At a time when scrutiny of corporate financial statements has intensified, Microsoft, Nasdaq, and PricewaterhouseCoopers have launched a pilot program to test the viability of using XBRL to provide greater transparency of financial statements, making it easier to report financials over the Internet.

The eXtensible Business Reporting Language is an open specification that uses XML-based data tags to describe financial data in business reports and databases. Under the pilot program begun last week, investors will have access to XBRL-enabled financial data from the financial reports of 21 semiconductor companies listed on the Nasdaq. Nasdaq extracted company data from Securities and Exchange Commission filings, and PricewaterhouseCoopers consultants tagged each of the documents in XBRL.

Using the spec should reduce the need for manual data entry because once information is entered into an XBRL-tagged document, the data can then be presented in a variety of forms and formats, including HTML documents, SEC filings, or other specialized reports.

Microsoft is providing a customized version of its Excel spreadsheet to extract the XBRL-tagged data and provide it in a usable format for analysis.

The backing of three marquee firms will move XBRL from a "talked about" issue to a more credible solution, says John Hagerty, VP of research at AMR Research. "The success of this pilot will indeed accelerate the XBRL standard adoption," he says. Hagerty predicts that XBRL-enabled financial reports will be a requirement within several years.