May 1, 2009 By Wayne Hanson
"The goals were timely and accurate data, stronger internal controls, reduced costs, a standardized system of seamless data exchange, business processes and data elements. XBRL met all of those goals." -- Nevada Controller Kim Wallin (pictured)
States and localities have in recent years been engaged in developing financial Web sites, transparency portals, campaign finance disclosure and online checkbooks to open the process of government spending to a very interested and sometimes skeptical public. Recently, with the flood of federal stimulus money, that development has accelerated.
While a commitment to openness and transparency is commendable, tracking grants and other financial information -- across multiple agencies and departments running different software on incompatible systems -- is a tough job for jurisdictions, and the resulting information may be too late for real-time decision making, and too complex for anyone but a professional auditor to understand. Increasingly, XBRL is being heralded as a solution.
XBRL stands for eXtensible Business Reporting Language -- an XML-based open standard for financial reporting. "Instead of treating financial information as a block of text -- as in a standard Internet page or a printed document -- XBRL provides an identifying tag for each individual item of data," says an explanation on the XBRL International Web site. "This is computer readable. For example, company net profit has its own unique tag. In addition, the tags provide other information about the item, such as whether it is a monetary item, percentage or fraction, etc.
"XBRL can show how items are related to one another," continues the site. "It can thus represent how they are calculated. It can also identify whether they fall into particular groupings for organizational or presentational purposes. Most importantly, XBRL is easily extensible, so ... organizations can adapt it to meet a variety of special requirements."
"The introduction of XBRL tags enables automated processing of business information by computer software, cutting out laborious and costly processes of manual re-entry and comparison. Computers can treat XBRL data 'intelligently' ... they can recognize the information in an XBRL document, select it, analyze it, store it, exchange it with other computers and present it automatically in a variety of ways for users. XBRL greatly increases the speed of handling of financial data, reduces the chance of error and permits automatic checking of information."
So with XBRL, the world of finance has agreed on a list of data definitions or tags that can be applied to financial information. The CFO, the CIO, the CEO, the CFA (certified financial analyst) and the CPA, the auditor, have all agreed to the same standard definition of financial information. Which means that if financial items can be tagged in XBRL, they can be moved across all software formats and can be looked at and analyzed without re-keying.
The XBRL business reporting standard is now mandated or used in regulatory filing programs in many of the world's leading capital markets, including Australia, Canada, China, France, Germany, India, Japan, Korea, Netherlands, Singapore, and the United Kingdom. The U.S. Securities and Exchange Commission now requires that large publicly held companies adopt the XBRL standard.
Nevada Controller Kim Wallin has been wrestling with the problems of financial reporting, grant tracking and making sense of financial information for many years, and has become an advocate of XBRL -- She talked to Government Technology recently about several XBRL pilot projects in Nevada state government.
The Nevada Department of Agriculture had more than 60 different grants for which information was gathered and maintained on a variety of spreadsheets and Word documents. Each month a detailed report was prepared