If finance is the language of business, then XBRL -- the eXtensible Business
Reporting Language -- is the language of finance in XML XBRL has become XML`s
language of international finance, used by companies, financial institutions,
stock exchanges, and regulatory authorities worldwide.
You can get a sense of
XBRL`s reach and an example of the way it works at
MIXMarket.org, a service of the
Microfinance Information eXchange (MIX). MIXMarket collects data from
microfinance organizations -- financial institutions making small loans to
farmers and entrepreneurs, usually in developing economies -- in 20 countries.
The exchange lets potential donors and investors assess the relative strength
and liquidity of nearly 2,000 microfinance lenders, with total loan portfolios
exceeding $US65 billion, but with average loan balances barely exceeding
With XBRL, MIXMarket collects data about these institutions, such as their
balance sheets, loan portfolios, interest and fees income, and expenses. The
MIX group developed a standard subset of XBRL using XML for institutions to
report and transmit these data in XML to MIXMarket. Thus, a donor can use MIXMarket
to compare Mol Bulak Finance in Kyrgyzstan with MiBanco in Peru, using a common
set of data.
XBRL calls these standard subsets taxonomies, which are hierarchical
dictionaries reflecting different business reporting practices. Taxonomies
provide common definitions of financial reporting concepts, as well as the
relationships among these terms. XBRL taxonomies have been written, for
example, for Generally Accepted Accounting Principles (GAAP) in the U.S., and
Listed Company Information Disclosure Regulations in China. Taxonomies meeting
XBRL specifications have also been written for variations of GAAP in Canada,
Brazil, and India.
Keeping government agencies happy
Government regulatory agencies worldwide collect information about financial
institutions and publicly traded companies, and XBRL provides a way of
standardizing and simplifying the data collection. In the U.S., the three main
bank regulatory agencies -- Federal Deposit Insurance Corporation, Federal
Reserve System, and Office of the Comptroller of the Currency -- use XBRL to
collect their quarterly call reports from federally chartered banks. Likewise,
Spain`s central bank collects data on its 400 member institutions using XBRL,
but with a taxonomy written for European financial reporting.
Publicly-traded companies in the U.S. are required to file quarterly and annual
reports to database called EDGAR, short for Electronic Data Gathering,
Analysis, and Retrieval, maintained by the U.S.
Securities and Exchange Commission The Commission began accepting these
reports in XBRL in 2005. Larger companies are now required to submit their
reports in XBRL format, with smaller enterprises scheduled to report their data
in June 2011.
Financial reports are useful tools within a company, as well as for outside
organizations. For internal reporting, XBRL offers what it calls a Global
Ledger (GL). This taxonomy captures and reports data from the company`s chart
of accounts, along with recurring entries such as receivables, payables, and
inventory. Because it is independent of accounting systems, GL provides a way
of consolidating financial data collected from various input sources, such as
XBRL won`t make the task of financial reports any more fun, but it has
encouraged software developers to write off-the-shelf tools to make the job
manageable for even the smallest of companies. If the Orangi microcredit
project in Karachi, Pakistan can file reports in XBRL to MIXMarket, what`s
holding you back?
By Alan Kotok