Book Pick: XBRL for Dummies

There's something intriguing about a book with the subtitle "Here's How to Make XBRL Work for You!" Large numbers of finance professionals must be wondering exactly how they're going to do that in the wake of the SEC's May announcement of a rule proposal that would mandate the use of XBRL (eXtensible business reporting language) for some regulatory filings within three years, as we reported here. Authors Peter Weverka and Wilson S. So offer some answers in XBRL for Dummies (Wiley Publishing, 2008), an 84-page overview that comes compliments of Hitachi.

Hitachi?

Yes. Hitachi America Ltd. XBRL Business Unit is a provider of the technology and has long maintained the Web's liveliest blog on the topic (click here). Anyone with more than a passing interest in XBRL should check it out.

Weverka and So kick off with a glance at a widely reported Grant Thornton study which revealed that almost one-half of CFOs have never even heard of XBRL. The data for the study was taken back in August 2006, and certainly awareness levels have climbed since then. But the authors' description of CFOs' attitude -- "I know it's coming, but I don't know what it is" -- still rings true. And, as they rightly point out, that does sound like something from a horror movie.

Next, the book launches into definitions of the technology (some useful if rather simplified examples of data-tagging here), its associated terminology (meta-data, taxonomies), and the rather useful metaphor of XBRL as a kind of bar-code system for financial reports. A brief history of XBRL and its governing bodies provides some useful background.

But the heart of the book is its exposition of the benefits of XBRL, which Weverka and So tackle under five heads:

– Better quality information. By eliminating the need to re-key information after you've pulled it from a source such as the SEC's EDGAR databank, XBRL saves time and improves accuracy, the authors argue. And it can tag narrative information just as easily as numbers, so users can more easily retrieve data from footnotes and management discussion and analysis.

– Better, faster information searches. XBRL's ability to pull data almost instantly into a spreadsheet or analytical application dramatically increases transparency.

– Better analysis of information. Investors and managers can slice and dice the data pretty much any way they want to spot problems and compare the performance of different companies.

– Better data communication within companies. XBRL can smooth the flow of information between subsidiaries, divisions, and other internal entities and may also improve the efficiency of business processes.

– Better accounting. The technology may help users reconcile different accounting systems, for example International Financial Reporting Standards (IFRS) and U.S. GAAP, and even translate financial statements from one language to another.

Weverka and So make a convincing case for data-tagging, and they don't shy away from the challenges, including the most important tag of all: the price tag. A handful of examples here give the reader a general idea of the cost (hint: not as bad as you might think.)

XBRL for Dummies is available only by ordering online. It's free except for shipping and handling charges. Order here.

For a concise introduction to XBRL see Robert D. Kugel's "XBRL: A Quick Primer" in our March issue.