Everything you need to know about XBRL
Update [31/03/10] -
CT Online Filing – software compatibility update
As part of the move to compulsory corporation tax filing using iXBRL, HMRC have updated their table of commercial software suppliers that have demonstrated their software with them. Note that HMRC have not tested other applications offered by them. The table is available on HMRC's website.
What is XBRL?
XBRL stands for extensible business reporting language. It is an electronic communication language for business and financial data and is an open standard, with no licensing fees.
It is being developed by an international consortium of about 500 companies, organisations and government agencies and is based on XML (Extensible Markup Language), which is a standard for the exchange of information on the internet and also between businesses.
Instead of using a block of text, as is usual in an internet page or printed document, it operates by using electronic ‘tags’ for different types of financial data e.g. “net profit”. The use of standard XBRL tags enables information to be processed by computer software; these tags can identify whether they represent a monetary item, percentage or fraction. This enables the software to select information, process it, present it appropriately, exchange it with another computer or publish it for ordinary viewing. An example of this is in preparation of accounts and filing at Companies House.
Investors, consumers, analysts or regulators can process the information more rapidly and can compare data more accurately using this format. It can handle data in different languages and accounting standards and can be adapted for different uses. Data can be transformed into XBRL by suitable mapping devices or it can be generated in XBRL by using appropriate software.
Until the arrival of XBRL, there was no standard formula for reporting financial data; each software developer produced their own and they were not interchangeable. Currently, financial data is still passed around in a variety of non-interchangeable formats – HTML, Microsoft Excel, text files and Adobe Acrobat files. This causes problems when exporting data from one application to another.
Is iXBRL the same as XBRL?
iXBRL is Inline extensible business reporting language. This addresses the problem that XBRL is designed to be read by computers, not by humans. It is a bridge between HTML (hypertext mark up language – normally used on websites) and XBRL to enable XBRL documents to be read by humans. It enables the sender to preserve branding and formatting of the data sent.
What are the Specifications?
Formula and related specifications are available on: http://www.xbrl.org/Specifications/
What are Taxonomies?
In order to exchange a message between a transmitter and a receiver, the participants must know a common code. This is the role of XBRL taxonomies. Taxonomies are the dictionary used by XBRL to define specific tags for individual items of data, e.g. “net profit”. National jurisdictions may need their own taxonomies to reflect their accounting regulations and different users, e.g. regulators or industries, may also need their own versions.
Approved taxonomies must comply with the official taxonomy guidelines for that type of taxonomy while acknowledged taxonomies only have to comply with the XBRL specification.
Taxonomies enable items to be correctly and easily identified by human users and by software in a variety of different circumstances. They must support a range of types of automated processing by software.
An XBRL taxonomy contains the following:
- Element names: the computer-readable tags which uniquely identify each item.
- Labels: The human-readable tag which uniquely identifies each data item in a taxonomy.
- Data types: the form of data of the item, such as monetary, numeric, text string.
An XBRL taxonomy may include another XBRL taxonomy; this feature of XBRL is essential to implementing the extensibility of taxonomies.
Concepts are defined in taxonomies by creating elements that have a data type defined in XBRL and which belong to either the item or the tuple group of elements.
Example: Definition of an element in an XBRL taxonomy
substitutionGroup= “xbrli:item” nillable= “true”/>
In this example, we have the definition in the taxonomy for a simple concept called CashInBank.
Every element that is defined in the XBRL taxonomies must have the attribute xbrli:periodType= “instant” or xbrli:periodType= “duration” to be able to identify its relationship with the appropriate period of time.
Concepts defined with the attribute “instant” are associated with a specific moment in time. For example, concepts on a balance sheet are “instant”.
Concepts defined with the attribute type “duration” are associated with a range of dates (startDate and endDate). Data on the profit and loss account always refers to concepts with the attribute “duration”.
When building taxonomies, it is assumed that the concepts are of the type “duration” unless there is a reason for them to be “instant”.
There are other options that may be added to the definition of a concept, for example balance= “credit” or “debit” that may be used to identify accounting concepts and whether they appear on the right-hand or left-hand side of the financial report.
It is possible to define abstract concepts in a taxonomy. These concepts are not used in instance documents, but they do add clarity to the structure of the taxonomy. For example the concept “Balance Sheet” is not an element that contains data, but we can use this element in the presentation linkbase as the parent of Assets and Liabilities and thus maintain a well-organised taxonomy.
The UK version has recently been released for review and comment. It is available on: http://www.xbrl.org/uk/Taxonomies/
- Data attributes: various aspects of an item, such as whether it is a debit or a credit and whether it is measured over a period or at an instant.
