All you need to know about – i.e. XBRL, iXBRL, ESEF, Taxonomy, Tag, Instance Document, Validation etc.
XBRL (eXtensible Business Reporting Language) is a data-rich dialect of XML (Extensible Markup Language), the universally preferred language for transmitting information via the Internet. It was developed specifically to communicate information between businesses and other users of financial information, such as analysts, investors and regulators. XBRL provides a common, electronic format for business reporting. It does not change what is being reported. It only changes how it is reported.
XBRL is a world-wide standard, developed by an international, non-profit-making consortium, XBRL International Inc. (XII). XII is made up of many hundred members, including government agencies, accounting firms, software companies, large and small corporations, academics and business reporting experts. XII has agreed the basic specifications which define how XBRL works.
iXBRL, or Inline XBRL, is an open standard that enables a single document to provide both human-readable and structured, machine-readable data. An XBRL report provides only the tagged data, while an iXBRL report is a human-readable report with tagged data embedded in it. The tagged data in an iXBRL report can be extracted and converted into an XBRL report by an iXBRL processor. At a technical level, an XBRL report is an XML document that can only be read with XBRL software. An iXBRL report is an HTML document that can be viewed directly in a web browser, as well as using XBRL software.
European Securities and Markets Authority (ESMA) is an independent EU Authority that contributes to safeguarding the stability of the European Union’s financial system by enhancing the protection of investors and promoting stable and orderly financial markets. It achieves this by: assessing risks to investors, markets and financial stability, completing a single rulebook for EU financial markets, promoting supervisory convergence and directly supervising credit rating agencies and trade repositories.
ESMA has recently mandated European Single Electronic Format (ESEF). The ESEF is the electronic reporting format in which issuers on EU regulated markets shall prepare their annual financial reports in XHMTL format, which is human readable and can be opened with any standard web browsers from 1 January 2020. Where AFRs contains IFRS consolidated financial statements, these shall be labelled the XBRL ‘tags’, which make the labelled disclosures structured and machine-readable.
In XBRL, information is not treated as a static block of text or set of numbers.
Instead, information is broken down into unique items of data (e.g. total liabilities = 100). These data items are then assigned mark-up tags that make them computer-readable. For example, the tag 100 enables a computer to understand that the item is liabilities, and it has a value of 100.
Computers can treat information that has been tagged using XBRL ‘intelligently’; they can recognize, process, store, exchange and analyse it automatically using software.
Because XBRL tags are formed in a universally-accepted way, they can be read and processed by any computer that has XBRL software. XBRL tags are defined and organized using categorization schemes called taxonomies.
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 (such as “net profit”), their attributes and their interrelationships. Different taxonomies will be required for different business reporting purposes. Different countries use different accounting standards. Reporting under each standard reflects differing definitions. The XBRL language uses different dictionaries, known as ‘taxonomies’, to define the specific tags used for each standard. Different dictionaries may be defined for different purposes and types of reporting. Taxonomies are the computer-readable ‘dictionaries’ of XBRL. Taxonomies provide definitions for XBRL tags, they provide information about the tags, and they organize the tags so that they have a meaningful structure.
As a result, taxonomies enable computers with XBRL software to:
- understand what the tag is (e.g. whether it is a monetary item, a percentage or text);
- what characteristics the tag has (e.g. if it has a negative value);
- its relationship to other items (e.g. if it is part of a calculation).
This additional information is called meta-data. When information that has been tagged with XBRL is transmitted, the meta-data contained within the tags is also transmitted.
Taxonomies differ according to reporting purposes, the type of information being reported and reporting presentation requirements. Consequently, a company may use one taxonomy when reporting to a stock exchange, but use a different taxonomy when reporting to a securities regulator. Taxonomies are available for most of the major national accounting standards around the world.
An XBRL Instance document is a business report, such as a financial statement prepared to the XBRL specification. The meaning of the values in the instance document is explained by the taxonomy. The instance document is an XML file where everything comes together; here the entity specific data links (tags) to the elements in the taxonomies to form the XBRL document that can be validated and transmitted automatically for utilization by numerous consumers. An instance document is somewhat useless unless you know the taxonomy to which it is prepared.
The core XBRL specifications define validation constraints which XBRL processors must impose on all XBRL reports. These enforce not only basic syntactical checks, but also ensure that the reports comply with the definitions in the taxonomy. Validation Tool is an important requirement for improving the quality of financial information/disclosures in XBRL. Successful validation of the instance document is a pre-requisite before filing the report with reporting authority.
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