Investors anticipate new XBRL tools will improve analysis
Washington, D. C. – The U. S. Securities and Exchange Commission’s (SEC) recent launch of an online, interactive tool that allows investors to instantly analyze and compare the financial results of public companies was applauded by XBRL US, Inc., the nonprofit consortium for XML standards for reporting financial and business information in the United States. This XBRL-driven tool underscores the flexibility and usefulness of “tagged” data.
The new application, called Financial Explorer, uses XBRL data submitted to the SEC directly from public companies and allows investors to automatically generate financial ratios, graphs and charts depicting information from financial reports. Because the software relies on XBRL data, investors will bypass the time-consuming and often error-prone chore of manually cutting and pasting financial information into spreadsheets, and the visual representations of the data make the numbers easier to understand and compare.
“Tools like the Financial Explorer are made possible because of the structure of the underlying data,” said Tom Larsen, CFA, manager of research, Harding Loevner Management LLP. “The power of XBRL means that information is more quickly, easily, and accurately extracted from the financial reports that come directly from public companies.”
Mr. Larsen is also chair of the CFA Institute’s XBRL Working Group and is featured, along with Sam Jones, CFA of Trillium Asset Management, with over 40 years experience on the buy-side and sell-side, in a recent XBRL US podcast (Click to listen, or right-click to save as .mp3 for your player) on the implications of the new SEC viewer and the impact of XBRL on investors and the capital markets.
The SEC’s Financial Explorer (http://126.96.36.199/viewer/home/) is the third tool released by the SEC that utilizes interactive data; the Executive Compensation viewer (http://188.8.131.52/compensation/action/main/list.action) and Interactive Financial Report viewer (http://184.108.40.206/viewer) are also available. The SEC’s Voluntary Filing Program, whereby public companies can opt to furnish financial disclosures using XBRL, has been underway since 2005 and continues to accept new participants. A rule regarding the use of XBRL by publicly traded companies reporting to the SEC is anticipated in the near future.
“Financial Explorer’s user experience and data visualization makes it easier for people to see the power of XBRL and interactive data.” said Mark Bolgiano, president and CEO of XBRL US. “The XML ecosystem in general is maturing, investor awareness of XBRL-driven business reporting is increasing, and demand for XBRL-enabled analytical tools is growing. The recent example from the SEC is one that we expect others to imitate and enhance in forms we have yet to imagine.”
XBRL US is currently under contract with the SEC to build out the US GAAP Taxonomies and develop guidance on creating XBRL-enabled financial statements for preparers. On December 5, the draft Taxonomies and documentation were made available for public review and XBRL US encourages public company preparers, investors, analysts and software providers to participate and provide comment. More information can be found at http://usgaap.xbrl.us.
About XBRL XBRL (Extensible Business Reporting Language) is a royalty-free, open specification for software that uses XML data tags to describe financial information for public and private companies and other organizations. XBRL benefits all members of the financial information supply chain by utilizing a standards-based method with which users can prepare, publish in a variety of formats, exchange and analyze financial statements and the information they contain. XBRL International is a non-profit consortium of approximately 500 organizations worldwide working together to build the XBRL language and promote and support its adoption. XBRL International is responsible for the technical XBRL specification and each country-specific jurisdiction works to facilitate the development and adoption of local XBRL taxonomies, or dictionaries, consistent with accounting, regulatory, and market standards and practices.
About XBRL US XBRL US is the non-profit consortium for XML business reporting standards in the United States and is a jurisdiction of XBRL International. It represents the business information supply chain, including accounting firms, software companies, financial databases, financial printers and government agencies. Its mission is to support the implementation of XML business reporting standards through the development of taxonomies relevant for use by US public and private sectors, working with a goal of interoperability between sectors, and by promoting adoption of these taxonomies through the collaboration of all business reporting supply chain participants. XBRL US has developed taxonomies to support U.S. GAAP and common reporting practices under a contract with the Securities and Exchange Commission. The XBRL US GAAP Taxonomies are available for public comment at http://usgaap.xbrl.us.