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Course FINA1032: Foundations Scholarship (ACC) Course School/Level BU/PG

Coursework Essay and reflection Assessment Weight 60.00%
Tutor J Mundy Submission Deadline 16/12/2006

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000402824
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 Coursework on
Foundation of Scholarship

Topic

A Critical Review of XBRL

Prepared by

Md. Omar Faruk Khan

ID: 000402824
MSc Finance and Financial Information Systems.

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 Table of Content
ABSTRACT 3

INTRODUCTION
4

TIMELINE OF XBRL

5
HOW XBRL WORKS

USES OF XBRL 6–8

COMMON BENEFTIS OF XBRL

8
XBRL: GLOBAL PERSPECTIVE

XBRL IN UK 9 – 11

XBRL IN USA
11-13
CONCLUSION

13
REFLECTION

REFERENCES 14

15

16 - 18

19 - 20

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ABSTRACT

This coursework is a requisite for the course Foundation Of Scholarship. I have selected
the topic “A Critical Review of XBRL” for my coursework. Here I described briefly
about XBRL which means eXtensible Business Reporting Language. I discussed XBRL
as a standard language for business reporting and show its benefits from different
perspective. Beside that, the history of XBRL, necessity of it and some current news on
XBRL are also described here. The main objective is this report is to critically evaluate
XBRL. Here I try to prove that XBRL brings a good change in the world of business.

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INTRODUCTION

XBRL means eXtensible Business Reporting Language. If we say briefly, reporting

basically means electronic reporting. Now a day’s various companies make their own
reports as various ways. They follow various formats. Although all of them follow the
standards of accounting and business reporting, their format is not same. And XBRL
removes the problem. It’s a standard format for presenting data. XBRL is a language for
tagging data. By using XBRL it needs less time and effort to communicate.

If we want to know about the evolution of XBRL we have to start from html. HTML
means Hyper Text Mark-up Language. XML is a part of HTML. XML stands for
eXtensive Mark-up Language. XML can be used for various reporting. And from XML
some techniques are separated which are very helpful in business reporting. This segment
is known as XBRL. XBRL is basically XML element and attributes that can be used to
express information used in the creation, exchange and comparison tasks of business
reporting. The main characteristics of XBRL which separate from all other business
reporting techniques is that it allows contest to be communicated with content. For
example, when we prepare financial statement with Microsoft Excel, we write asset
items, liability items in one cell and write their amount in another cell. So, computer read
it as two separate cells and a little change in cell will make everything worthless. But
with XBRL it is possible to make those separate items as a single one. (XBRL
International)

As I mention earlier, XBRL is a language for tagging data, it means that XBRL tagged all
the information or items of data which will make a business report. Tagging data makes
computer to read the data as the way human being can. As a result, computer can analyze
data as us. With the existing system computer can not read data itself. We have to give
commands on computer for analyzing data. But with XBRL we don’t need it. Computer
just takes the tagged data and can analyze itself. XBRL tags enable computer process
data automatically. People may ask about how XBRL tags can be used with different
types of industries as same item in various industries can be termed as different account.

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For example, when a departmental store purchase a computer for their calculation, it is an
asset to them. But when a shop which sells computers and buy computer to sell it is not
an asset to them. So if XBRL tag computer as asset there will exists a problem. But
XBRL tag item based on sectors so there is no chance to face this problem. (XBRL
International)

If XBRL is used in business sectors, a significant change will come on this sector.
Everybody is going to be benefited from it. It will make business world faster. It will
make business reporting more effective and efficient.

TIMELINE OF XBRL

The evolution of XBRL is basically starts on April 1998 when Charles Hoffman, who is
known as the father of XBRL, applies XML to financial statement. In December, 1998
Hoffman with other two (Mark Jewett and Karyn Waller complete first financial
reporting XML prototype. They named is as XFRML which stands for eXtensive
Financial Reporting Markup Language. In June 1999, a business plan on XBRL was
presented to AICPA by Hoffman, Eric Cohen and Louis Matherne. After that, a
consortium on XBRL was formed in the year 1999. Later this consortium made various
versions on several times. Those version are 0.9, 1.0 etc. Currently 2.1 versions are
available on market. (Stuart, A. 2006)

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HOW XBRL WORKS

As mentioned earlier XBRL allows context to be communicated with content. There are
several stages include in XBRL. Those stages are shown by a chart below:

XBRL Specification

XBRL Taxonomy

XBRL Instance

XBRL Style Sheet.

