The Future of Financial Reporting Mapped Out
Mike explained that the Steering Committee  is a start-up - launched in October 1999 - made up of a number of competing firms who have all pledged to check their competition at the door and collaborate on the development of this new language. They anticipate developing the language over the next 24 months, then it is a matter of implementation after that.
XBRL was presented as a communication breakthrough in history, which could potentially progress communication in a quantum leap the way the development of paper did in China thousands of years ago or the way the Guttenberg press did in Germany a half a millenium ago. The progression is that XBRL will focus exclusively on content - and the analysis of that content - and not be dependent on "appearance" to enhance the value of the communication.
What will XBRL do? According to Mike and the other Steering Committee members who joined the discussion, XBRL will enable users of financial information to:
- decrease the time and cost of accessing the information contained within the existing financial statements
- decrease the preparation cost and time
- increase the distribution of, and access to, existing financial statement information
- increase and enhance the statement's analysis.
Mike was quick to point out that XBRL would NOT replace GAAP and would NOT replace the CPA, rather it is the enhancement of the information contained in financial statements to enable users and preparers to deal with it more efficiently.
Tools are being developed today to facilitate the use of XBRL. It is an evolving process, likened to where the development of HTML pages was five or six years ago.
What can XBRL really do? Imagine if you could access the information within financial statements in a more efficient manner to find out what they are "saying"? What if you could ask to see information related to revenue, such as a comparative analysis of day sales outstanding, receivables to revenue growth, and the revenue recognition policy? And what if financial statements could "work with" your software to answer these questions with just the click of a mouse?
- Credit Analysis - providing XBRL financial information for credit request purposes will enable less costly and more timely analysis.
- Report Preparation - XBRL financial information can be rendered in various formats based upon the user's request, thereby reducing the costs associated with report preparation. In more general terms, XML is projected to reduce the cost of publishing content to the Web by 30 to 50 percent.
- Shareholder Tools - XBRL provides a robust platform for significantly enhanced assessment, extraction, and query tools for shareholders and other users in the market.
What XBRL is and is NOT:
- Not a detail universal chart of accounts, but rather a GAAP/industry-sector oriented tagging scheme or language
- Not a new accounting or auditing standard
- Not designed specifically for U.S. territory GAAP financial statements, but rather oriented to a range of territories
- Not a requirement to conform to a specific financial reporting template
- Not a technology that requires a proprietary software application.
According to Mr. Willis, the marketplace will soon demand financial statements in XBRL format simply because they are better tools for communicating. The early adopters will be in the investment community, where analysts will be able to extract, analyze, and process this information on a faster, cheaper, and more timely basis with software tools designed for this purpose.
Participants in the workshop had a number of questions and concerns, and the reader of this article is encouraged to view the transcripts  of the session to ensure you get a better flavor of the nuances of the XBRL initiative.
For more information on XBRL, including definitions, fact sheets, presentations web resources and press releases, be sure to visit the AccountingWEB XBRL Resource Center .