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What does XBRL stand for and what is iXBRL?

Let's start with the basics: XBRL with no 'i'. XBRL stands for eXtensible Business Reporting Language. It's a worldwide standard developed to improve the communication, compilation, and comparability of financial data. XBRL works to achieve this goal by making financial data human- and machine-readable. It's a derivative of eXtensible markup language (XML.)

Similarly, iXBRL — with an ‘i' — stands for inline eXtensible Business Reporting Language. iXBRL is a development of XBRL that shifts the focus onto data rendering and readability. Where XBRL documents can be read via specific viewing platforms, iXBRL focuses on universally rendering information. This means iXBRL documents can be viewed by human or machine through a viewer on any browser.

What’s the difference between XBRL and iXBRL?

Readability: iXBRL is readable by humans and machine. XBRL is only machine-readable.
File Type + Encoding: iXBRL is a standard HTML file. XBRL is XML, which is more rigid. 
Rendering (e.g., making the document human-readable): iXBRL can be rendered on iXBRL viewers on any browser or printers. XBRL is only rendered on an XBRL viewer. 
Formatting: iXBRL is highly flexible. XBRL is limited in flexibility.  
Filing: iXBRL requires a single step to submit machine and human-readable formats. XBRL requires machine-readable and human-readable documents to be filed separately.

What are the benefits of iXBRL?

iXBRL has some significant benefits over XBRL. As a first-generation reporting language, XBRL had data quality issues. As a result — and to the disappointment of the hardworking accountants who created them — the filings weren't used to their full potential.

Thus, iXBRL was introduced to:
Reduces inconsistencies: Filers can embed iXBRL data directly into their filings instead of attaching them as separate documents.
Control of presentation: Filers have control over the HTML presentation of the XBRL disclosure, so documents are easier to read.
Universally accessible: The SEC's open-source iXBRL viewer can be used to read XBRL data more efficiently. Anyone with a web browser can read iXBRL documents. No software needed.
No need for multiple versions: XBRL requires filers to maintain both XBRL and HTML versions of filings. Any updates must be made twice. Late updates miss slipping through the cracks. With iXBRL, there is only one version to maintain.

How does iXBRL work?

Within the statement, iXBRL uses standard HTML code — the same code you use to create webpages — to format “elements” (your financial concepts) with "tags" so that a computer knows what it's looking at. It helps to think of tags like computer translations that tell the computer what figure is present. e.g., A computer would recognize the tag ifrs:Revenue as the company's revenue disclosure.

While iXBRL aims to promote comparability between reports, filers can be from different industries, organization types, and government agencies, and thus subject to different accounting standards. Even within peer groups, there can be communication differences between companies' financial statements. iXBRL accommodates these differences this through "taxonomies."

What is an iXBRL Taxonomy?

Taxonomies are like a code dictionary of financial concepts. Each taxonomy contains “elements,” which, as mentioned above, describe your financial concepts and the attributes and interrelationships between them.

To see elements in action, let’s take “cash,” for example.

If we’re looking at cash on the balance sheet, the taxonomy would explain the definition of “cash.” It would also describe how it relates to other balance sheet items in the taxonomy, like how cash rolls up into ‘current assets’ and ‘total assets’ — both of which are also defined as elements in the taxonomy.

There are different taxonomies for different accounting standards. Reporting jurisdictions develop a taxonomy to reflect local accounting standards and reporting regulations. For example, there is a European Single Electronic Format (ESEF) XBRL taxonomy to be used as the basis for the iXBRL for European Securities and Markets Authority (ESMA).

It’s important to note that the taxonomy must match the standard used to prepare the data. If group data were prepared according to IFRS and company data prepared under FRS 101, then the group data would be tagged with the IFRS taxonomy and the company data would be tagged with the FRS 101 taxonomy.

Organizations, regulators, industries, and companies may also develop or “extend” a taxonomy to reflect their specific reporting needs.

What is an iXBRL taxonomy extension?

What do we mean by “extend”? A taxonomy extension is the ability to add or change elements to meet the company’s reporting needs. IXBRL is eXtensible in this way so that iXBRL can be widely adopted.

What is iXBRL tagging?

IXBRL tagging is the process of tagging elements (financial concepts) within a taxonomy (your dictionary of financial concepts.) To tag, you must convert your financial report into an iXBRL format. Then, tags are embedded in the data manually or using your iXBRL software. What needs to be tagged? iXBRL requirements include:

  • Any accounts in a company tax return: balance sheet, P&L, notes to the accounts
  • Director and auditor reports (but only the data that appears within the taxonomy for director and auditor reports)
  • Prior period comparative figures
  • You only must tag items in financial reports with existing tag exists in the taxonomy. If there's no available tag, you can leave the data as plain text. (i.e., textual reports, chairperson's statement)

Who Uses iXBRL? 

Millions of companies worldwide prepare financial statements in iXBRL to provide regulators and analysts with structured data. Users of iXBRL include regulators, standard bodies, data aggregators, accounting firms, analysts, investors, software vendors, stakeholders, and the company themselves.

Evolving regulatory standards are demanding more detailed and timely information from companies. But it’s difficult for the regulators to measure the data when its filed. XBRL helps regulators do this faster and more efficiently. The filing company can also benefit from further embedding XBRL in internal processes to enhance, standardize, and make management reporting more reliable.

What capabilities should the best iXBRL software have?

Smart, automatic tagging: The best iXBRL tagging software solutions use a machine learning engine to auto-tag tables and free text in line with the taxonomy without any manual intervention. (I.e., you don’t need to learn code. Winning!)

Re-use tags: The ability to re-use tags across different time periods saves you an incredible amount of time. Look for a solution with automatic re-tagging so that when you’re preparing your next report, iXBRL fields update and automatically rollover.

Automatic validations: Like spell check for your iXBRL filings, automatic validation rules verify that your results and tags are correct before submission.

An integrated solution: When your iXBRL filing is created on the same platform as the rest of your financial management processes, financial documents align with parameterized numbers and text updates as data changes. 

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