(Source: XML Working Group)

XBRL Specification:

There are some rules for creation of XBRL. Those rules are known as XBRL Specific. It
combines compliant files and conformance of those files to the specification.

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XBRL Taxonomy:

This is the most important and sensitive part of XBRL. According to the XML Working
Group, An XBRL taxonomy is a description and classification system for the contents of
financial statements and other business reporting documents. There are a lot of financial
facts for business reporting. XBRL tagged those facts according to various purpose,
industry and jurisdiction. For example, XBRL may tag one fact as asset for one industry
and the same fact as expense for other industry depending on the nature of the industry.
XBRL taxonomy is basically a dictionary of financial items. XBRL puts separate tags for
each individual item. Dictionary of terms is also known as Schema. XBRL also manage
link to manage references, levels and relationship among them. XBRL tagged data in
such a way that it shows how items are related to each other. Once items are tagged
carefully to XBRL by software, computer can search, select and analyze those data.
Concepts of accounting are very necessary while tagging the data. If there is mistake
while tagging the data the output will not be correct. XBRL global taxonomy structure is
given below:

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 Global Common
Document

GAAP IAS
(USA) (International)

EDAP PFS
Financial Tax/KPI
Reporting Reporting

Nation A Nation B
US GAAP Banks &
Insurance
CI Savings

CI CI

Source: XML Working Group

XBRL Instance:

After tagging the data we will get an instant output which is known as XBRL instance.
The output can be result of using one or more taxonomies. One or more taxonomies make
framework of XBRL.

XBRL Style Sheet:

This is the last stage of XBRL. Style Sheet does the presentation or transformation of
tagged data.

USES OF XBRL

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Though it may seem that XBRL is basically for company internal and external financial
reporting, XBRL can be applied for a lot of purpose beside that. Beside companies, non
profit sector or public sector can also use it. For example, Department of Statistics can
use it to find out registered and unregistered companies in a country, list of all industries
and companies under them, their financial condition. XBRL can help Central
Government by transmitting financial data of various companies to Treasury. Currently
companies recreate source data for tax filling. But if there is use of XBRL, the tax agency
can easily get control over it through appropriate taxonomies. Securities Commission can
use XBRL to check the accuracy of disclosure and filling of various companies. Basically
XBRL can be used by any organization or individual who either needs to create business
reporting or needs to get business report. (Zachary P. Coffin, 2000)

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COMMON BENEFTIS OF XBRL

Here I mention common benefits of XBRL rather than benefits of XBRL. The reason are
that XBRL is going to help each of the industries, companies, organization by different
ways. Each particular organization will get some specific benefits from XBRL. However,
there are some common benefits of XBRL which can be achieved by all organization.
Those are described below:

Automate processing of Business Information:

Once data’s are tagged in XBRL computer can read those data and process it
automatically. Currently managers need to analyze data through MS Excel or by some
other package, they need to enter the data first, then they make graph on it and analyze.
But XBRL will automatically pull the data in the required place for analyze and it
analyze the data itself. The logic behind this is very simple. When we can read data, we
can analyze it. As XBRL makes data computer readable, computer can analyze or
interpret those data. (INTERNATIONAL KPMG- XBRL)

Data Warehouse

XBRL can be used as a good data warehouse. A lot of information can be stored here in
an organized way and can be searched at any time by different needs. (Susan P, et all)

Reducing cost and time

Because of XBRL manual re-keying can be reduced which will reduce time behind
preparing financial reporting. Organization can use this time in some other productive
sector. Moreover, XBRL makes faster movement of data and analyze of them compare to
previous methods. Information are more re-usable with XBRL, that means we don’t need
to enter data every time for different purpose. XBRL helps to reduce cost of organization.

