XBRL FAQ For your convenience, we collected the most asked questions regarding XBRL, and answer them in one overview. If your question is not (fully) answerd, please do not hestitate …
Enhance your business reporting and financial data with XBRL
Financial reporting is a form of communicating financial data and is as old as humankind. Every year regulations and methods regarding accounting evolve, whether companies are prepared for this or not. Implementing the XBRL standard is one way to make a uniform standard for annual reporting. While the standard is nothing new, many companies are only recently dealing with XBRL. Furthermore, it is not surprising that the most frequently asked question regarding XBRL is: What is XBRL, and why should it matter for my company? With this article, we hope to answer these questions for you.
XBRL stands for eXtensible Business Reporting Language
To explain what is XBRL is simple to answer yet, for many challenging to understand. In a nutshell, XBRL is a language in which you can authoritatively define reporting terms. You use these terms to represent the contents of your financial statements or any other kind of compliance documentation, such as performance and business reports. You can now prepare, validate, publish, exchange, consume and analyze financial reports while ensuring compliance with the reporting authorities.
XBRL enforces accurate, fast and streamlined communication between organizations
The way you communicate business data makes or breaks the prosperity of your company. Every year new annual reporting rules are introduced by local and international authorities. Organizations thereby present various reporting tools, software, and service to make your financial reporting more consistent, accurate, and convenient. In this case, XBRL is the tool, XBRL applications the software and, organizations such as Global Connect Consultancy, the service. The next question is, how does XBRL create these benefits for your company?
Two sides of one coin
To explain how XBRL is beneficial for your company, you first need to view the standard from two viewpoints: Technical and Business. From a technical point of view, XBRL is a computer language, making your business systems talk to each other. From a business point of view, XBRL is business communication. You can benefit from the XBRL standard regarding transparency reporting, compliance, and communication. Your company is obligated to be transparent with your data and commit to reporting deadlines.
Furthermore, everyone has experienced how misinterpretations and miscalculations can affect your business. XBRL forces the filer to be on top of their financial data, recognizing inconsistencies earlier. By identifying inconsistencies, committing to deadlines and complying with transparency reporting, you will eliminate a lot of stress and fines while increasing trust and communication.
From mapping, taxonomy and tagging: Your financial statements go hand in hand with XBRL
We have explained what XBRL is and why it is essential, so you might wonder what the implementation of XBRL looks like for your company. Let us explain what your XBRL process will look like.
Your XBRL process is all about linking and labeling your financial data. For example, you provide your data, such as a financial statement, and mark this data to a taxonomy. This form of labeling data is called ‘tagging’ and ensures that computer systems and humans can read and validate your disclosures in a structured manner. The tagging efficiency depends on the XBRL software you implement or the professional you outsource your XBRL projects.
With the digitalization of financial reporting, you need to prepare your annual financial statements in XHTML. Whether you report in PDF or Excel, you must XBRL tag your financial data to taxonomy. Furthermore, you can only open XBRL documents with XBRL software, which further proves the importance of XBRL software.
For many companies, the main challenge is finding XBRL software that can be adjusted to the company’s needs and is practical to implement. Luckily, you can choose various licensed XBRL software applications, such as Amelkis XBRL. Please do not hesitate to contact us for an Amelkis XBRL demonstration to show you how effectively you can work on your XBRL projects from start to finish.
Comply with the Transparency Directive
Who has a business in the EU, or has activity in the EU, is most likely aware of the Transparency Directive, introduced by the European Parliament to ensure transparency of information for investors through a regular flow of disclosure on regulated information. Issuers who prepare their annual financial reports must do so in a single electronic reporting format. This electronic format for transparency is where the European authority, ESMA, comes into play by introducing ESEF, the European Single Electronic Format.
If you prepare your annual financial reports on the EU-regulated markets, you need to do so in the ESEF format. The main objective of ESEF is to make your financial reporting more manageable and facilitate the accessibility of financial data. With ESEF, you can now quickly analyze and compare financial statements and business reports and thereby comply with transparency reporting.
XBRL is an open standard, but you need XBRL software to remake your XBRL journey possible
Various XBRL applications exist for different types of companies, depending on size and activities. In some cases, such as for micro and small enterprises, governments have implemented plugins in their website to report in XBRL. However, if your company does not fit that category, you need to invest in XBRL. To implement taxonomy, tag your documents and generate financial statements in XBRL, you need XBRL software. Furthermore, you need to validate your documentation, which is something XBRL software can effectively do for you, resulting in saving much time and money.
IFRS and XBRL
The main goal of IFRS and XBRL is to streamline financial reporting internationally. IFRS and XBRL both act as a uniform method for annual reporting. The ESEF taxonomy provides a hierarchical structure so that you may classify essential financial data in XBRL. The ESEF taxonomy is, therefore, an extension of the IFRS taxonomy. To comply with the Transparency Directive and EU reporting regulations, implementing XBRL is the way to do so. All internationally active companies have experience with IFRS, so knowing that XBRL is perfectly aligned makes the new process more straightforward.
The future of your organization is in your hands
The way you on with your financial and business reporting is in your hands. We do recommend taking the extra step to prepare yourself for future endeavors. If you experience difficulties or are not yet confident with your XBRL process, please do not hesitate to reach out to us. We would gladly look into your situation and look for the best possible solutions together.
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