XBRL Victory! SEC Mandate Of XBRL Extends Benefits Of Financial Standards
By Diane Mueller, JustSystems
The U.S. Securities and Exchange Commission mandate of XBRL is great news! It's a triumph for SEC Chairman Christopher Cox, who played a pivotal role in ensuring the modernization of IT infrastructure of the EDGAR filing system based on XBRL — an initiative that may be his most lasting legacy and a final feather in his cap.
And, of course, the SEC's XBRL mandate is great news for the financial community at large. XBRL holds the promise of revolutionizing business reporting on a global scale, dramatically improving the relationship between people, processes, accounting standards, and financial information. How? By ensuring that a company's financial reporting is always an authoritative reflection of the latest version of the truth within the enterprise.
XBRL lets reviewers look at financial data in a highly interactive format that is much more accessible by various line-of-business applications and composite applications. Documents empowered with XBRL are more richly described and can be consumed much more readily by applications such as risk management, financial analysis, and audit.
Chairman Cox puts the matter plainly when he says that XBRL "means allowing average Americans the ability to view exactly the financial information that they want. We are on a campaign to liberate business and financial information that…is currently trapped inside dense documents." With adoption of this mandate, the SEC moves from document disclosure to data disclosure, improving searchability and accessibility. XBRL makes the rendering of financial data in its various forms more easily accessible to investors.
XBRL is already mandated for financial filings in multiple jurisdictions worldwide, so the SEC mandate simply moves the U.S. into global alignment with other regulators. Also, the SEC mandate, combined with the trend toward the adoption of the International Financial Reporting Standards (IFRS), opens the possibility for true global comparability of financial documents.
To date, the potential for XBRL remains largely unexplored due to the gap between worker knowledge and access to new services that can view, consume, and work with this new format. Financial documents still remain largely focused on unstructured and disconnected data built and viewed with non-XBRL aware applications.
Going forward, however, the SEC announcement — in combination with new advances in XBRL data-centric documents-based technology, management, search capabilities and dynamic content enrichment — offers a promising lifeline to help solve XBRL's tenuous relationship with people and task-oriented knowledge. One thing is for sure — XBRL is not going away, so it is time for organizations to get comfortable with the standard and create a solid plan for adoption.
Diane Mueller has been actively involved in the development efforts of the XBRL standard for the past nine years. She is a Member of the XBRL International Steering Committee and chairs the XBRL Working Groups on Rendering and Software Interoperability. She currently serves as vice president of XBRL development at JustSystems, the largest independent software vendor in Japan and a worldwide leader in XML and information management technologies. Learn more about JustSystems at http://www.justsystems.com
SOURCE: JustSystems