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It gives higher value to the financial reports and reduce the cost of business data
operation. (XBRL international)

Eliminate the error of manual input and transcription

If data are entered manually there is a chance of error. But in XBRL the chance is very
low. If the tagged is done currency there is no chance of error at all. XBRL enable people
to automatically validate the accuracy of business reporting. The data become more
reliable and flexible with XBRL. (XBRL international)

Increase productivity

As low time is needed to do business reporting with XBRL, organization can use this
time to some other high valued tasks. Beside, XBRL itself increase operational efficiency
of organization as it automatically store, process and analyze data. Low level of cost and
time, faster business reporting and engaging the extra time with some other valuable jobs
increase the productivity of the organization. (XBRL International)

Open Standards

With the current standards of business reporting there are several ways to format data.
But with XBRL every organization will use the same technique. As a result of this they
will be able to understand the business report of other organization easily. If all
organization use XBRL it will become a open standards of business reporting. XBRL is a
totally new format of presenting data, it is not a change is old format. (XBRL
International)

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Increase market efficiency

We know that the more information in the market are, the market become more efficient.
There is a positive relationship between information and market efficiency. XBRL makes
faster business reporting, everybody will be able to get the financial reporting of
companies easily. It will help them to take decision or change their previous decision. As
a result of this market will become more efficient. (Zachary P, 2000)

XBRL: GLOBAL PERSPECTIVE

XBRL is becoming popular all over the world day by day. Different countries all over the
world has already shown their interest on XBRL. XBRL is a non profit consortium of
around 480 companies, organizations and Government agencies. In each year there are
two conference on XBRL which are held in different country. The last conference was
held on USA on 4th December, 2006. (XBRL International)

XBRL consortium already approved financial reporting taxonomies in several countries.

Some taxonomies are currently under development. They will be in market after the
authorization of XBRL consortium. In the following a list of approved taxonomies
according to country is given:

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COUNTRY /
TAXONOMY SPEC LEVEL STATUS
JURISDICTION
Canada GAAP Primary Financial Statements 2.1 Ack Draft
China Listed Company Taxonomy
China 2.1 Ack Draft
Framework
China Fund Company Taxonomy
China 2.1 Ack Draft
Framework
Germany AP Commercial and Industrial 2.0 Ack Final
IASB IFRS General Purpose, 2004 rules 2.1 Ack Final
IFRS General Purpose, 2003 rules 2.1 Ack Draft
International Global Common Data Taxonomies 2.1 Ack Draft
Ireland GAAP Commercial and Industrial 2.1 Ack Draft
Korea GAAP Primary Financial Statements 2.0 Ack Draft
New Zealand GAAP Commercial and Industrial 2.1 Ack Draft
Spain General Data Idenfication 2.1 Ack Final
Thailand Listed Companies - Banking Services 2.1 Ack Draft
Listed Companies - Commercial and
2.1 Ack Draft
Industrial
Listed Companies - Securities
2.1 Ack Draft
Companies
United Kingdom GAAP Commercial and Industrial 2.1 Ack Draft
United States GAAP - Commercial and Industrial 2.1 App Final
GAAP - Banking and Savings 2.1 App Final
GAAP - Insurance 2.1 App Final
GAAP - Investment Management 2.1 App Final

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 GAAP – Brokers and Dealers 2.1 Ack Draft
GAAP - Pensions 2.1 Ack Draft
SEC Certification 2.1 App Final
Management Report 2.1 App Final
Accountants Report 2.1 App Final
MD&A 2.1 App Final

Source: XBRL International

Here, Ack Means Acknowledged by XBRL Consortium and App means already
approved by XBRL Consortium. GAAP refers to Generally Accepted Accounting
Principle and SEC refers to Securities and Exchange Commission.

