XBRL gets belated welcome

XBRL gets belated welcome

Companies House says that 10,000 company accounts have been filed using the technology since late last year

Finally, after what seems like years of aborted attempts to encourage
adoption of XBRL as the best way for business to communicate financial
information, it looks as though the reticence is being overcome.

The benefits of eXtensible Business Reporting Language as a technology that
‘marks up’ financial data and allows it to be compared and analysed by
businesses and stakeholders have been praised since the late 1990s, but only now
does the persuasion appear to be working.

Buy-in was limited due to concerns over the huge complexity of mapping
financial data, in a way that would make comparability possible. But with the
news last week from Companies House that 10,000 company accounts have been filed
using the technology since late last year, and Lord Carter’s recommendation that
all companies should file their tax returns online using XBRL by 2010, the UK’s
total adoption looks almost inevitable.

Business can gain value from XBRL use. James Fisher, a director at business
software vendor Cartesis, said a key benefit was in benchmarking -­ an area that
has gained popularity in recent times.

And even though its take-up is being driven through regulation, Fisher
believes that many businesses will go through a ‘sit up and wake up’ phase that
will see them look to drive value from compliance. ‘It can help drive
forecasting accuracy, benchmarking and analysis, even looking at M&A
placing.’

Dennis Keeling, chief executive of business software lobby group BASDA,
believes that the best chance for take-up of XBRL for financial reporting is to
simplify the way it classifies certain bits of data, as done by Companies House
for company accounts.

Simplification must be achieved, he said, because businesses ‘don’t see the
point’ of going through the current time intensive processes involved in using
XBRL.

XBRL unmasked

Instead of treating financial information as a block of text, XBRL provides an i
dentifying tag for each individual item of data, which is computer readable.

For example, company net profit has its own unique tag. The introduction of
these tags is to automate processing of business information by software. The
technology allows the information to be analysed and stored for reporting
financial information.

But ‘mapping’ data to the tags has led to concerns over its complexity, and
stunted takeup.

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