All standards are not created equal. Standards can be open or closed. Nonproprietary or proprietary. Developed by a non-profit standards organization or by a commercial entity.
The XBRL standard is free, open, non-proprietary and is developed, and maintained by a market-driven, not-for-profit standards body. These are critical attributes for a standard and here’s why.
The XBRL technical specification was created and is maintained through an open, collaborative process with input from all stakeholders. Good standards demand this kind of cooperation from data creators, intermediaries and users, to build a standard that meets all needs, thus encouraging rapid, broad adoption. A “closed” standard, software or protocol may have limited public participation in its initial and ongoing development which limits its usefulness to all parties.
No royalty fees (free).
There are no licensing fees associated with the use of the XBRL technical standard. That means that anyone can build an XBRL taxonomy, at no cost. XBRL taxonomies developed or managed by XBRL US or XBRL International like the US GAAP Taxonomy, the Orange Button Solar Taxonomy or the Surety Work-in-Process Taxonomy are, by definition, freely available for use by data creators, intermediaries and data users.
Some standards, like CUSIP (the Committee on Uniform Securities Identification Procedures), a securities classification system managed by Standard & Poor’s, requires users to pay assignment fees ranging from $50 to $200 for each identifier. The requirement that users of a standard pay licensing fees can significantly hinder widespread adoption and use.
Proprietary standards, like Excel or PDF or CUSIP, which was mentioned earlier, can be considered de facto standards because they are widely used, even though they are controlled by one company, and their development is not governed by a standards organization. Governments and businesses looking to adopt a standard that will be used by multiple reporting entities and users, should opt for a nonproprietary standard because ongoing development and the business strategy for the standard is not tied to a commercial entity with the interests of a single organization in mind.
The use of proprietary standards also means that any upgrades or changes in reporting requirements by users of the standard, must be performed by the same commercial entity that built it. This effectively results in a roadblock to ongoing development of the standard and can lead to significant expense as users must request changes from a single entity with commercial interests. Adoption of the standard by other commercial organizations may also be hampered because of conflicting competitive concerns.
The XBRL standard is developed and maintained through work performed by the industries in which it is used. XBRL US and XBRL International, because of their not-for-profit status and their deep connections into the issuer, user and technology communities, are able to bring together competing entities to collaborate on developing best-of-breed standards. Only standards developed by the marketplace can achieve successful, efficient adoption.
Not-for-profit standards body.
XBRL US and XBRL International are both not-for-profit standards organizations with a mission to improve business reporting. XBRL International focuses on developing and maintaining the technical specification while XBRL US is responsible for building data standards for U.S. reporting. Commercial entities simply cannot effectively develop and disseminate a data standard used by other competing commercial entities. Only a member-driven not-for-profit standards organization can bring together representatives from reporting supply chains for the kind of collaboration essential to good quality standards and adoption.