XBRL is the acronym of eXtensible Business Reporting Language which is used for electronic communication around the world. Have you heard about XML (Extensible Markup Language)? The XBRL is linked to it and its use has become quite popular for exchanging business information online. Let’s learn more about what is xbrl?
The Committee of European Banking Supervisors (CEBS) and the U.S. Federal Deposit Insurance Corporation were among the first organizations to utilize the XBRL language when it was initially introduced.
Many other businesses use this language for various functions including regulators of stock exchanges, banking regulators, business registrars, revenue reporting and tax-filing agencies, and national statistical agencies. Keep reading to find out more!
What is XBRL?
The eXtensible Business Reporting Language is a computer-based language that is largely used for global business and financial data transmission. A global non-profit coalition of more than 600 businesses, organizations, and governmental entities oversees its management.
XBRL is based on XML which is created with the goal of providing standards for uniform reporting of financial information for different organizations. The good thing is that it is free of license fees and many countries are already using it for their interests.
Due to its many advantages, which include enhanced accuracy and reliability for all parties accessing financial data, cost savings, increased efficiency, and ease of business information transmission, XBRL usage is steadily growing around the world.
What is tagging in XBRL?
XBRL tags are defined by taxonomies (which are defined as a grouping of financial concepts commonly known as elements). In XBRL, the information is expressed in a unique type of data, not as a static block of text or a set of numbers. The XBRL tags can easily be read by any computer that has an XBRL software
In XBRL, the term “tagging” refers to processing data objects in a distinctive way before assigning mark-up tags that make them machine-readable. Information that has been tagged with XBRL is efficiently handled by computers; they can automatically recognize, process, store, exchange, and analyze it.
How does XBRL work?
As we have stated, XBRL is an improved form of XML that can handle financial data effectively and is strong enough to suit corporate needs. It works by adding distinctive identifying tags to the financial data and by giving the relevant information regarding the item to which the tag was applied, the details might include percentages or fractions. It also aids in giving a general notion of how items are related to one another, making calculation easier.
Many firms are adopting XBRL because computers can quickly detect and relate information with it without human interaction. After China imposed XBRL reporting, many other countries including the US, Korea, Japan, Canada, and Australia are considering doing the same.
What are XBRL taxonomies?
Different dictionaries used by the XBRL language referred to as “taxonomies,” aid in specifying the precise tags that are employed. Taxonomies give XBRL tags definitions and provide information about the tags, it organizes the tags in a purposeful structure.
Computers that have XBRL software can easily read these dictionaries. Taxonomies help in understanding the tag more precisely and define the characteristics of the tag. It also aids in determining the relationship of items with one another and the additional information is known as meta-data which is transmitted with the tagged XBRL information.
Taxonomies are also available for the majority of the important national accounting standards used throughout the world. The reporting objectives, the nature of the information being reported, and the requirements for the reporting presentation may vary from one business to another and so does the Taxonomies.
When the XBRL taxonomy should be updated?
When an old taxonomy changes, you will need to update the current taxonomy since the update could involve a new link base, a modified link base, or an altered link base. Only the lines for the new or changed lines need to be mapped after the taxonomy has been updated. Read below how it is done:
- To update a schema, go to the XBRL Taxonomies page and select the Schemas action.
- Choose the Import action after selecting the schema you want to change.
- Select the Linkbases action to update or create a new link base.
- Choose the appropriate linkbase or click Ctrl+N to start a new line, then choose the linkbase type before adding a description.
- Select the Import action to import the linkbase.
- To apply the linkbase to the schema, select Yes and you are done.
Why XBRL Tools are required?
Although there are several XBRL tools on the market, why do we need them? These tools are necessary for working with taxonomies such as extension and validation. The many various tools aid in rendering, analysis, and reporting; some tools focus on specific roles, while others provide additional services.
Wrapping Up:
XBRL has been proven to be useful for electronic communication among different firms, we have shared all the related details above to help you better understand how it works so we hope that you found this article useful.
The use of XBRL is increasing day by day and more companies are relying on it for different functions. So, what are your thoughts on it? Share with us in the comment section below!
Frequently Asked Questions:
What do you mean by XBRL?
XBRL is from the family of XML (Extensible Markup Language), which is used for transmitting information online. The main purpose of its development is to make communication among businesses easy and secure and it is used for sharing financial information.
How do I fix the XBRL error?
You can try to fix the XBRL error by submitting a Notice of Error (NOE) to ACRA to correct clerical or typographical problems, or you can file a court order to make the filed Annual Return expunged and a new Annual Return submitted.