What Is Inline XBRL for Financial Reporting?
Demystify Inline XBRL: The innovative digital standard enhancing financial reporting for both human and machine understanding.
Inline XBRL (iXBRL) represents a modern approach to digital financial reporting. This standard allows financial data to be both easily read by humans and efficiently processed by machines within a single document. Its purpose is to streamline the exchange of financial information, enhancing transparency and simplifying data consumption for various stakeholders.
The Foundation of XBRL
Understanding Inline XBRL begins with its predecessor, XBRL, or eXtensible Business Reporting Language. XBRL is an open, global standard for the electronic exchange of business and financial data. It functions by assigning digital tags to financial facts within a report, making them machine-readable. These tags are drawn from standardized dictionaries known as taxonomies, which define financial concepts like “net income” or “assets.”
Traditional XBRL separates the data from its visual presentation. Companies would create a human-readable financial statement, then generate a separate, machine-readable XBRL file with tagged data. This dual process meant that specialized software was often required to view and interpret the XBRL data, as the raw XBRL file was not designed for human readability.
The Inline XBRL Innovation
Inline XBRL (iXBRL) addresses the limitations of traditional XBRL by embedding machine-readable tags directly within a human-readable document. This document is typically an HTML file, allowing it to be viewed seamlessly in any standard web browser. A single document serves a dual purpose: presenting financial information for human readers while simultaneously containing structured data for machine processing.
This innovation eliminates the need for preparers to create separate HTML and XBRL files, streamlining the reporting process. For data users, iXBRL simplifies access and exploration of financial data, as the context of the tagged information is visible within the report itself.
Mechanics of Inline XBRL
Inline XBRL functions by tagging financial data directly within an HTML document. Preparers utilize XBRL taxonomies, which are dictionaries of financial concepts, to apply tags to financial information. For instance, a revenue figure is assigned a tag from the relevant taxonomy, such as the U.S. Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) taxonomy.
Software tools facilitate this tagging process, allowing users to map financial statement line items to the appropriate taxonomy concepts. Once tagged, the iXBRL document, an XHTML file with embedded XBRL data, can be viewed in a standard web browser. Specialized Inline XBRL viewers, or the SEC’s own viewer, enable users to highlight or extract the hidden XBRL tags and their data. This allows data consumers, such as regulators or financial analysts, to extract and analyze the structured data without complex conversion processes.
Real-World Applications
Inline XBRL is widely adopted by regulatory bodies globally to enhance financial transparency and data analysis. In the United States, the Securities and Exchange Commission (SEC) mandates its use for corporate financial filings. This requirement applies to public company financial statements and risk/return summary information, including Forms 10-K and 10-Q.
iXBRL enables efficient data analysis for investors, analysts, and regulators. By embedding machine-readable tags directly into human-readable documents, it streamlines the extraction and comparison of financial information across companies and reporting periods. Beyond the U.S., other jurisdictions, such as the European Securities and Markets Authority (ESMA), also require iXBRL for financial reporting.