- Instance document: An XBRL version of a financial report, containing a set of values which can be understood by reference to the taxonomies on which the instance is based. An instance is created by matching business data against a taxonomy. Every instance must reference the taxonomies on which it is based, so that its contents can be understood. It is a technical file intended for consumption by appropriate software, not easily read by humans.
- Accounting references: References to legal texts or accounting standards on which the concept is based.
- Presentation view: Rules to specify the formatting of a report.
- Calculation view: Rules for calculations (additions and subtractions) between elements in the taxonomy that are used to validate instance documents.
- Data groupings: various types of relations between data items are represented by technical features known as ‘tuples’ and ‘dimensions’.
- Extension taxonomy: A taxonomy which amends another taxonomy to adapt it for a particular purpose. Extensions may add data to a ‘base’ taxonomy but may also prohibit relations in the base, effectively restricting coverage. They may also adapt the presentation and calculation linkbases, providing alternative views of the data in the base. Extensions should not change the accounting definitions of items in the base taxonomy.
- Contexts are used in XBRL to distinguish different ‘flavours’ of data e.g. for different periods, entities, business segments etc.
- Tuples are used to group related data items which may be used repetitively in instance documents.
- Dimensions are used to represent the different forms in which an accounting item may be reported.
- Substitution groups are used to control the content of particular types of data in the Common Data taxonomy. They apply to data which comes in standard lists e.g. names of countries or currencies.
- Footnotes and textual data may be used in XBRL for handling textual data. XBRL footnotes should be used in instance documents where appropriate to handle textual comments on particular data items.
What does XBRL have to offer?
- XBRL is being adopted worldwide.
- XBRL is designed to be compatible with other applications.
- once entered, data does not have to be re-entered.
- XBRL uses standardised descriptions, which reduces the possibility of error.
- The technology is ideal for web-enabled applications and those who gather financial information over the internet.
- XBRL can generate various outputs and reports based on a single set of data.
- Cost savings to be gained from input efficiency, preserving accuracy and integrity.
- Built-in error detection.
- Different style sheets and controls can sort, expand, collapse and graph information.
- Items reach institutional investors without delay and no conversion errors.
- User can export data as XBRL, selecting the appropriate taxonomy, such as UK GAAP, IAS etc.
What can XBRL do for accountants?
XBRL can be used to obtain information more rapidly, analyse data, reduce effort in gathering data and assist in filing obligations. It also limits the risk of erroneous data entry, since all reports are generated from a single information source and error detection is built into the XBRL specification at the source of the data, rather than at the receiving party.
This system of digital reporting is of particular value to:
- Accountants in business, involved in both internal and external reporting and in the development of electronic trading within their companies;
- Professional practices, who will benefit from technical standards in regulatory and tax filing and financial reporting;
- Financial analysts and investors;
- Regulatory authorities.
The Carter Review recommended that HMRC and Companies House should work together to provide a joint filing facility using iXBRL and they have done so. Companies House filing service for dormant and abbreviated accounts was the first Government service in the world to use XBRL format for filing accounts and has been running successfully for a number of years. An iXBRL function will be introduced for unaudited full accounts by the summer of 2010.
HMRC’s new iXBRL service for Corporation tax returns will be available from November 2009. They have announced that the current voluntary regime for online Corporation Tax return filing is to become compulsory from 1 April 2011 (for accounting periods ending after 31 March 2010). This will enable companies to make a single transmission over the internet for their company tax return and accounts. Those without software capable of translation into iXBRL or software incompatible with the format, have about 18 months to find a system that will meet this requirement.
The use of iXBRL will be mandatory when filing accounts as part of the Corporation Tax return for all accounts prepared under the Companies Act 2006. HMRC’s free software will still be available for those companies with less complex affairs.
Are there any concerns about XBRL?
A number of professional bodies, while appreciating the benefits of a standard system, have expressed concern about the short implementation period envisaged by Government bodies such as HMRC and Companies House.
Major software companies are committed to producing software compatible with XBRL, but they are not yet available.
Companies House intends that all financial statements prepared under Companies Act 2006 be filed using XBRL, yet for many companies, these accounting periods have already begun.
The Accounting Standards Board’s proposal to bring new international accounting standards for mid-tier companies would have effect from 1 January 2012, while HMRC said its new reporting language will become compulsory from April 2011.
This raises questions about companies’ ability to implement the changes to the IT system only a few months before the reporting guidelines change.
HMRC and Companies House have produced a joint statement, which is available on: http://www.hmrc.gov.uk/ct/ct-online/joint-filing-statement.htm
Their technical pack for software developers is available on: http://www.hmrc.gov.uk/ebu/ct_techpack/index.htm
Technical guidance on UK taxonomies can be found on: http://www.xbrl.org/uk/TechGuidance/