What is XBRL Taxonomy ?
Taxonomies are the reporting -area specific hierarchical dictionaries used by the XBRL community. They define the specific tags that are used for individual items of data, their attributes and their interrelationships. These taxonomies will be used when storing or exchanging financial and operational information internally in a company, and when reporting externally to investors, analysts, regulators and customers.
Different taxonomies will be required for different business reporting purposes. Different XBRL jurisdictions may have their own financial reporting taxonomies to reflect their local accounting regulations. Many different organizations, including regulators, specific industries or even companies, may requiretaxonomies to cover their own business report needs.
The working of XBRL
Traditional Financial Statements
All the line items tagged with common terms in XBRL Taxomony
XBRL instance Document
Instance document is the document generated by tagging the companies with XBRL Taxonomy.
XBRL is a powerful and flexible version of XML, which has been defined specifically to meet the requirements of business and financial information. It enables unique identifying tags to be applied to items of financial data. XBRL can show how items are related to one another. It can thus represent how they are calculated.
Benefits of XBRL
XBRL offers major benefit at all stages of business reporting and analysis. The benefits are seen in automation, cost saving faster, more reliable and more accurate handling of data, imporved analysis and in better quality of information and decision -making
(i) Benefits and Uses of Business
All participants in the financial information supply chain benefit as XBRL enables producers and consumers of financial data to switch resources away from costly manual processes, typically involving time consuming comparison, assembly and re-entry of data. As just one example, searches for particular information which might in the past have taken hours can be completed with XBRL in a fraction of a second.
(ii) Data Collection and Reporting
By using XBRL, companies and other producers of financial data and business reports can automate the processes of data collection. for example, data from different company divisions with different accounting systems can be assembled quickly, cheaply and efficiently if the sources of information have been upgraded to using XBRL. Once data is gathered in XBRL, different types of reports using varying subsets of the data can be produced with minimum effort.
(iii) Data Consumption and analysis.
Users f data, which is received electronically in XBRL, can automate its handling cutting out time-consuming and costly collation and re-entry of information. Software can also validate the data, highlighting errors and gaps which can immediately be addressed. It can also help in analyzing, selecting and processing the data fro re-use. Human effort can swithc to higher, more value-added aspects of analysis, review, reporting and decision-making.
The use of XBRL does not imply an enforced standardization of financial reporting. On the contrary, the language is a flexible one which is intended to support all current aspects of reporting in different countries and industries. It s extensible nature means that it can be adjusted to meet particular business requirements, even at the individual organization level.
Uses of XBRL
Companies can use XBRL to save costs and streamline their processes for collecting and reporting financial information. Consumers of financial data, including investors, consumers of financial data, including investors, analysts, financial institutiones and regulators, can receive, find, compare and analyze data much more rapidly and efficiently if it is n XBRL format.