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Technology: New Format set to Revolutionize Financial Data Transfers
The cost to transfer financial data could drop dramatically later this year should a new data specification be approved by the Securities Exchange Commission (SEC). It’s called the Extensible Business Reporting Language (XBRL) US Generally Accepted Accounting Principles GAAP Taxonomies, but it’s really nothing more than a specification for how to represent business and financial performance data in XML format. Mike Willis, a partner with PricewaterhouseCoopers described XBRL “like an MP3 file for analytical concepts”.
A draft of the specification was released in early December and the SEC is expected to approve it as early as the end of Q1 2008. The European Union Central Bank Supervisors and the U.S. Federal Deposit Insurance Corp. are both already using the exchange standard. Use of the format is required in Japan and China, and the UK will be using it beginning in 2010.
XBRL benefits include:
- a standard method for releasing real-time financial data
- data is immediately transferable with no need to re-enter
- less error-prone than existing methods
- enables easy distribution of data
- commoditize/standarize datasets operated on by accounting software and ERP packages
It is expected that XBRL will form the foundation for software tools and applications that will help corporations provide the greater transparency that compliance regulations like Sarbanes-Oxley have been demanding. Financial comparative analyses of companies can be run at the push of a button. This will be a huge plus for securities analysts and investors.
Technologies like XBRL and ECM (Enterprise Content Management) document and records management are key towards giving companies and their auditors greater control in finding corporate information.
