XBRL Hits the Street to Streamline Business Reporting

HTML, XML, FpML, FinXML, MDDL ... the acronyms are dizzying, but the standards behind them promise to be the wave of the future for financial-services firms - simplifying and standardizing everything from news to market data to trade information. And one XML-based standard, in particular, is on its way to achieving this in the area of financial statements, performance reports, accounting records and other financial information.

To this end, Nasdaq, PricewaterhouseCoopers and Microsoft have teamed up to launch the first pilot program to demonstrate, to a range of potential users, the benefits of XBRL.

XBRL, or Extensible Business Reporting Language, is an XML-based format for reporting financial information in a standard way. By reporting financial information through the XBRL standard, investors, regulators, analysts and companies can benefit from increased transparency and usability of the information, as well as a reduced cost of consumption.

XBRL-formatted information is tagged from an electronic dictionary of terms for digital publication, making it accessible in a standard format for companies that publish the information and users who consume the information. XBRL information can then be extracted for analytical use, eliminating the need to re-enter the information and the resulting risk of errors.

XBRL can also save users time. "The way information is formatted today, in paper and electronic-paper form, it would take five or six hours to get information on, say, the five largest semiconductor companies and put it into an analytical application of any kind," says Mike Willis, founding chairman of XBRL International and partner at PricewaterhouseCoopers. "With the pilot program using XBRL, you could do it in 30 seconds."

The pilot program on the Nasdaq Web site provides access to financial data from 21 Nasdaq-listed companies in the semiconductor industry. "We've tagged five-years worth of the companies' SEC filings for 10K annual reports and two-years worth of 10Q quarterly reports," says Willis. This includes information on balance sheet, profit and loss, cash flow, changes in equity and some notes.

"XBRL is a significant step forward in improving the transparency to investors and quality of data from SEC filings," says John Delta, vice president and general manager of Nasdaq.com. And, by improving transparency, Nasdaq is also looking to help improve investor confidence in key information that affects the markets.

"We worked with PwC and Microsoft to select a subset of companies and provided the SEC filing information to PwC and they tagged the data in XBRL and worked with Microsoft in developing the analytics to deliver the XBRL in an extractable format." More specifically, the XBRL data can be pulled into an Excel spreadsheet for comparison and analysis.

Although corporate disclosures have become highly standardized, Willis says that the process of retrieving and viewing that information from financial statements and comparing them with other companies has become quite costly and time consuming. "You have a human being trying to read 100 pages of a document and the disclosure they're looking for might be on page 76, so they have to read 75 pages to get there," says Willis. "With an XBRL document, you can tell it what you want to see and it pulls it up immediately."

Nasdaq's Delta adds that, historically, SEC data was delivered in ASCII format, which was then taken by sites like EDGAR Online to turn the data into HTML or rich-text format, but the details were not standard or easy to extract. "This takes it much further. Now, when I see revenues for different companies, I'll know exactly what that means," says Delta. "It won't be net revenue in some cases and gross revenue in others."

Willis explains that the information can be put into XBRL format through vendor-reporting applications or other XBRL tools. This translation into XBRL is done as a sort of "file save as idea," he says, where users can save their reports and statements as XBRL documents. "Software vendors are migrating their applications to deal with the XML format because it increases the transportability of any file you're sending from one application to another," says Willis.

The Nasdaq pilot program takes advantage of Web-services servers to expose XBRL documents in a broadcast type of delivery. Willis says that the Internet is largely a publishing model, where users would have to go to several different Web sites to find the financial statements they are looking for and then download and open them. But with the pilot program, the XBRL-formatted statements are delivered through a Nasdaq-hosted Web service, which pushes the information out.

At this point, the pilot program includes what Willis calls, "exemplary data," which constitutes about 80 percent of the data.

In other words, the Web service provides the XBRL-tagged data, but the user selects the particular companies and areas they would like to compare and/or analyze from within the Excel application. "When the users hit a button, they are basically tuning into this Web service, which pumps out all of the data to them," says Willis. The data has been made available through the Excel interface via a custom solution built by Dell Professional Services.

Companies that already report using XBRL include Morgan Stanley, EDGAR Online, Reuters, Microsoft and DaimlerChrysler. Vendors that have committed to XBRL-enabling their financial -reporting applications include Microsoft, SAP, Hyperion, Oracle, Creative Solutions, enumerate and CaseWare. In the future, Nasdaq will be looking to expand the pilot program to include other listed companies.

In addition to XBRL for financial statements and regulatory filings, other potential applications for XBRL include XBRL for taxes and XBRL for accounting and business reports. XBRL could also prove useful for regulatory organizations themselves, says Willis. "This ability to consume information much more efficiently and analyze it in a matter of seconds would be a powerful business case for tax regulators or capital-markets regulators as well," he adds. <<<

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Company Information
Made Available Through the Nasdaq Pilot

- Intel Corp.
- Maxim Integrated Products, Inc.
- Xilinx, Inc.
- Linear Technology Corp.
- Broadcom Corp.
- NVIDIA Corp.
- Altera Corp.
- Microchip Technology, Inc.
- Marvel Technology Group, Ltd.
- QLogic Corp.
- Atmel Corp.
- Intersil Corp.
- Integrated Device Technology, Inc.
- Conexant Systems, Inc.
- RF Micro Devices, Inc.
- Applied Micro Circuits, Corp.
- Semtech Corp.
- Lattice Semiconductor Corp.
- Micrel, Inc.
- Vitesse Semiconductor Corp.
- Microsoft Corp.

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How are XBRL Documents Created?

- Several accounting-software products support XBRL, as a native import and export format, to allow users to map charts of accounts and other structures to XBRL tags.

- XBRL can be manually created with products for "XBRL-instance documents" or XBRL can be generated by extracting information from a database or an accounting system's application-program interface.

- XBRL can be transformed from existing formats, such as HTML or PDF or raw print-stream data, with tools that recognize the information needed and prompt a user for confirmation that tags are being properly applied. The software can also build a set of conversion rules so that the user can store them as a template for repeated use.

- Web sites are available where EDGAR fillings can be transformed into XBRL online.