XBRL: A New Global Paradigm for Business Financial Reporting

Introduction

The persistent rise of high profile corporate accounting scandals in recent years highlights the urgency for more effective corporate financial reporting that is informative, credible, and readily accessible to regulators, investors, and other stakeholders (Lester, 2007). As an evolving information technology for web-based financial reporting (Doolin & Troshani, 2007), eXtensible Business Reporting Language (XBRL) holds the greatest promise for building a global standard that is pledged to enhance the accuracy, reliability, efficiency, accessibility and availability of electronic communication of business financial data (Baldwin et al, 2006; Lester, 2007; Stantial, 2007; Vasarhelyi et al., 2012; Willis, 2005; Yoon et al, 2011). Initiated in 1998 by the AICPA, and now administered by a global consortium, XBRL streamlines the preparation of financial statements both internally and externally (Taylor & Dzuranin, 2010). XBRL is considered an important enabler of corporate transparency (Apostolou & Nanopoulos, 2009; Bonsón et al., 2010; Debreceny et al., 2011; Ionescu, 2011; Roohani et al., 2009) and an example of breakthrough value adding accounting information technology (Alles et al., 2008).

XBRL is an information technology that provides an identifying tag for business information such as total sales to create an unambiguous way to identify and compare information of one company to another (Hoitash et al, 2006). Self-describing markups or tags provide notations to contents of a document and thus allow the search and extraction of desired information by purpose-built computer programs without downloading an entire document (Jones & Willis, 2003; Vasarhelyi et al., 2012). XBRL tags are defined and organized using a systematic classification scheme called a taxonomy that defines financial reporting concepts and their relationships as per specific legislation or standards (Deshmukh, 2004; Lester, 2007; Strader, 2007). Files with tagged financial information are called XBRL instance documents (Janvrin & Mascha, 2010). XBRL tags can be applied to financial statements after they are generated or implemented directly into an accounting information system (Vasarhelyi et al., 2012). By separating content from format, XBRL benefits all members of the financial information supply chain by making information exchangeable between different applications and systems and easy to extract, search, and reuse by users (Jensen & Xiao, 2001). The computer readable and searchable XBRL-tagged document will lead to a fundamental revolution in financial reporting as users like investors and analysts can download not only the traditional financial report but also consistent representations of the data that were combined and aggregated to create that report (Hannon, 2002; Plumlee & Plumlee, 2008). It’s also perceived as a useful IT productivity tool by auditors (Chironna & Zwikker, 2011; Janvrin et al., 2008). The American Institute of Certified Public Accountants has ranked XBRL as one of top ten technologies for accounting and auditing professionals (Peng & Chang, 2010).