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After Sarbanes-Oxley, XBRL

After Sarbanes-Oxley, XBRL

by Rick Turoczy on February 8, 2005

Financial execs may not appreciate it yet, but this new data-tagging system should speed the flow of info and create new ways to analyze it. On Feb. 3, financial reporting took a giant step into the future with the Securities & Exchange Commission’s announcement that it’s ready to start accepting corporate financial reports that have been tagged with newly developed software code known as XBRL.

That jumble of letters stands for Extensible Business Reporting Language. Software developers will easily grasp that it’s a kind of XML (Extensible Markup Language), in this case tailored for business reporting. But to most financial professionals, XBRL represents a confusing new intersection of high tech and finance that they aren’t quite ready to embrace.

For the uninitiated, the easiest way to understand XBRL’s purpose is by comparing it to the humble bar code, which can track a can of soup from the manufacturing plant through the point of sale. Similarly, XBRL tags financial information so it, too, can be tracked, from the first interactions with vendors, to reports submitted to various operating divisions within a company, and finally to become part of a consolidated earnings release. “XBRL will really facilitate the flow of business information” from public companies to analysts and regulators, says Mike Willis, a partner at PricewaterhouseCoopers and one of the programming language’s architects.

After Sarbanes-Oxley, XBRL

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