong> flexibility,<br />
which renders in less effective. Though EDGAR documents provide <strong>for</strong> a few detailed<br />
tags, it is rendered in groups, rather specific pieces of in<strong>for</strong>mation, which altogether<br />
reduces the overall effectiveness of the tagged in<strong>for</strong>mation.<br />
<strong>XBRL</strong> <strong>for</strong> sec filings is hence more preferred. Also read some of the key in<strong>for</strong>mation<br />
about inline <strong>XBRL</strong> <strong>for</strong> SEC filing.<br />
Question: What <strong>XBRL</strong> means to those who prepare <strong>financial</strong> <strong>statements</strong>?<br />
Though <strong>XBRL</strong> is not a necessary one, having such a specification would help the<br />
companies solve many concerns <strong>and</strong> improve the efficiency of collecting, analyzing <strong>and</strong><br />
utilizing the <strong>financial</strong> <strong>statements</strong> effectively. It provides <strong>for</strong> better distribution <strong>and</strong>
communication of various <strong>financial</strong> <strong>statements</strong> <strong>and</strong> thus provides better value <strong>for</strong><br />
money <strong>for</strong> several stakeholders.<br />
Question: Why does the AICPA spearhead up this initiative?<br />
Being the leading national professional organization of CPAs in US, the AICPA has<br />
decided to spearhead the initiative to facilitate <strong>and</strong> support all the necessary<br />
developments <strong>for</strong> a common specification which will be utilized by the whole<br />
accounting industry to hold up <strong>XBRL</strong>.<br />
Additionally, irrespective of the size of the organization, all businesses are experiencing<br />
basic changes with respect to the advances in technology, changing customer<br />
preferences <strong>and</strong> attitudes. The CPAs have become an integral part of any business,<br />
which has the ability to drive change <strong>and</strong> support the business ecosystem to grow better<br />
<strong>and</strong> smarter. The CPAs have the innate underst<strong>and</strong>ing <strong>and</strong> repercussions of the <strong>financial</strong><br />
<strong>statements</strong> <strong>and</strong> its languages <strong>and</strong> how they can be leveraged to drive growth <strong>and</strong><br />
sustainability to the businesses.<br />
The looming change in the <strong>financial</strong> <strong>and</strong> business language is a natural one, though<br />
induced by the fast advances in the technology. The CPAs are undergoing changes <strong>for</strong> a<br />
few years now <strong>and</strong> the trend is expected to continue, as well. This definitely burdens the<br />
shoulders of the CPAs more, as it is their fundamental duty to help the investing<br />
community to better underst<strong>and</strong> the <strong>financial</strong> stature <strong>and</strong> implications of the<br />
investments they make <strong>and</strong> if they need to reconsider their investment strategies.
Question: What does the future hold <strong>for</strong> <strong>XBRL</strong>?<br />
In a new study by AIMR on public companies, it is found that nearly 66% of the surveyed<br />
companies utilize a website <strong>and</strong> 76% of them publicize their <strong>financial</strong> in<strong>for</strong>mation<br />
through their websites <strong>for</strong> various stakeholders to take note of. Another important fact<br />
stated in the study is that most of the <strong>financial</strong> data analysts preferred to get the<br />
in<strong>for</strong>mation from the website even though there are several other sources present, as it<br />
is very easy to get the details from a website. In a different study, it is revealed that<br />
around 80% of the major US organizations disclose some kind of monetary in<strong>for</strong>mation<br />
to the Web.<br />
The future appears to be more challenging, yet brighter <strong>for</strong> most public companies as<br />
most of them will continue to have websites <strong>and</strong> release their <strong>financial</strong> <strong>statements</strong><br />
online. Companies that are looking <strong>for</strong>ward to availing <strong>financial</strong> assistance from banks<br />
will start to present various <strong>financial</strong> <strong>statements</strong> on the <strong>for</strong>m of <strong>XBRL</strong> through email <strong>and</strong><br />
the same will be added to the database of the bank <strong>for</strong> references, scrutinizes <strong>and</strong><br />
various analyses. We also expect that all pieces of monetary in<strong>for</strong>mation, reliable<br />
secretarial literature <strong>and</strong> major studies related to the industry will also start to appear in<br />
<strong>XBRL</strong> <strong>for</strong>mats <strong>for</strong> better utilization of the resource made available. SO, companies from<br />
around the globe have increasingly started creating <strong>XBRL</strong> documents<br />
Question: What charges will be incurred when your specifications are used to<br />
generate <strong>financial</strong> <strong>statements</strong>?<br />
The initiative is conceived to be licensed free of cost to ensure maximum utilization <strong>for</strong><br />
the betterment of the distribution, analyses <strong>and</strong> data generation based on the <strong>financial</strong><br />
<strong>statements</strong>. As this is poised to become a fundamental infrastructure on which the<br />
industry will start to grow better, the development cost it borne by the industry itself.
Also, having only one specification will help in minimizing the costs associated with<br />
developing <strong>and</strong> maintaining it.<br />
Question: Will this cause to any change in the existing accounting st<strong>and</strong>ards?<br />
No. <strong>XBRL</strong> <strong>for</strong> accounting has always been preferred. The specifications being developed<br />
will rely <strong>and</strong> depend on the various existing bookkeeping st<strong>and</strong>ards <strong>and</strong> principles.<br />
Question: Where do I get more in<strong>for</strong>mation about <strong>XBRL</strong>?<br />
Visit;<br />
The <strong>XBRL</strong> public website (http://www.<strong>XBRL</strong>.org)<br />
The AICPA website (http://www.aicpa.org)<br />
For more in<strong>for</strong>mation overview on XML st<strong>and</strong>ards, you can also visit<br />
http://www.xml.org<br />
http://xml.com<br />
Question: What will be the impact of <strong>XBRL</strong> on International Reporting<br />
St<strong>and</strong>ards?<br />
Ef<strong>for</strong>ts are in place to develop an open structure that can provide <strong>for</strong> synchronized<br />
development of the specifications internationally <strong>and</strong> in other jurisdictions as well.
Question: How is <strong>XBRL</strong> different from other <strong>for</strong>mats such as FinXml, FpML, OFX,<br />
Fix, <strong>and</strong> XML/EDI? Why are the ef<strong>for</strong>ts necessary?<br />
Except <strong>for</strong> <strong>XBRL</strong>, all others are transaction-precise specifications created to meet specific<br />
purposes whereas, <strong>XBRL</strong> reporting is precise. These hard works are necessary as each of<br />
them carries a specific purpose when developed.<br />
If you are in need of any services related to <strong>XBRL</strong> or have any queries, contact any of the<br />
best <strong>XBRL</strong> data conversion companies <strong>and</strong> they will guide you properly.