XBRL is an acronym for Extensible business reporting language is a method which was developed in the industry for improving the manner of transmitting or communicating the financial data which makes it easier to compile and share the data altogether. XBRL is a form of extensible makeup language (XML) which is helpful in organizing the data. XBRL has emerged and outshined itself as the most widely accepted medium of sharing financial information. The data could be easily transmitted to stock exchanges, and other regulatory bodies.
XBRL was developed basically to share information between different businesses and others such as investors, analysts and regulators. It provides a common platform for financial reporting and does not change the matter that has been reported.
XBRL tagging is a process in which any financial data is tagged with the most appropriate term is accounting taxonomy which makes the identification of data easier. In XBRL, information is not considered or seen as static form of numbers and text, in fact the information is broken down into unique chunks of data and this where XBRL tagging is considered very important. Once the information is broken down into unique items, the data is then assigned tags to make them computer readable. The tags enable a computer to understand the data and its value.
The core benefit of XBRL tagging is that it helps the computer to work on information as they can recognize, store, analyze, process and exchange it automatically. XBRL tags are universally acceptable and they can be identified and processed by any computer.
What is XBRL taxonomy?
XBRL taxonomy is a dictionary of accounting terms. Different countries have different standards. Taxonomies are the different dictionaries that are used for XBRL language and these are computer readable. Taxonomies give definition for tags and provide information about them. They organize the tags to give them a meaningful structure. XBRL language uses tags for working in computers and taxonomies enable computers to understand these tags.
Some additional information is also communicated along with the information that has been tagged with XBRL. Such additional information is known as meta- base. Taxonomies differ on different basis. Companies may use it for different purposes. A taxonomy which is well used for reporting stock exchange may not be used for reporting securities regulator.
Benefits of XBRL reporting
- Corporate financial professionals prefer sharing of financial information in XBRL format as it eliminates noise, gives accurate understanding of performance in capital markets and facilitates discovery of shares.
- They receive accurate data which does not require any further validation.
- Retail investors receive benefits from analysis which are available only for investors in mutual funds.
- They receive the benefit of immediate analysis without waiting for filing.
Extensible business reporting language has provided a great platform to business entities for exchanging or sharing financial information without any problems. XBRL tagging proves to be beneficial for updating or running information in electronic system. �