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XBRL Basics - How does it work?

XBRL enables preparers to utilize software to tag all financial items in their business reports to the elements within a taxonomy. This is accomplished with an Instance Document which can be electronically exchanged and validated between computers or viewed in a human readable format (this is called rendering).

XBRL US has published a guide which is available on the XBRL US Web site to help preparers of financial statements get started in creating XBRL financial statements. The XBRL US Preparers Guide, which the AICPA was involved in creating, provides rules and rule of thumb for using XBRL technology for financial statement reporting.

Below is a list of frequently used terms and explanations of how XBRL works:

What is a Taxonomy?

A taxonomy is a grouping of financial concepts (known as “elements”) in which each concept is defined (similar to a dictionary). Additionally, the taxonomy also defines the relationships between the concepts within the group. Therefore, if we are working with a balance sheet item such as Cash, the taxonomy would include the definition of Cash and would also demonstrate how Cash may relate to other balance sheet items (within the taxonomy) such as rolling up to Current Assets and eventually Total Assets. All three of these items (Cash, Current Assets, and Total Assets) are financial concepts that are defined and presented in the taxonomy as elements. Public taxonomies have been developed by market constituents and are maintained by XBRL.

The US GAAP Taxonomies contain over 15,000 elements representing commonly reported financial concepts for US GAAP financial statements and are available and maintained by XBRL US.

What is a Taxonomy Extension?

The X in XBRL stands for eXtensible. Therefore, if a particular concept does not already exist in a public taxonomy there is the ability to add to or change the elements to meet the company’s needs; called extending the taxonomy. This extensibility is one of the most important aspects of XBRL because it allows for wide adaptation and uses of XBRL.

What is Tagging?

Tagging is the process of applying the entity’s unique financial data to an element within the taxonomy. The tagging process is performed during the creation of an instance document.

What is an Instance Document?

An instance document is the file that includes the company specific business reporting information in a structured manner that computers can intelligently recognize and exchange. It is expected that instance documents will be created for individual financial reports (e.g., annual reports, earnings releases, submissions to creditors, etc.). The instance document is an XML file where everything comes together; here the entity specific data links (tags) to the elements in the taxonomies to form the XBRL document that can be validated and transmitted automatically for utilization by numerous consumers.

What is Rendering?

As we stated above, an instance document is an XML file that is computer readable. Rendering is the process in which XBRL software will translate an instance document into a human readable format.

XBRL Tools

In order to work in XBRL, you will need software. There are a number of XBRL tools in the marketplace today. Some tools enable you to work with taxonomies (i.e., creation, extension, and validation), others focus on the instance document (creation and validation). There are also tools that will specialize in rendering, analysis, and reporting. Some tools may offer one or more of these services within the application while others may only focus on one function. You can refer to the XBRL US Web site for details on vendors that support XBRL.

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Exposure Draft - XBRL Principles and Criteria

Exposure Draft: The exposure draft titled Proposed Principles and Criteria for XBRL-Formatted Information dated June 1, 2011, includes a set of principles and criteria for preparers, reviewers, and practitioners to use in evaluating information formatted in eXtensible Business Reporting Language (XBRL).
Published on May 14, 2013

XBRL Events

Conference: Events, presentations and webcasts related to XBRL with topics covering the Securities and Exchange Commission's Interactive Data and other educational opportunities.
Published on May 08, 2013

SEC Rules for Reporting Financial Statements in XBRL Format

Article: Summary of SEC Rule related to Interactive Data (XBRL)
Published on February 05, 2013

Evaluation of Current and Future State of XBRL

Article: Whitepaper issued by Columbia Business School on research of the current and future state of XBRL and Interactive Data for investors and analysts
Published on January 31, 2013

XBRL

Article: Complete overview of XBRL, including its background, how XBRL works, potential benefits and uses, summary of SEC Rules for Interactive Data. There are also links to XBRL related webcasts, articles, cpe products, Q&As and comment letters.
Published on January 29, 2013

XBRL Certificate

Article: Coming Soon – XBRL US GAAP Certificate Program Register now to learn more about the program and the final launch date! The XBRL US GAAP Certificate, a comprehensive online training program developed by the AICPA and XBRL US, is designed to help you b
Published on September 28, 2012

Principles and Criteria for XBRL

Article: Principles and Criteria for XBRL-Formatted Information provide preparers, reviewers, auditors and users with a tool to evaluate the quality of XBRL Files.
Published on August 28, 2012

PwC

Article: PwC Comment letter in response to Exposure Draft Proposed Principles and Criteria for XBRL-Formatted Information
Published on August 12, 2011

BDO Response

Article: BDO Comment Letter on AICPA Exposure Draft Proposed Principles and Criteria for XBRL-Formatted Information
Published on August 05, 2011

Background of XBRL

Article: In 1998, Charlie Hoffman, a single CPA who worked for a small CPA firm in Washington state, had the idea of XBRL as a way of totally transforming business reporting. (Read XBRL: It’s Unstoppable – A Conversation with the Father of the Digital Langua
Published on July 26, 2011

Exposure Draft - Proposed Principles and Criteria for XBRL

Article:
Published on July 15, 2011

XBRL Basics - How does it work

Article: XBRL enables preparers to utilize software to tag all financial items in their business reports to the elements within a taxonomy. This is accomplished with an Instance Document which can be electronically exchanged and validated between computers or v
Published on July 15, 2011

Benefits and Potential Uses of XBRL

Article: XBRL can applied to a wide range of business applications.
Published on July 15, 2011

Proposed XBRL Principles and Criteria

Exposure Draft: The AICPA XBRL Assurance Task Force developed a set of Principles and Criteria for XBRL-Formatted Information. These Proposed XBRL Principles and Criteria are undergoing a public exposure and request for comment.
Published on June 01, 2011

XBRL_09_web_final.pdf

Article:
Published on April 26, 2010

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Related AICPA Products

Introduction to XBRL: Revolutionizing Business Reporting! This self-study course will help you understand the global phenomenon of XBRL and how it is affecting the entire business reporting supply chain.

Introduction to XBRL: Revolutionizing Business Reporting!

This self-study course will help you understand the global phenomenon of XBRL and how it is affecting the entire business reporting supply chain.