What is XBRL?

XBRL (eXtensible Business Reporting Language) has a history that dates back to the late 1990s with the development of the eXtensible Markup Language (XML). XML was designed to enable the exchange of structured data on the web. Its simplicity and ability to encode information in a machine-readable format caught the attention of the business community who was faced with the growing challenge of managing complex financial and business data. However, while XML enabled the exchange of data, there was no standardized way to tag financial data, meaning that data was often encoded in different formats and with different meanings.

In 1998, a group of financial professionals and technical experts met at the American Institute of Certified Public Accountants (AICPA) to address these challenges. The group recognized the need for a standard language to tag financial data and make it more easily accessible and usable. The working group started experimenting with XML tags and developed a set of taxonomies for financial information, which laid the foundation for what would eventually become XBRL.

In 2000, the group formed the XBRL International consortium, a not-for-profit organization aimed at promoting the adoption of XBRL as a standard format for business reporting. The consortium was made up of members from various backgrounds, including accounting, finance, information technology, and regulatory bodies.

In the early years, the focus of XBRL was on the development of the technical specifications and the creation of taxonomies for different sectors such as banking, insurance, and finance. The goal was to develop a standardized language that could be used across different jurisdictions and systems, reducing the cost and complexity of financial reporting.

As XBRL gained traction, it began to gain support from the regulatory bodies in different countries. In 2005, the US Securities and Exchange Commission (SEC) issued a rule requiring companies to submit their financial information in XBRL format, making it the first regulator to mandate the use of XBRL. This move was significant in the advancement of XBRL as it provided significant legitimacy and validation to the format.

In the years that followed, other regulatory bodies around the world followed suit, recognizing the benefits of standardizing financial reporting using XBRL. In Europe, the European Securities and Markets Authority (ESMA) has played a leading role in promoting XBRL, mandating its use in financial reporting across the European Union.

XBRL (eXtensible Business Reporting Language) is an open standard language used for the electronic communication of business and financial data. It is designed to facilitate the exchange and analysis of financial information across different platforms and countries. XBRL uses a standardized set of tags to identify and describe financial data, making it easier for companies to share and compare financial information across different reporting systems. The use of XBRL for financial reporting is becoming increasingly popular and is now supported by many regulatory bodies around the world. The use of XBRL has expanded beyond the regulatory sphere to cover other aspects of business reporting such as sustainability reporting. Many companies are now using XBRL to report on their environmental, social, and governance (ESG) performance, allowing them to present their sustainability data in a standardized and transparent format.

The evolution of XBRL technology has also been significant. Initially, most XBRL tools were custom-built solutions that required a high level of technical expertise to implement. However, with the growth in XBRL adoption, the market for XBRL tools has expanded, and simpler, user-friendly solutions have emerged. Nowadays, XBRL-enabled software is widely available, making it easy for companies to create, manage, and publish XBRL reports. In recent years, there has also been a push towards developing a more advanced version of XBRL, known as Inline XBRL (iXBRL). iXBRL integrates human-readable text with machine-readable data, making XBRL reports more accessible to humans and systems alike. This new version of XBRL will likely become more widespread in the coming years, further expanding its use in financial and business reporting.

In conclusion, XBRL has come a long way since its inception in the late 1990s. Its success in standardizing financial reporting across different systems and jurisdictions has been remarkable, and its use continues to grow. With the development of new technologies and the increasing demand for greater transparency and accountability in business reporting, it is likely that XBRL will continue to evolve to meet the changing needs of the business community.