SEC launches financial reporting XML project

The U.S. Securities and Exchange Commission last week launched a pilot project built around a specialized flavor of XML for financial reporting.

The pilot is designed to assess the viability of using the eXtensible Business Reporting Language (XBRL ) to affix computer-readable identifiers to the contents of financial statements. XBRL is an XML derivative that the nonprofit consortium XBRL International is developing to increase the usability of information contained in financial statements.

When attached to financial data, XBRL tags potentially can make it easier to find and extract specific elements of a financial document, such as net profit or operating expenses. The tags conform to strict definitions, so an automated program could retrieve, aggregate and analyze data from different text-based sources - including documents created in different languages and .

Backers expect companies will use XBRL to streamline processes for collecting and reporting financial information, and consumers of the data will be able to more easily analyze it.

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The U.S. Securities and Exchange Commission last week launched a pilot project built around a specialized flavor of XML for financial reporting.

The pilot is designed to assess the viability of using the eXtensible Business Reporting Language (XBRL ) to affix computer-readable identifiers to the contents of financial statements. XBRL is an XML derivative that the nonprofit consortium XBRL International is developing to increase the usability of information contained in financial statements.

When attached to financial data, XBRL tags potentially can make it easier to find and extract specific elements of a financial document, such as net profit or operating expenses. The tags conform to strict definitions, so an automated program could retrieve, aggregate and analyze data from different text-based sources - including documents created in different languages and .

Backers expect companies will use XBRL to streamline processes for collecting and reporting financial information, and consumers of the data will be able to more easily analyze it.

"We look at XBRL doing for business reporting what bar-coding has done for product distribution," says Louis Matherne, president of XBRL International. "Bar codes enhanced product distribution, in terms of improving efficiency, improving the quality of information, eliminating errors and allowing for things that hadn't even been conceived, like checking out our own groceries. XBRL is about doing the same thing for the collection and exchange of business information."

Participants in the SEC pilot last week began submitting XBRL files in tandem with other electronic filings - which traditionally are formatted in HTML or ASCII. One of the first companies to do so is Bowne Financial Print, a $637 million subsidiary of Bowne & Co. that helps companies prepare financial documents for filing, printing and Web display.

Going through the XBRL creation and filing process this first time around wasn't a no-brainer, says Dave Copenhafer, director of EDGAR Services at Bowne Financial Print in New York.

The XBRL specification can be difficult to implement, and preparing a document requires input from a surprisingly large corporate contingency, Copenhafer says. For Bowne's first XBRL-ready filing, the company's finance, IT and legal staff weighed in on the process, as did top executives. One of the hardest parts was making judgments about how existing document data mapped to the XBRL tags, he says.

"When you take a line item out of your human-readable financial report and you want to map that to an appropriate XBRL line item, it turns out there may be numerous choices," Copenhafer says. "So companies and their auditors really need to look at all of the accounting characteristics that define a particular line item and make a selection from the available tags that best fits all of the elements associated with it."

Tools to create and analyze XBRL data are emerging from vendors such as Fujitsu, Rivet Software and Semansys Technologies, but it's an early market. Microsoft partnered with Semansys late last year to create a suite that bundles Microsoft Office and SharePoint Portal Server with Semansys' XBRL Composer software.