What is XBRL?
XBRL, which stands for eXtensible Business Reporting Language, is a language used to electronically communicate business and financial data. It allows companies to prepare, analyse and communicate financial information with improved efficiency, reliability and accuracy at reduced costs. The XBRL standard is open source and free of licence fees.
The originality of XBRL lies in the fact that instead of handling financial information as text blocks, XBRL attaches individualised tags to each information item, which can then be easily read by computers. Thus, a bank’s net Interest income, for example, will have its own unique tag.
The real advantage is that data no longer needs to be compared and manually re-entered, but can be automatically processed by computers on the basis of the underlying tags. Because of the modularity of such a tag system, financial data can be organised and presented in a range of different ways depending on the intended end use. Thus, a supervisory body like the Luxembourg CSSF can pick out only those items of information that it needs concerning a specific entity it supervises, without having to sort through unstructured spreadsheets and documents in order to retrieve the required data.
An XBRL taxonomy is a standard description and classification system for the content of business reports. Put simply, a taxonomy is thus a dictionary used by XBRL. Like a dictionary, it contains definitions – in the case of XBRL, this dictionary essentially defines the specific tags for individual items of data. Establishing a taxonomy is a necessary step to allow the automatic exchange and extraction of financial information. XBRL taxonomies may differ from country to country. XBRL International approves financial reporting taxonomies based on a set of criteria.
An XBRL jurisdiction is a group of members either within a country, a region or another interest group (ex. accountants) defending the specific interests of its members.
The role of a national XBRL jurisdiction is to promote and support the development of national XBRL taxonomies. There may also be transnational XBRL jurisdictions for internationally recognised reporting regimes, like the IAS.
XBRL in Luxembourg
XBRL is being developed by a large international non-profit group, XBRL International, constituted of companies, organisations and government agencies. There exist various jurisdictions around the world, representing countries or international bodies and focusing on developing and promoting XBRL in their region.
The Luxembourg jurisdiction is represented by XBRL Luxembourg a.s.b.l., a non- profit association of some 20 leading organisations and companies in Luxembourg that are either using XBRL or delivering services relating to XBRL technology. XBRL Luxembourg was founded in January 2007 by the ABBL, the CSSF, the Central Bank of Luxembourg, STATEC, ACA, the Institut de Réviseurs d’Entreprises (IRE), alfi and the Ordre d’Experts Comptables (OEC).
The association’s aim is to increase the awareness, knowledge and understanding of XBRL and its uses in the Luxembourg economy. By supporting and coordinating various XBRL projects and especially through the creation of taxonomies, XBRL Luxembourg is promoting and accelerating the adoption of XBRL in the various reporting channels in Luxembourg. In its role as supporting organisation, XBRL Luxembourg, in collaboration with the ABBL and the CSSF, have, for example, developed an XBRL User Book dealing with the numerous technical and practical aspects involved in using the XBRL for the FINREP and COREP reporting standards.