A couple of weeks ago, while rebutting Democratic challenger Kamala Harris during the US Vice Presidential Debate, Vice President Mike Pence notably stated: “You’re entitled to your own opinion but not your own facts.” Beyond the political point Pence was making, this quote – especially in the context of a debate – can also be applied to business, where, all too often, some information is downplayed in order to enhance other information, format and flair are given precedence over fact, and timeliness is key.
As we all know, information is king; however, universal, and timely access to verified information has always been a problem. While we’re more likely to have PDFs of corporate financial reports in cloud storage than we are to have physical stacks of corporate financial reports (learn about the advantages of publishing your annual report in a digital format), the fact remains that the data in these files cannot be extracted and analysed in an efficient and uniform way. Developed through a joint venture of governments, regulators, and major international companies, XBRL, the eXtensible Business Reporting Language, presents a common/standardised way for businesses and stakeholders to access and exchange reporting data.
Using an analogy from PWC, XBRL can be thought of as a “bar code,” with the difference being that, instead of telling information about a physical product, the bar code will give financial information. Needless to say, making this information more transparent and accessible could allow for: increases in speed and efficiency in a business’ decision-making process; reduction in data errors; reduction in the cost of preparing, disseminating, and applying information; and allowing for data to become more automated overall.
Much like XBRL itself, let’s now attempt to gain a better understanding of the term by breaking it down into its easily understood components and reconstructing it. Language, coming from the Old French language and the Latin lingua, meaning ‘tongue’, was first used in the sense of instructions and data processed and executed by a computer in a 1947 issue of The American Mathematical Monthly: “The present methods of coding or translating from mathematical symbols to machine language are given in some detail.” The verbal-noun explaining what is to be the use of the language, reporting, denoting the action of giving a report on something, is a product of the Old French reporter via the Latin reportare, meaning ‘to bring back or, figuratively, report’, and can first be found circa 1439 in John Lydgate’s The Fall of Princes (which was based on Giovanni Boccaccio’s work De Casibus Virorum Illustrium (On the Fates of Famous Men)), where Lydgate writes: “Wherof cometh the famous clear shining Of emperors..Of wherof cometh their laude in reporting, Stuff that clerk’s hand written their histories?” The object of the specified kind of reporting language- business- can be traced back to the Northumbrian bisignes, originally meaning ‘careful or diligent occupation’, but, in the sense of trade and commercial activity and profitability as we apply it, the original usage first appears in a collection of letters detailing a family of London wool merchants, The Cely Letters, which mention in 1478 that: “I will ye come home,..for there shall be no business at Caleys this marte time.” Finally, indicating which area of business reporting the language will cover, extensible, or capable of being extended in any direction, originates from the French extensible which is derived from the Latin extendere, meaning ‘to spread out’ and enters the English language through Randle Cotgrave’s 1611 Dictionary of the French and English Tongues, where it is defined as: “Extensible, extensible; which may be extended, or drawn out in length.”
Learn more about the new requirement to publish annual reports in XBRL in out article: XBRL – the New Language for Company Reporting?