XBRL, eXtensible Business Reporting Language, is an XML-based markup language used to communicate financial and business data electronically. Although XBRL is based on XML, XBRL software is generally user-friendly, requiring no previous knowledge of XML and no IT background. Any entity can use XBRL to encode its financial information such as financial statements, earnings releases, and so forth. In simple terms, XBRL is a tool that benefits all users of financial statements by providing increased functionality over traditional paper, Hyper Text Markup Language (HTML), and other image-based financial reporting formats.

XBRL is used to encode financial statements so that the information in those statements can be read automatically by XBRL-enabled software and more easily sorted and compared. Computers have no inherent knowledge of financial reporting and do not understand information that is not fully defined. Making information machine‑readable requires data to be accompanied by contextual information. Consider the example in Figure 1. Telling a computer "our net sales were 131,383" is useless without defining what the number represents (net sales), the currency in which it is reported (dollars), scaling and rounding (thousands), time period covered (2013), and the company identity (ABC Company). This accompanying context allows a computer to make sense of "131,383". The markup codes used in XBRL describe financial data in a format that computers can classify, sort, and analyze.

Figure 1 Sample Income Statement

ABC COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

For the Two Years Ended December 31, 2013 and 2012

(In thousands, except share data)

XBRL facilitates the analysis of financial data by using pre-existing names to standardize business reporting terminology. Companies often use different terms to describe the same concepts (for example, "accounts receivable", "receivables", and "trade [accounts] receivable"). XBRL normalizes company-specific terminology to get to the root business reporting concepts, allowing comparison of essentially similar information across multiple financial statements and among multiple companies.

XBRL in no way requires a company to change how, what, or when to report financial information. It simply provides a standard mechanism for computers to understand and compare financial data. XBRL also does not change or add to US GAAP and SEC financial reporting disclosure requirements; it is strictly a method of transmitting financial information in a way that leverages computer technology. The XBRL US GAAP Taxonomy is not an accounting guide or disclosure checklist. Using the taxonomy as the basis for preparation of a financial statement provides no assurance that the financial statements comply with US GAAP or meet all of the reporting requirements set forth by regulators. Compliance with US GAAP and reporting requirements should be determined independently from the information contained in the XBRL US GAAP Taxonomy.

1.1 Overview of XBRL

Markup tags have been used since the 1960s to assign appearance and organizational characteristics to electronic documents and, with the advent of the Internet, website content. Similarly, XBRL assigns each financial statement item a tag to give it a machine-readable meaning. The number "131,383" thus becomes ABC Company and Subsidiaries' $131 million of consolidated net revenue for 2013. To perform tagging, preparers must have a collection of previously defined elements that provide the definitions that computers use to understand financial statement data. These collections of defined elements are called taxonomies. To create XBRL-encoded financial statements, preparers match each piece of information from the financial statements to an element in the taxonomy. During this matching process, known as mapping, preparers note where the taxonomy differs from the financial statements. In such cases, preparers "extend" the XBRL US GAAP Taxonomy by relabeling elements, rearranging elements, or creating new elements to match the financial statements. Once preparers have a fully mapped financial statement and extend the XBRL US GAAP Taxonomy to match the financial statements, they can then tag each piece of financial statement information to create an XBRL-encoded financial statement known as an instance document. These instance documents must be reviewed before they are released.

Figure 2 presents the basic work flow for creating XBRL-encoded financial statements. The process starts with a complete set of US GAAP compliant financial statements and ends with a valid extension taxonomy and instance document. The first step of the process is mapping the financial statements to the latest version of the taxonomy that contains the standard definitions and structure that most closely reflect the financial statements. Preparers must check the XBRL US website before mapping to ensure that the taxonomy used is the most recent.

This process is based on current practice, in which the financial statement is prepared before the XBRL extension creation or instance document tagging begins. Integrating the extension taxonomy creation into the preparation process for the financial statements offers advantages, and future editions of this guide will address methods for a more integrated process.

Figure 2 XBRL Extension Taxonomy and Instance Document Creation Process

1.1.1 Step 1 – Financial Statement Mapping

Mapping can be done in a number of ways, but when mapping for the first time, preparers might consider using either a spreadsheet or a simple pen-and-paper table, listing financial statement concepts in one column and corresponding taxonomy elements in another. Using familiar tools to map can help preparers to learn the taxonomy and see where they need to extend the taxonomy to meet specific reporting needs. Figure 3 provides an example of what a template for mapping might look like for the balance sheet of ABC Company. The left column shows the statement line items; the middle shows the mapped element name; and the right indicates additional details about the line item. Mapping, which is necessary for financial statements including notes, is covered starting with Section 3, Understanding and Using Taxonomies, with additional supporting detail in Section 4, Using Taxonomy Calculations, and in Section 5, Using Tables.

