Digital Financial Reporting

The XBRL International Standards Board (XSB) published a document summarizing six strategic initiatives which they say will help prepare XBRL for the future. I agree. This is a summary of those six strategic initiatives.

1. Create an abstract model. An abstract model provides a conceptual framework for understanding XBRL and gives developers a strong foundation for implementing XBRL solutions.
2. Produce training materials. High-quality training materials lend support to developers and those new to XBRL.
3. Define standard API signatures. API signatures assist developers with their implementation of XBRL solutions.
4. Reorganise existing specification. A reorganisation of the XBRL specification will make the specification easier to understand.
5. Enhance data comparability. Data comparability widens the applicability of XBRL data across project and international boundaries.
6. Develop application profiles. Application profiles reduce the scope of XBRL implementations by breaking up the XBRL specification into components.

This document and the strategic initiatives are a great piece of work by the XBRL International Standards Board. It is my view that the initiatives summarized in this document are critical for XBRL. Several of the strategic initiatives are absolutely necessary for XBRL to move to the next level in its evolution.

The two key pieces are number 1 (Create an abstract model) and 6 (Develop application profiles). This will lead to number 5 (Enhance data comparability).

Since I learned about the notion of an application profile and logical model from my work on the team which created the US GAAP Taxonomy Architectureand the result of that work which was a paper Rene van Egmond and I put together in 2008, XBRLS: How a Simpler XBRL Can Make a Better XBRL, I have been pushing the idea of using a logical model above XBRL's syntax and application profiles to make using XBRL easier for business users.

Work with the XBRL Taxonomy Arhitecture Working Group resulted in a draft Business Reporting Logical Model and Financial Reporting Logical Model.  I created a straw man implementation of those two models. I have further expanded on that straw man implementation creating a set of meta patterns, business use cases, comprehensive examples, and comparison examples to help prove those two  logical models and better understand these ideas.  You can find summaries of this information here.

Taking this to the next level, I have applied these models to SEC XBRL filings and the US GAAP Taxonomy.  You can find summaries of this information here: Meta patterns, basic example, basic comparison.

Both of those sets of resources are helpful in understanding the business benefits of an abstract logical model and an application profile.

While I am not a software architect, I don't know exactly how to document an application profile.  I do understand a little better how a logical model can be expressed using UML (Unified Modeling Language) or RDF/OWL. I do understand from my detailed work with XBRL over the past 11 or so years that application profiles and logical models which will hide the XBRL syntax which will cause fundamental changes to how business reporting applications which generate XBRL will be created. These changes will result in an order of magnitude improvement is usability of this software for business users.

So kudos to the XBRL International Standards Board for taking this important step. This step moves us significantly closer to the possibility broad use of XBRL by business professionals. I would point out that it was the XBRL International Standards Board, not the XBRL International Best Practices Board which issued this strategic initiative. What that means to me is that these logical models and application profiles will have more teeth to them: standards, not best practices.  Time will tell for sure how all this will play out, but I see the strategic initiatives as a big step in the right direction.