Don't look at Extensible Business Reporting Language as an onerous would-be requirement; look at it as an opportunity for better insight into competitors and financial markets. That's the message delivered Dec. 5 in Philadelphia by SEC Chairman Christopher Cox.
The SEC and many international counterparts are embracing XBRL to make it easier to oversee public companies, but speaking at the 14th International XBRL Conference, Cox said that XBRL will also liberate financial executives, analysts and investment professionals from number-crunching drudgery so they can "perform subtle analyses and make careful judgments that machines can't replicate."
XBRL is an XML-based format that provides a computer-readable way to tag more than 2,000 financial data points, such as cost, assets, net profit and other values. Because it's standardized, XBRL enables fast, automated analysis not only by regulators, but also by companies examining competitors and industries. The SEC has recommended that companies embrace XBRL for reporting quarterly and annual results, but has held off on a mandate--a requirement widely viewed as inevitable.
"Most companies looking at this are focusing on the costs and changes required to publish financials in XBRL," said conference attendee Trevor Walker, a VP at performance-management vendor Cartesis. "We're educating customers that there's no requirement for publishing for now, but they can take advantage of the benchmarking advantages of XBRL."
Using XBRL-normalized data on public companies available from commercial publishers such as Edgar Online, companies can benchmark and accurately track performance against competitors. "You can be much more aggressive [or realistic] in how you put together your forward-looking forecasts and plans," Walker said.
Cox told attendees that XBRL-US will document taxonomies for every industry using US GAAP no later than mid-2007