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Governance Gauge: XBRL Sets the Standard

It's no longer a question of if Extensible Business Reporting Language (XBRL) will be the standard mandated by financial regulators around the globe, but rather when.

It's no longer a question of if but when Extensible Business Reporting Language (XBRL) will be the standard mandated by financial regulators around the globe. This much was clear at the 11th XBRL International Conference, held April 26-29 in Boston, where U.S. Securities and Exchange Commission (SEC) Managing Director for Operations Peter Derby urged all companies reporting to the agency to adopt the XML-based format. "Tagged data will improve the quality of information and the speed of its availability to investors and the marketplace," Derby told attendees.

The SEC in February announced a voluntary program encouraging companies to submit XBRL-formatted financial reports. Developed to ease electronic communications and analysis, XBRL offers standardized tags for all data and content in financial statements to provide computer-readable context and, therefore, automated query and analysis. The standard is already mandated by the FDIC and in various stages of adoption among financial regulators in the European Union, United Kingdom, The Netherlands, Spain, Japan and Korea.

Supporting more than governance, XBRL will enable corporate strategists to perform automated, apples-to-apples comparisons with competitors and potential acquisition targets. Few reports are currently authored in XBRL, but converted data is available from aggregators including Edgar Online, which demonstrated a tool at the conference that lets users analyze some 1,000 XBRL-normalized data points from each of more than 12,000 companies reporting to the SEC.

Standardized markup will make it harder for companies to bury poor performance deep in financial reports as it will be easy to spot trouble signs and anamolies through fast, broad-scale analysis.
Doug Henschen