Question

Read “an introduction to XBRL” and answer the follow questions:

a. What are the most important features of XBRL? Describe two of them.

b. Who are the user of XBRL? Describe two of them.

c. What are the benefits of XBRL for Securities Regulators and Stock Exchanges?

Describe two of them.

Answer 1

a. What are the most important features of XBRL? Describe two of them.

XBRL stands for 'eXtensible Business Reporting Language'. XBRL offers major benefits 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, improved analysis and in better quality of information and decision-making. All types of organizations can use XBRL to save costs and improve efficiency in handling business and financial information.

1. Clear Definitions:

XBRL allows the creation of reusable, authoritative definitions, called taxonomies, that capture the meaning contained in all of the reporting terms used in a business report, as well as the relationships between all of the terms. Taxonomies are developed by regulators, accounting standards setters, government agencies and other groups that need to clearly define information that needs to be reported upon. XBRL doesn’t limit what kind of information is defined: it’s a language that can be used and extended as needed.

2. Efficient Data Consumption and Analysis:

Users of 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 immediately validate the data, highlighting errors and gaps which can immediately be addressed. It can also help in analyzing, selecting, and processing the data for re-use. Human effort can switch to higher, more value-added aspects of analysis, review, reporting and decision-making. In this way, investment analysts can save effort, greatly simplify the selection and comparison of data, and deepen their company analysis. Lenders can save costs and speed up their dealings with borrowers. Regulators and government departments can assemble, validate and review data much more efficiently and usefully than they have hitherto been able to do.

b. Who are the users of XBRL? Describe two of them.

The international XBRL consortium is supported by more than 600 member organizations, from both the private and public sectors. The standard has been developed and refined over more than a decade and supports almost every kind of conceivable reporting, while providing a wide range of features that enhance the quality and consistency of reports, as well as their usability. XBRL is used in many different ways, for many different purposes, including:

1. Regulators:

• Financial regulators that need significant amounts of complex performance and risk information about the institutions that they regulate.
• Securities regulators and stock exchanges that need to analyze the performance and compliance of listed companies and securities, and need to ensure that this information is available to markets to consume and analyze.
• Business registrars that need to receive and make publicly available a range of corporate data about private and public companies, including annual financial statements.
• Tax authorities that need financial statements and other compliance information from companies in order to process and review their corporate tax affairs.
• Statistical and monetary policy authorities that need financial performance information from many different organizations.

2. Companies:

• Companies that need to provide information to one or more of the regulators mentioned above.
• Enterprises that need to accurately move information around within a complex group.
• Supply chains that need to exchange information to help manage risk and measure activity.

c. What are the benefits of XBRL for Securities Regulators and Stock Exchanges? Describe two of them.

1. Better Regulation:

XBRL brings transparency and robustness in the reporting data supply chain thus strengthening the supervision of regulators over the capital markets they regulate.

2. Market Transparency:

XBRL provides high-quality data, more market transparency, and increased investor confidence in the listed companies and their reported financials. Interactive data can provide investors quicker access to the information they want in a form that's easily used and can help companies prepare the information more quickly and more accurately.