Figure 3 Mapping of a Balance Sheet

1.1.2 Step 2 – Extension Taxonomy Creation

After mapping the financial statements and identifying areas requiring an extension to the XBRL US GAAP Taxonomy, a preparer does not change the XBRL US GAAP Taxonomy directly. Instead, an extension taxonomy is created "on top" of the XBRL US GAAP Taxonomy with all the changes required for an entity's specific reporting needs. Extending the taxonomy properly makes it reusable with only slight modifications period after period. Taxonomy extension is discussed in greater detail in Section 6, Creating Extensions.

Validating the extension taxonomy will check it for technical errors and inconsistencies. XBRL software is used to validate extensions, so a preparer should select a software product that has an effective validation function. Frequent validation diminishes the possibility of finding downstream errors late in the process. Validation of the taxonomy is important because it will impact the validation of the instance document (step 3).

1.1.3 Step 3 – Instance Document Creation

After adding the extension taxonomy to the XBRL US GAAP Taxonomy to fit the financial statements, the preparer is ready to create an XBRL instance document. The instance document contains entity- specific financial data for a specific period and ties them to the XBRL standard definitions and other descriptive data in the taxonomy. The instance document also contains other specific financial report information such as the company to which the data apply, the period being reported, whether the information is consolidated, restated, and so forth. Instance documents are discussed in detail in Section 7, Creating Instance Documents.

Validation of the instance document checks whether it is consistent with the extension taxonomy. XBRL software is used to validate the instance document, so a preparer must select software that has an effective validation function for instance documents.

1.1.4 Step 4 – Review

The valid extension taxonomy and instance document are the deliverables of this process. Review of the mapping files, extension taxonomy, and instance document during the development process is desirable, but at a minimum the deliverables must be reviewed and reworked if not satisfactory. Management is responsible for the completeness, accuracy, and presentation of financial statements whether the financial statements are paper-based or in XBRL. For example:

• Completeness: Do all the statements, amounts, notes, and text from the source document appear in the instance document?

• Accuracy: Are all the numeric values in the instance document the same as the source document?

• Presentation: Are the relationships in the instance document consistent with relationships in the source document?

Section 8, Review of Instance Documents, addresses the topic further.

1.1.5 Alternate Processes

There are a number of possible work flows to create an extension taxonomy and instance document.

For example, completing the extension taxonomy for the statements and notes before starting the instance document helps to ensure consistent tagging when the same amounts appear on different pages. However, an alternative is to complete the face of the financial statements in their entirety, which populates the instance document with a single period of data from the basic statements and can reveal problems in the extension that can be corrected early.

Also, the features and functions of XBRL software that preparers use will affect the work flow, possibly condensing or expanding certain steps. The preparer must decide what processes to use based on available tools and experience.

1.2 Who Can Use XBRL?

Anyone involved in business reporting can use XBRL: preparers on the internal accounting and financial statement creation end; analysts and investors on the financial statement consumer end; and everyone in between, such as auditors and data aggregators. While this document focuses solely on the preparer, XBRL has benefits for all financial information stakeholders.

1.3 Limits of XBRL

XBRL combines web-based technology with standardized terms and definitions to provide increased functionality for users of financial statements, including improved data comparability and the many advantages of having financial statements in a reusable, computer-readable format. XBRL can provide more timely and efficient analysis of financial data internally and across companies, expand usability of externally reported financial information, and improve cost accounting, performance measurement, and overall decision making. However, it is not a substitute for the financial accounting systems, controls, procedures, and related managerial oversight required to prepare GAAP-compliant financial statements. XBRL improves the usability and comparability of financial statement information, but it does not check the accuracy of financial statements for compliance with accounting standards, including company decisions with respect to when, how, and at what value transactions are reported and disclosed within those financial statements. Financial statements derived from XBRL instance documents are only as reliable as the financial information used and the accuracy of the mapping used to create them.

XBRL is an enhancement of traditional modes of financial reporting. It does not provide more data than standard financial statements; it provides the data in a format that computers can sort, group, and categorize. When used correctly, XBRL changes the appearance and improves the delivery mechanism for financial statements, but it does not alter their meaning.

1.4 XBRL Terminology

A basic knowledge of XBRL terminology is essential to understanding XBRL and creating financial reports in XBRL. XBRL term definitions can be found in the Glossary (Appendix A) and via hyperlinks throughout this guide.

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