XBRL and Real-Time Reporting Securities

XBRL and Real-Time Reporting Securities and Exchange (SEC) Commission began considering alternatives to its traditional financial reporting requirements earlier in the decade, realizing that existing reporting requirements were limited in functionality and value. On May 30, 2008 the SEC announced a new rule for financial reporting based on the eXtensible Business Reporting Language (XBRL), a variant of the XML language, which has tags for specific financial measures of performance so they can be captured and published in real-time (Callaghan, Nehmer, 321).

The initial ruling called for a timetable of compliance with the largest 500 U.S.-based corporations required to file using XBRL by December 15, 2008. The remainder of U.S. corporations and those foreign corporations filing under the International Financial Reporting Standards (IFRS) are being phased in throughout 2010 according to the SEC ruling compliance timetable. The SEC also is granting a 30 day extension for all corporations filing using the new standard. XBRL is based on the foundational elements of XML technology for data identification, taxonomy development, reporting, and data integration.

The SEC deliberately chose to extend their reporting standard using XML as a foundation due to the ubiquity and widespread use of XML as a data integration platform (Callaghan, Nehmer, 322, 323). XBRL Adoption and Use As the SEC ruling immediately required the top 500 corporations in the U.S. To comply, these organizations and their CFOs have quickly moved to embed or integrate XBRL reporting into their statements they file with the SEC quarterly.

CFOs have remarked that the coding for XBRL, even in pilot phases, has led to delays in filing all reports on time. XBRL is viewed by CFOs as a necessary requirement albeit an expensive and time-consuming one (Farewell, 83 -- 84). Contrasting this view of XBRL as a necessary burden of compliance, investment firms are actively using XBRL to analyze firms they own significant stock positions in.

Institutional investors are finding XBRL to be valuable from the standpoint of creating taxonomies that give them greater insights into the performance of the firms they hold significant stock share positions in. In addition, investment analysts with leading Wall Street firms are using XBRL as a means to define entirely new and more detailed analysis of financial statements and key ratios as well.

Given the fact that XBRL treats financial information as a referenced by an XML-compatible tag, each financial ratio, item on a financial statement and significant event as defined by the Sarbanes-Oxley (SOX) Act are all tagged. This significantly improves reporting timeliness and has led to the SEC stating that the future of financial reporting will be in real-time (Tribunella, Tribunella, 71). The Connection between XBRL and Real-Time Reporting With XBRL, the ability of corporations to report in real-time becomes possible. No.