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Teaching Finance a New Language

Teaching Finance a New Language

by Toby Lucich on May 26, 2005

Four letters have long promised to revolutionize the way businesses deal with financial reports. They are XBRL, which stands for extensible business reporting language. It’s a standard used to tag financial information so it can be tracked and analyzed by software applications.

But before all those applications can be built, companies first have to start creating reports in XBRL -– which they have little motivation to do since they lack programs that would make it worth their while. It’s a classic chicken-and-egg problem that’s in the process of being solved now, thanks to encouragement from government regulators.

On Feb. 3, the Securities & Exchange Commission announced a voluntary program (often a precursor to a mandate) to accept financial reports in XBRL (see BW Online, 2/8/05, “After Sarbanes-Oxley, XBRL?”). And some countries are well ahead of the U.S. in requiring filings in this format, says Louis Matherne, president of consortium XBRL International and the director of XBRL at the American Institute of Certified Public Accountants (AICPA).

Teaching Finance a New Language

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