XBRL IN UK

In UK, XBRL International is working with several companies, organizations and

government agencies to develop taxonomy and promotion of XBRL in UK. Some major
Accounting firms, Software Companies, HM Revenue and Customs, Companies House,
London Stock Exchange, BASDA (Business Application Software Developers
Association) are the members of XBRL international. Again, among them Companies
House takes the biggest project in the UK. They take the responsibility of tags companies
accounts into XBRL automatically. They are trying to adopt the Web Filing facilities. On
the other hand, HMRC (HM Revenue and Customs) has currently started their XBRL
operations. They already take initiative to make it compulsory to do all tax computations
filed online in XBRL by March 2010. (XBRL International)

XBRL IN USA

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Currently the condition of XBRL in USA is better than any other countries. Already 20
large companies of USA filed their accounts with XBRL. In September 2006, the
Securities and Exchange Commission of USA announced 54 million dollars to be
invested in a project. That project will transform the old fashioned EDGAR database into
a new database which is based on XBRL. Within few years, it is expected that filing in
XBRL will become compulsory in USA. (XBRL International)

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CONCLUSION

After going all ins and outs of XBRL we can understand that XBRL is not a new
accounting or finance concept at all, it is just only a new effective and efficient way of
presenting business report. XBRL is going to help us in many ways; there is obviously no
doubt about it. But to take benefits from XBRL, we have to try our best to spread the use
of it. Some people or organization may think that implementing XBRL is going to be
costly. But it is not costly at all. Organization will be able to use this free of cost. They
may need to expend at the initial stage to train their employees. Adaptation with XBRL
may be a little bit problems at the primary level. Because people become habituated with
the existing method and adopting new technique is challenging to some person and at the
same time boring to some others. But once the organization adapts them with XBRL they
will be benefited in the long run.

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 REFLECTION

REFLECTION OF GROUP PRESENTATION

In my group, I work with Tahira Anjum and Ivie Erabo. While selecting the topics for
group presentation we tried to select a challenging topic among the topics provided for
Finance and Financial Information System Students. We get the topics XBRL very new
for us and we think that if we select the topic we will be able to learn a totally new thing.
We meet with our supervisor before selecting the topic and she encourage us and helps us
a lot by proving information and source to get more information. After that we go
through various websites and discuss ourselves about how to organize the presentation
slides. We understand that this topics are going to be new to everyone as us and we have
to work a lot to make it understandable to the other people. At the first week, we all go
through all of the content relevant to this and after that we separate topics for each of us
for presentation. However, we help each other to understand all the topic regardless of
who is going to present this. After making the rough draft we sent it to our supervisor and
correct it according to her suggestion. But I am extremely sorry to say that we have done
mistake in the final draft also. Basically this is not only our first semester in the
University but also our first study time outside country. That’s why we were a little bit
nervous about everything. However, we tried our best to show high confidence level
during presentation. We discover the following strength and weakness from the
presentation.

Strength:

1) Good Confidence level: We were confident during presentation and question

answer time. We answered all the question confidently after the presentation.
2) Organized in terms of content: We touched every important topic during the
presentation. We went through step by step so that others can easily understand
this.

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Weakness:

1) Lack of planning: We took more time (15 minutes) than we are supposed to take
(10 minutes). And basically I am liable for that as I take around 5 minutes. Before
the presentation, we practice individually and we didn’t check the time that much.
I think if we practiced it in a group with proper time management we will be able
to avoid the problem.
2) Design of slight was not good: Though the content of our slight was quiet good,
but the design was not satisfactory. We used different types of bullet points in
different time. We used Projector in lieu of Power Point slides. That’s why we
didn’t use any colour. Besides, our first slides was too much complex. Too many
information was there. It would be better if we divided it into two pages.
3) No content page and Reference: We didn’t use any content page at the beginning
and Reference page at the end.

After the presentation, we were a little bit frustrated when found that all of our
weaknesses was relating to something else rather than content and presentation skills. If
we could organize our works properly we would be able to get higher marks with the
existing works. Anyway, we learn a lot of techniques from this presentation and we hope
that we will be able to use it in later presentation. And this is the one main objective of
this course.

