Like any government mandate, the SEC's requirement to use XBRL (Extensible Business Reporting Language) in public companies' financial reports cannot be ignored. However, along with the government stick comes a number of beneficial carrots.
Up until now, many companies have lived in a document-centric world where finding the right information might require someone to read a 100-page filing to get the one piece of data they need. The use of XBRL moves documents from being about big unstructured ideas to those that have a lot more structure, making them more consumable and more reusable, says Mike Willis, a partner at auditor PricewaterhouseCoopers and the founding chairman of XBRL International, a supply-chain consortium representing more than 600 companies.
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"XBRL takes the same exact document and structures it, so you can say show me everything related to this topic," Willis notes. Once data becomes more interactive, it becomes multidimensional, linking users back to authoritative documentation, says Diane Mueller, vice president of XBRL Development for JustSystems, an XML tools provider.
United Technologies (UTC), a conglomerate that makes helicopters, air conditioners, elevators, and aerospace components, was an early adopter of XBRL. After three years of use, John Stantial, UTC's assistant comptroller, says the company hasn't fully exploited XBRL, yet has still been able to reduce the time and cost of its corporate reporting processes by 25 percent. Stantial expects to gain further improvements as UTC applies XBRL to more systems and processes. As XBRL gains a sufficient mass of users, Stantial looks forward to new software tools for better automated retrieval and systemwide integration to help UTC take further advantage of XBRL.
Once every company is required to put XBRL into the SEC's Edgar database, which provides the public with access to corporate filings, every organization will benefit from better research and benchmarking capabilities, Stantial says. That will bring about the need for XBRL analysis tools for use by investors, regulators, and companies' financial departments.
All of these benefits will create new opportunities to apply XBRL, and thus more XBRL-related work for IT to take on.