XBRL: What Is It? Why the FASB? Who Uses It?
This document represents the view of the FASB staff. The views herein do not necessarily reflect the views of the FASB. Official positions of the FASB are determined only after extensive due process and deliberation.
What Is eXtensible Business Reporting Language (XBRL)?
XBRL (eXtensible Business Reporting Language) is the open international standard1 for digital business reporting. XBRL is used to deliver human-readable financial statements in a machine-readable, structured data format. Preparers using GAAP for publicly traded companies are required not only to create financial statements, but also to assign an XBRL tag to every number, table, accounting policy, statement, and note.
Prior to 2009, such quarterly and annual financial statements were only required to be filed with the Securities and Exchange Commission (SEC) using Hyper Text Markup Language (HTML), an unstructured format. Starting in 2009, the same financial statements were also required to be filed in a more structured machine-readable format, using XBRL, so that machines could more readily process what humans read in the HTML document. The XBRL filing allows thousands of pieces of information in financial statements to be digitally available for electronic consumption. In 2021, only an Inline XBRL format, which embeds the XBRL data directly in the HTML document, is required.
XBRL tags can be found in the GAAP Financial Reporting Taxonomy and SEC Reporting Taxonomy (collectively referred to as the “GAAP Taxonomy”). The GAAP Taxonomy is a list of computer-readable tags in XBRL format available for preparers to assign to their financial statements. It is essentially a dictionary of financial statement terms for GAAP requirements and common reporting practices as provided in the FASB Accounting Standards Codification® (Codification).
Why Is the FASB Responsible for XBRL?
The FASB assumed the ongoing development of the GAAP Taxonomy from the SEC in 2010 to keep it current with GAAP. That allowed the FASB to integrate the process used to develop the GAAP Taxonomy with the FASB’s development of Codification improvements and to work closely with the SEC, investors, preparers, service providers, software developers, and other stakeholders to develop high-quality GAAP Taxonomy updates.
The FASB is responsible for keeping the GAAP Taxonomy current and aligned with (a) the Codification, including SEC material referenced in the Codification, (b) presentation and disclosures commonly made in practice and derived from the Codification that are consistent with GAAP and reflect common reporting practice, and (c) technical improvements based on stakeholder feedback.
When XBRL tags in the GAAP Taxonomy are applied to a company’s financial statements, computers can automatically search and assemble information so that financial statement data can be readily accessed and analyzed by users. Using XBRL, fully machine-readable financial statements are available digitally in real time across companies, markets, the country, and the globe.
Who Uses XBRL?
The availability of XBRL data has helped users go deeper in their financial analysis, view and collect financial data, perform peer comparisons, review cross-sectional or time series data for patterns or variances, update forecasts with as-reported information, and more. XBRL enables the automation of the data collection process and provides faster access to originally reported financial statement data for more detailed and robust analysis with multiple companies in a shorter time period and more affordably than traditional, normalized, or adjusted data sets.
Machines represent over 95% of EDGAR2 ‘visitors’ enabling a wide range of XBRL data users, including investors, financial analysts, economic research firms, data aggregators, academic researchers, college professors, preparers for peer analysis, auditors, the SEC, FDIC, IRS, and other federal agencies, as well as the FASB. Some users may be unaware they are using XBRL data because the data providers they rely on incorporate XBRL data in their service. The SEC provides a free monthly update of the XBRL Financial Statement and Notes Data Sets on their website. There were over 500,000 downloads of these datasets in 2019. This is in addition to their RSS feed and other mechanisms for downloading filings.
The SEC staff uses XBRL data to efficiently analyze large quantities of information in support of risk assessment, rulemaking, and enforcement activities, including as part of its internally developed Financial Statement Query Viewer and iViewer applications. The SEC can more timely review the information and immediately incorporate it into their tools and it dramatically increases their access to and reuse of corporate disclosures by a factor of 5 to 10 times depending on the company.
The FASB staff uses XBRL data to support Board-level research, having completed over 200 research projects using the data over the last several years. The FASB staff uses the data to improve the quality of the GAAP Taxonomy by studying how preparers use it. This review is included with the FASB post-implementation review process to gain insight into how preparers are meeting reporting requirements for new accounting standards.
With a machine’s ability to use XBRL and the Internet as a distribution platform, XBRL data is widely used for a more efficient and effective exchange of digital machine-readable financial statement data. In today’s digital world, information comes from many sources. When those sources are not digitally enabled, users must convert them at the cost of precious time and resources.
1XBRL is an XML standard, which is maintained by XBRL International, a non-profit consortium of approximately 600 member organizations, companies, and government agencies around the world. It is available free of license fees and is being used in more than 50 countries.
2EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, is a registered trademark of the SEC.