Introduction to XBRL: A Guided Tour
XBRL, or eXtensible Business Reporting Language, is an open international standard for digital business reporting managed by the non-profit organization XBRL International. It has been used for over 20 years and comes with 214 implementations in more than 50 countries worldwide (as per August 2023).
XBRL gained importance in response to the financial crisis of 2007-2008, a period marked by a severe global economic downturn. The crisis was triggered by a decline in the subprime mortgage market in the United States, which led to the collapse of Lehman Brothers, downturns in stock markets, and housing market drops in the U.S. The crisis highlighted the need for a fast, more efficient, and reliable way to identify financial risk. Since then, XBRL has been used intensively and continues to be a significant reporting standard (e.g., ESG).
What is XBRL?
XBRL is a language for the electronic communication of business and, specifically, financial data. It provides significant benefits in preparing, analyzing, and communicating business information. It offers cost savings, greater efficiency, and improved accuracy and reliability to all those supplying or processing financial data. Furthermore, XBRL reports can move between organizations rapidly and digitally.
How does XBRL work?
XBRL works by using a universal way of identifying items of business data. Technically speaking, this is only possible by replacing business terms with technical representations, making the inner workings of XBRL reporting challenging for most of us. To understand how XBRL works, you need to gain familiarity with terms like Instance Documents, Taxonomies, Linkbases, Facts, Concepts, Tags and more. If you try to travel on your path, you will find out that, in most cases, these terms are defined and described incomprehensibly.
For instance, consider a common definition of “taxonomy” as per the image.
SMA offers a clarification on the Creation of Extension Taxonomy Elements. The 2023 update explicitly advises not to create extension taxonomy elements that duplicate the meaning and scope of any ESEF core taxonomy element as per Annex IV.4(a) of the ESEF RTS. This point is emphasized in order to prevent a decrease in comparability between companies over time.
Is all of this confusing to you? It most certainly is!
How to get around this issue?
With a guided tour into the very basics of XBRL, you will find out how easy everything holds together. Check out AMANA´s webinar. It will give you your introduction to XBRL. It does not matter if you are a newcomer to XBRL or if you have been working with it for a while. You will be surprised by its simplicity.
Certified solutions
AMANA is an expert in XBRL, and its products XBRL Tagger; Smartnotes, XBRL Portal, XBRL Auditor, and XBRL Cloud are certified by XBRL International.
