XBRL - Implications to Businesses
XBRL (eXtensible Business Reporting Language) is a language that applies to the electronic communication of business and financial data . This new language is based on XML (eXtensible Mark-up Language), and it will translate financial reports into a harmonized language that users can more easily access, query and analyze. For these reasons it is easy to see that the application of XBRL will have major implications to the accounting profession.
The best way to see what the exact implications of this device will be is to look at the advantages and disadvantages of its application to the accounting profession. From this it should show just how advantageous this new language is for accounting firms and for any firm in the business world.
Lots of firms are now implementing this new language to their systems but why? There are many reasons but the main one is that by applying this new simplified and standardised technology companies will now be able to produce financial data quickly and in various different formats. The main advantages that XBRL bring to government entities are listed in the following journal XBRL - Implications for the Accounting Industry. From these advantages it is clear to see the benefits that government entities will gain from the application of this new language in the process of producing financial data and these advantages will also hold true for private companies and accounting firms that wish to adopt this language.
The main disadvantage of the use of XBRL comes hand in hand with one of the main advantages. The fact that there is increased availability and access to financial information there are a variety of new security concerns that have to be taken into account. To take account of these firms would have to apply security measures to prevent unauthorised access to the information and also to maintain its reliability and validity. This would cost firms a lot of money and could negate that benefits that arise from its use, but the costs shouldn’t be too great.
Another disadvantage is that for some firms the start up cost for implementing XBRL will be very large. These substantial costs will mainly occur with smaller companies that do not have the technology in place or a web presence, do apply XBRL to your company you have to have a web presence and specific hardware and software. This means that costs that some firms would face in the application of XBRL will be greater than the benefits that would arise from its use.
Something else that may be taken into account is the fact that with its application many firms are saving a lot of time as people don’t have to repeatedly type in the financial figures. This could maybe result in job reductions as firms no longer need as much people to type in the financial information, this could result in social costs of the loss of workers. This factor should always be taken into account when implementing a new technology, but the savings again from the use of this new language will outweigh the social costs that may occur.
Though there are disadvantages to the use of XBRL these should not deter companies from its use, as the advantages are so great that the disadvantages do not have a great effect. This new language will provide companies with a valuable tool that will save time and increase their production of financial data that will benefit all users of the accounts by providing reliable, relevant and useful information.
The best way to see what the exact implications of this device will be is to look at the advantages and disadvantages of its application to the accounting profession. From this it should show just how advantageous this new language is for accounting firms and for any firm in the business world.
Lots of firms are now implementing this new language to their systems but why? There are many reasons but the main one is that by applying this new simplified and standardised technology companies will now be able to produce financial data quickly and in various different formats. The main advantages that XBRL bring to government entities are listed in the following journal XBRL - Implications for the Accounting Industry. From these advantages it is clear to see the benefits that government entities will gain from the application of this new language in the process of producing financial data and these advantages will also hold true for private companies and accounting firms that wish to adopt this language.
The main disadvantage of the use of XBRL comes hand in hand with one of the main advantages. The fact that there is increased availability and access to financial information there are a variety of new security concerns that have to be taken into account. To take account of these firms would have to apply security measures to prevent unauthorised access to the information and also to maintain its reliability and validity. This would cost firms a lot of money and could negate that benefits that arise from its use, but the costs shouldn’t be too great.
Another disadvantage is that for some firms the start up cost for implementing XBRL will be very large. These substantial costs will mainly occur with smaller companies that do not have the technology in place or a web presence, do apply XBRL to your company you have to have a web presence and specific hardware and software. This means that costs that some firms would face in the application of XBRL will be greater than the benefits that would arise from its use.
Something else that may be taken into account is the fact that with its application many firms are saving a lot of time as people don’t have to repeatedly type in the financial figures. This could maybe result in job reductions as firms no longer need as much people to type in the financial information, this could result in social costs of the loss of workers. This factor should always be taken into account when implementing a new technology, but the savings again from the use of this new language will outweigh the social costs that may occur.
Though there are disadvantages to the use of XBRL these should not deter companies from its use, as the advantages are so great that the disadvantages do not have a great effect. This new language will provide companies with a valuable tool that will save time and increase their production of financial data that will benefit all users of the accounts by providing reliable, relevant and useful information.
posted by Peter M Currie at 5:31 AM
3 Comments:
This comment has been removed by a blog administrator.
I think that XBRL does have its drawbacks, the main one being that, with the current upheaval of the introduction of the International Financial Reporting Standards, the last thing companies need is the added pressure of changes to their reporting systems. However, the long term result of a common language within accounting systems is an outweighing benefit.
Being able to model something like financial reporting is no easy task. The fact that XBRL is extendible makes it ideally suited for the profession. As reporting standards change, so can the software. It is based on XML, so it is easy to make additions and modify. Most importantly, it makes it easier for companies to share information with the industry, as there are no compatibility problems, companies can share information with other companies and industry analysts. These other parties are likely to use different hardware and software, with XBRL there is no need for conversion as the file format will be compatible. With an increased focus on transparency in financial reporting XBRL is a welcome addition to the profession.
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