Microsoft says it's the first US company to file financial records using a newly released XML data standard this week, the GAAP (U.S. Generally Accepted Accounting Principles) taxonomy for XBRL (Extensible Business Reporting Language), according to a report by IDG News in London. XBRL is an XML standard that makes financial filings machine readable, potentially saving massive amounts of time formerly required for manual data analysis.
Just like any other data standard, XBRL could help in opening up significant analytical innovation on top of standards based information. Advances in adoption of XML based data standards are good news for everyone. This might sound like dry, but you will be glad it happened when free financial information is all the more available and 3rd party service providers are able to build more sophisticated analysis tools on top of well articulated, standardized financial data.
XBRL is being adopted all around the world, but here in the US a draft for the new GAAP taxonomy was just opened for public comment on Wednesday. That taxonomy would make financial reporting machine readable using tags based on GAAP financial terms. Presumably the GAAP standard will help make XBRL reporting make all the more sense for US based companies in particular by working with existing practices.
Microsoft filed a Form 8-K with the SEC this week using the new GAAP XBRL standard, as part of an initial SEC pilot program involving three dozen companies.
"We've been saying that interactive data is on the brink of transforming the review and analysis of financial information for the benefit of investors and public companies alike," said David Blaszkowsky, Director of the SEC's Office of Interactive Disclosure in the draft's press release. "With the release of this taxonomy today, investors can now begin to visually see the progress being made, and so will every public company that uses GAAP. Interactive data is no longer merely an up-and-comer, it's becoming reality.
Readers interested in learning more about this XML standard should check out its Wikipedia page.
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Much credit must go to Chris Cox who's been punting things like electronic document delivery and the XBRL spec. This makes for more rational (and hopefully transparent) financial reporting.
Because XBRL tags all line items and maps to a schema (GAAP in this case), wonder if it qualifies as an API??
Posted by: Derek | December 7, 2007 9:35 AM
edgar-online's imetrix application is one of the most sophisticated XBRL apps around. The excel integration they did with MSFT is stellar. Way ahead of the game
Posted by: joey | December 7, 2007 7:20 PM
Marshall,
nice write-up. I think your commentary is pretty much on the mark. I also agree with Derek above that much credit goes to SEC Chairman Chris Cox for having the “Investor-Friendly” and "Interactive Data" vision and completely running with it. Obviously there are/were lots of other folks involved from XBRL and private industry who also stepped up and ran along side with Chairman Cox.
Joey's mention of iMetrix is a good example of what can be done with the democratization of financial data. The folks at Rivet Software also have an interesting vision with their i-Fi Suite. There are other interesting vendors out there and apologize for not mentioning them.
Full disclosure first, broad sweeping prognostication second... I was the Vice-Chair and Chair of the XBRL GL (Global Ledger) Working Group and one of the contributors to the taxonomy and it’s architecture along with a bunch of other smart people. Obviously, my statements might be a bit biased, however I prefer the term “insightful” :-)
The XBRL announcement is monumental and helps build some very public awareness compared to some lesser known successes XBRL success (the FDIC project for example). The next thing to watch is the XBRL Global Ledger. Founded by Eric E. Cohen (Global Technical Lead at PwC) XBRL GL is focussed on internal reporting vs the external reporting that XBRL FR (Financial Reporting) tackles.
XBRL GL is reporting (e.g. GAAP vs IFRS), system (e.g. SAP to Oracle to homegrown and back again) and language independent. For the theme of “Interactive Data” above XBRL GL allows investors, auditors, management and partners (e.g. your financial institution) to drill down, up and around with the underlying data. Fujitsu has done a really cool demo of this scenario. It also enables machine-to-machine communication without the need to standardize the journal (think merger/acquisition scenarios or trading with international partners without the need for traditional EDI). Lastly the Global Ledger is extremely flexible enabling consolidation within systems that weren’t necessarily designed to consolidate data from other systems (think mid-market accounting packages).
The tie into this announcement and to ground my “next big thing” prognostication is something called XBRL GL SRCD (Summary Reporting Contextual Data). Lack of marketing skills aside the idea here is to provide the missing link between the detailed data represented in XBRL GL and the “end user” data represented in XBRL FR and vice versa in a “simple” and non-ambiguous manner. SRCD can also be used to link to other XML schemas (e.g. RIXML, UBL, etc...).
You heard it here first :-)
Posted by: Jeff Fedor | December 8, 2007 7:32 AM