Foreword to “XBRL Global Ledger Distilled”
As mentioned here the book “XBRL Global Ledger Distilled” has been recently published in China. Below is the foreword that the author, Jia XinQuan, kindly asked me to write.
The Extensible Business Reporting Language (XBRL) is rapidly becoming the global standard for the representation of business and financial data. The vast majority of its visible implementations to date relate to regulatory reporting, and there is a common misconception that this is the only process that XBRL is designed to support.
In reality XBRL is a Business Reporting Supply Chain (BRSC) standardization effort, and as such it encompasses both internal and external reporting processes. It is designed for the end-to-end standardization and integration of data: from the first entry in accounting software, through the various levels of summarization for internal reporting purposes, to its final roll-up in multiple end reports for internal and external use, including, but not limited to, compliance reporting. The use of XBRL to standardize internal information, to streamline the internal processes that aggregate and analyze it and to standardize the rules of aggregation between granular internal data and internal and external end reports is the space of XBRL Global Ledger (XBRL GL).
One of the analogies most frequently used to describe the power of XBRL is the barcode, which revolutionized the distribution supply chain by enabling greater efficiencies and extremely significant cost savings, mostly related to the automation of previously manual activities. The barcode is a machine readable, standardized code that uniquely identifies goods and materials and describes some of their features; in the same way, XBRL allows to attach machine readable “meaning” relevant in the business and financial data domain to pieces of information, thus enabling the same kind of transition from manual to automated processes related to data aggregation, analysis and reporting.
Well, I assume that if you were in charge, say, of a specific distribution supply chain you would not apply the barcode to your merchandise only in the moment in which it is unloaded from the truck to get to the grocery store shelves – your own processes would not benefit from it at all, and the only beneficiary would be the grocery store itself. The earlier in the supply chain you start barcoding, the more significant and pervasive are the process benefits that you achieve within your own organization.
In the same way, seeing XBRL only as the format to which financial statements must be converted to comply with a regulatory mandate means ignoring the great opportunities that it enables. The earlier you tag your business and financial data in the business reporting supply chain, the more significant the benefits achieved will be. XBRL GL is the enabler of “early barcoding” within the BRSC – and the benefits seen so far from XBRL adoption in the external compliance space are only the tip of the iceberg. The real value and the most significant process efficiencies lie in the internal use of XBRL, including, but in no way limited to, the generation of XBRL reports in a standardized, more efficient way.
China has taken a lead position in global XBRL adoption since the release in October 2010 of the Chinese Accounting Standards XBRL taxonomy promoted by the Ministry of Finance, and the level of interest in expanding its use for internal purposes is very high – as is very high the potential for breakthrough advances in the application of this technology.
The publication of XBRL GL Distilled is a milestone on the way towards the complete realization of the benefits of data standardization in business reporting and towards the full adoption of the “business data barcode” in one of the most influential economies in the world – which has the capability of setting best practices that will greatly benefit the global community as a whole.
Gianluca Garbellotto
Chair, XBRL Global Ledger Working Group
