Digital Financial Reporting

This blog post provides a quick overview of XBRL. (This set of slides and this seven minute video provide the same information.)

XBRL, the Extensible Business Reporting Language, is a global industry standard format that can be used to create machine-readable business reports that are also readable by humans.  The global XBRL industry standard was created by XBRL International which is an consortium of approximately 600 members in around 19 jurisdictions around the globe.

XBRL was originally started by the American Institute of Certified Public Accountants (AICPA) for the purposes of financial reporting.  From the outset, the financial reporting focus was expanded to business reporting in general.

Today, there are approximately 180 different XBRL related projects in 50 different countries.  Many of the projects are used for financial reporting and tax reporting to regulators.  But, ultimately, XBRL will likely become an approach to creating general purpose financial reports that are machine-readable and also still readable by humans. Today, general purpose financial reports are only readable by humans.  Soon, general purpose financial reports will be readable by artificial intelligence software applications which will enable both automated financial report creation and automated financial report analysis.

Fundamentally, XBRL is an information exchange medium.  One key aspect of XBRL is that it enables the exchange of complex information where different information models can be used.  XBRL was designed to meet the needs of complex financial reporting such as US GAAP and IFRS.

While you might want to understand what XBRL is; what is more important is what the existence of XBRL means.  Artificial intelligence, digital distributed ledgers, and structured information such as XBRL offer a completely new platform for financial accounting, reporting, auditing, and analysis.  The old platform is based on physical, the new will be grounded in digital.

To understand how XBRL works, watch this video.  To get an understanding the technical details, work through this very basic XBRL primer. If you want to master XBRL, here is that information.