I have been doing some reflecting on what XBRL really is. I summarized this on the page What is XBRL? on this blog. I won't get into that definition here, you can go read that page. I will just tell you what I think XBRL is and then pick up from there. If you don't agree with the definition of XBRL, I would encourage you to point me to a better definition/explanation or to create a better one yourself (and then point me to it). I am simply trying to understand and help others understand.
So in summary, the best definition of XBRL in my view is the following from Wikipedia:
XBRL (eXtensible Business Reporting Language) is an open standard which supports information modeling and the expression of semantic meaning commonly required in business reporting.
It is unfortunate that I cannot point you to a better explanation of XBRL on the XBRL.ORG web site, but I really cannot. Here is what XBRL International says XBRL is.
So, XBRL is about information modeling and exchanging information as opposed to data. XBRL is about business information exchange. It is not about only financial reporting, which is what a lot of people think because much of the early work relating to XBRL taxonomies had to do with financial reporting taxonomies. People also think XBRL is about only financial reporting because XBRL was started by the American Institute of Certified Public Accountants (AICPA). But, it is not about just financial reporting.
Well, so is XBRL even limited to business reporting? It seems to solve a lot of problems relating to general problems of exchanging information (as opposed to data). XBRL can help turn data into information in a global standard way. It does this by adding context to data.
Let's take a step back here: data, information; what is the difference? Let's add two other terms here to round this out: data, information, knowledge, wisdom. Some definitions from various sources:
Data is the most basic level;
Information adds context;
Knowledge adds how to use it; and
Wisdom adds when to use it.
You can think of the difference between information and data as you read about these for terms, but let's move on.
So, what is XBRL, really? Is this something that is meant for technical people or for business users? Well, personally, I have always been into all this for the business user. Right now, technical people can make use of XBRL well. This can be seen with the successful implementations of XBRL by the US Federal Deposit Insurance Corporation (FDIC), the Committee of European Banking Supervisors (CEBS), Japan FSA, the upcoming use of XBRL (interactive data) by the US Securities and Exchange Commission (SEC), the Dutch Government, the Australian Government, and so forth. Technically, all this works and it can be made to work, if you are a technical person.
But what about a business person? Can one business person exchange information with another business person using XBRL? At the XBRL International Conference in Washington, DC a few weeks ago I ask the question if that is considered a use case for XBRL and I received a definitive "yes" which was very encouraging. However, for the life of me I see no real tools for doing that today.
Also, if you look at the list of who is implementing XBRL (two paragraphs up) you will notice that the list is all regulators. Is XBRL a tool for everyone or is it a tool for regulators? Seems like regulators are getting a lot of really good technology for some fairly good prices.
But what about the business user? Well, I guess business users will get to file with the regulators. I guess what is business users making use of XBRL. But, that is not what I personally want to get out of XBRL.
So what is XBRL, really? Are the issues pointed out above due to the point XBRL is within its life cycle? Clearly we are pretty early, even though XBRL is almost 10 years old. Maybe it will be this use by regulators which eventually pulls in the business users because they will be able to better see what XBRL can be used for by having to file with regulators. It is certainly the case that the US SEC's potential use of XBRL has provided motivation to experiment with XBRL, thus seeing how it may be useful for other things internal to a company, rather than simply a required format required by regulators. This was certainly the case for United Technologies. UTC started experimenting with XBRL because they saw a potential mandate from the SEC, but they discovered benefits for their internal reporting. That is business users being assisted by technical people to meet the needs of the business user.
For me though, I am still looking for the ability of one business user to exchange information with another business user, internally or externally to their organization. It needs to be with minimal help from technology people (other than buying software) because having to go through a technology person adds additional time and cost to the equation. I mean, that is why the PC and a spreadsheet was so great; no more going to the "glass room" to get that report you needed. You just did it yourself.
For me, that is what XBRL is, or needs to be. It is not there yet. It does seem to be moving in that direction.
What do you think XBRL really is?
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