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REFLECTION ABOUT INDIVIDUAL ESSAY

Time management is the main problem that I face while preparing individual essay.
Stress of some other courses affects me while doing this. Besides, after preparing the
coursework I face problems with in text reference and bibliography. While downloading
information for my coursework I saved everything in my flash drive and I though that the
link of website will be shown on computer. But when I start work at home I discovered
that the link shows the path in my computer. That’s why I need to go lab again and find
out this entire links. Besides, in most of the pages content of some items are almost same.
That’s why I couldn’t understand which source to use while in text referencing. Anyway,
I tried my best to do a good project on XBRL.

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REFERENCES

XBRL eXtensible Business Reporting Language. Australia. undated, XBRL training

material.[online] Available from: http://www.xbrl.org.au/training/NSWWorkshop.pdf

International KPMG, undated. XBRL:Digital business Reporting.[online].Available from:

http://www.kpmg.com/xbrl [accessed 5 November 2006].

International XBRL, undated, XBRL: An Introduction to XBRL [online]. Available from:

http://www.xbrl.org/WhatIsXBRL/, [Accessed on: 13th November 2006]

Coffin, Zachary P. (June 2000), XBRL Benefits [online] Available from: http://www.de-
haas.nl/Digital%20Reporting/XBRL%20Benefits.htm, [Accessed on: 2nd November
2006]

Securities and Future Commissions, undated, Benefits of using XBRL, [online] Available
from: http://www.sfc.hk/sfc/html/EN/xbrl/abtxbrl/benefits/benefits.html, [Accessed on:
3rd November 2006]

David. H, undated, XBRL: e-business for the business reporting supply chain, [online]
Available from:http://www.binarything.com/binarything/openpublish/DavidHardidge.ppt
, [Accessed on 12th December 2006]

XML Working Group (2004), XBRL in the New Call Reporting Process, [online],
Available from: http://www.xml.gov/presentations/fdic1/XBRLNewCall.ppt, [Accessed
on 12th December 2006]

McGUIRE et all (2006), Second-Wave Benefits of XBRL. [online] Available from:

http://web.ebscohost.com/ehost/pdf?vid=2&hid=108&sid=7d69083d-288b-474f-beac-
ae37455c4a7b%40sessionmgr106, [Accessed on 12th December 2006]

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GARBELLOTTO, G. (2006), XBRL Is to XML as Lemonade Is to Lemons GIANLUCA
GARBELLOTTO [online] Available from:
http://portal.gre.ac.uk/cp/render.UserLayoutRootNode.uP?uP_tparam=utf&utf=http%3A
%2F%2Fw3.gre.ac.uk/lib/products/ [Accessed on 12th December 2006]

Debreceny S. at all (2005), Financial Reporting in XBRL on the SEC's EDGAR System:
A Critique and Evaluation.[online] Available from:
http://portal.gre.ac.uk/cp/render.UserLayoutRootNode.uP?uP_tparam=utf&utf=http%3A
%2F%2Fw3.gre.ac.uk/lib/products/ [Accessed on 12th December 2006]

Susan P, et all (2006) [online] business reporting: An information management

perspective [online] Available from: http://www.sciencedirect.com/science?
_ob=ArticleURL&_udi=B6VB4-4JRKD45-
1&_user=634187&_coverDate=04%2F30%2F2006&_alid=509458762&_rdoc=1&_fmt=
full&_orig=search&_cdi=5916&_sort=d&_docanchor=&view=c&_acct=C000027518&_
version=1&_urlVersion=0&_userid=634187&md5=b0cbf85e50368e059b3f22aa60da7a5
e [Accessed on 13th December 2006]

O'Rourke, J. (2001) [online] Creating Financial Information in XBRL. Available from:

http://portal.gre.ac.uk/cp/render.UserLayoutRootNode.uP?uP_tparam=utf&utf=http%3A
%2F%2Fw3.gre.ac.uk/lib/products/ [Accessed on 13th December 2006]

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