Industry consortia are increasingly coming together to draw up XML standards for businesses.

One of the major emerging standards is XBRL: eXtensible Business Reporting Language. Organized by more than 170 finance, accounting, regulatory, and software companies from across the world, XBRL is emerging as the definitive standard for expressing business information contained in corporate documents. With XBRL, each piece of a company's reported information is represented in XML and can be searched and extracted depending on business requirements. Given that more than 80% of major U.S. public companies provide some type of financial disclosure on the Internet, XBRL is invaluable for stakeholders, analysts, investors, and regulators because it streamlines the collection and electronic distribution of this information.

The XBRL standard is an open, freely licensed standard and can be downloaded as an XML Schema at the XBRL.org Web site. In March 2002, Microsoft became the first technology company to publish its financial statements on the Internet using XBRL. Since then, companies such as Morgan Stanley, EDGAR Online, Reuters, and DaimlerChrysler have started to use it to document their business reports. XBRL is also used in several countries outside the U.S.: every lending institution in Australia, for example, currently reports to the Australian Prudential Regulatory Authority using XBRL. Already, vendors like Microsoft, SAP, Oracle, and Hyperion have committed to XBRL-enabling their financial-reporting applications.

The Business Requirement
Companies create many kinds of business reports, including financial statements, general ledger transactions, and regulatory filings for various business requirements, including credit risk analysis, consolidations, and tax filings. Some of these reports have to be created and published at regular intervals, such as annual and quarterly financial statements. To add to the complexity of financial reporting, the company must conform to the reporting standards of the jurisdiction in which it is located and must be prepared to append the reports when new laws are legislated. Formats can vary from Web pages to paper documents to PDF files and are transported via the Internet, mail, faxes, and e-mail attachments. Often, the information is reentered at several stages, which leads to errors in reporting and is overall an inefficient manner to transport information between disparate systems.

XBRL brings the advantages that XML and XML Schemas have shown in meeting business requirements of flexible, extensible, and standard transport formats. It allows for extensions and variation according to country-specific financial regulations, and its standard tags allow for consistency in reporting error-free documents in various formats. Since the information is in XML, it can be published to the Web, or converted by XSL transformations and built into PDF documents. In addition, XBRL allows for greater interoperability and speed of data exchange between disparate systems. All these advantages lead to reporting transparency of companies, and more powerful analysis of financials, and therefore, greater efficiency in the global capital markets.

XBRL is also invaluable in saving time for its users. "The way information is formatted today, in paper and electronic-paper form, it would take five or six hours to get information on, say, the five largest semiconductor companies and put it into an analytical application of any kind," says Mike Willis, founding chairman of XBRL International and partner at PricewaterhouseCoopers. "With the pilot program using XBRL, you could do it in 30 seconds."

The key to the XBRL technical specification consists of a framework composed primarily of taxonomies. The taxonomy describes a group of concepts for a particular financial area. For example, an electronic annual report can contain financial statements, auditor's reports, and notes, all coded and identified in the XBRL structure and tags.

XBRL Framework
XBRL focuses specifically on business reporting covering arenas such as U.S. GAAP (Generally Accepted Accounting Principles), IAS (International Accounting Standards), and Japanese GAAP. It is built on three XML specifications: XML Schema, XML Namespaces, and XML Linking. The XBRL Framework consists of two main concepts: items and taxonomies.

Items
The most fundamental concept in the framework is an item. An item corresponds to a fact such as a numeric value representing annual revenues for a particular year or text describing the principles used to generate that value. The specific time period and specific business entity must accompany the fact. In the XBRL schema, item is an abstract element. All the elements that are defined in taxonomies can substitute for item.

<ci:capitalLeasedAssetsNet.capitalLeasedAssetsGross numericContext="c1">727
</ci:capitalLeasedAssetsNet.capitalLeasedAssetsGross>

The namespace prefix ci indicates that the number is calculated according to the GAAP Commercial & Industrial (ci) classification. A numerical fact, such as 727 shown in the code above, can only be understood with a numericContext.

A numericContext points to a definition that includes other elements such as :

An "entity/identifier" ... IBM
A "period/instant" ... 2002-02-11
A "unit/measure" ... ISO4217:USD

Tuples
A tuple, like a row in a database table, is a grouping of facts. For instance, the name, age, and compensation of a director of a company should be grouped together to be correctly understood.

Groups
In XBRL, a group is a set of related items that can appear in any order and can be interspersed among other text and elements in any XML document. The root of an XBRL Instance Document is a group, which may, in turn, contain other groups. There is therefore no "XBRL document type" as such. It is possible in principle to embed an XBRL item in any document, such as a press release that is otherwise formatted in HTML.

Taxonomies
A taxonomy corresponds to a group of well-defined concepts such as the U.S. GAAP applied to Commercial and Industrial (CI) companies. Elements in a taxonomy correspond to the notion of elements in XML Schemas. An element in the taxonomy mentioned can be "Accounts Receivable Trade, Gross".

Taxonomies can be grouped together to represent larger taxonomies and can be extended to include new concepts. Essentially, the creation and extension of taxonomies follow the architectural rules of XML Schemas. XBRL considers the ability to accommodate virtually any business entity's unique reporting requirements through extensions as critical to its universal acceptance. An instance document, therefore, represents a collection of financial facts using tags from one or more taxonomies.

The CI taxonomy describes the creation of business reporting objects according to the GAAP Commercial & Industrial classification, whereas the IAS taxonomy does so for International Accounting Standards. In XBRL instance documents, the different classification and standards applied to a concept are indicated by the namespace prefix of the item (see Figure 1).

According to XBRL, "Taxonomies represent up to hundreds of individual business reporting concepts, mathematical and definitional relationships among them, along with text labels in multiple languages, references to authoritative literature, and information about how to display each concept to a user."

Period
A period is an instant or duration of time. In business reporting, financial numbers and other facts are reported "as of" an instant or for a period of certain duration. Items that report on instants and durations are both common.

Namespaces
Proper detection of an XBRL document depends on the XBRL namespace. The namespace for the current version is www.xbrl.org/2001/instance.

Linkbases
To represent the definition of relations between taxonomies, a taxonomy also uses a series of elements that implement a set of Xlink-compliant linkbases. XLink is a W3C standard way to use XML to represent all kinds of relationships between XML elements no matter where they are. Examples of linkbases include relation links (calculation, definition, and presentation) that manage the relations between taxonomy elements, and label links that manage the text associated with taxonomy elements in various languages. Figure 2 shows some sample XBRL content.

Summary
XBRL is well positioned to become the global standard for business reporting. Not only is the standard already in use by leading companies in the U.S., it is also becoming popular amongst firms and stock exchanges in other countries. The most recent example of XBRL's adoption is the Toronto Stock Exchange in Canada. In the U.S., The American Institute of Certified Public Accountants (AICPA) is one of the organizations leading the XBRL effort.

Currently, XBRL is primarily used to digitally publish financial statements of companies that are issued to external users. An XBRL-based financial statement is a digitally enhanced version of paper-based financial statements, which include the balance sheet, income statement, statement of equity, statement of cash flows, and the notes to the financial statements as well as the accountant's report. Using XBRL greatly increases the transparency, speed, and accuracy of financial statements for investors. Since XBRL is XML schema-based, you can extend its taxonomies to include your unique business reporting needs if XBRL's current coding falls short of your requirements.