Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi America, Ltd. An Interview with Charlie Hoffman (Part III)
Charlie Hoffman, who is widely regarded as the originator of XBRL and has one of the most distinguished resumes in the field, kindly agreed to do an extensive interview with us. The third and final installment, beginning with question (8), appears below; part one was published on April 23 and part two on April 28.
(8) You recently started your own XBRL website and blog that has become required reading for the XBRL community. What encouraged you to start a blog at this point? What objectives do you hope it will achieve?
I wanted to experiment with blogging. I have quite a bit of knowledge and information which I have accumulated over the past 10 or so years, and I am the type of person who prefers to share information. Besides, I find that pulling information together in order to do a good job presenting the information helps you learn.
I can’t really say that I have any objectives to achieve. I do like having a forum to express my views and to organize things and distribute them where I don’t have to answer to XBRL International or UBmatrix. I can pretty much do what I want – there’s no “party line” to follow.
(9) Your Financial Reporting Using XBRL, published in 2006, is one of the very few books that discusses the technical aspects of interactive data in any detail. Do you have any plans for a new edition?
I am working on a new edition which updates the old version for things which I have learned and developments in XBRL over the past two years. I hope to have the completed version available by the end of the year or so.
(10) As XBRL moves forward, so does the trend toward convergence of international accounting standards. Do you see the two movements as part of the same trend toward global standardization of financial reporting? In what ways do they support and reinforce one another? Or, alternatively, do you see them as being on separate tracks?
The trend toward convergence to one set of accounting standards has existed long before XBRL existed. It seems only reasonable that, if we have one set of global financial reporting and accounting standards, that we would want one electronic format to express that information, rather than every country (or whoever) creating their own electronic format. I don’t know if IFRS and XBRL are on the same track, but each does seem to benefit the other.
Of course, this assumes that you believe that paper is a dead reporting format for financial reporting.
What is interesting about this is to see if the world has the resolve to actually make one set of accounting standards and one electronic means to exchange that information a reality. I mean, look at how great the simple standard USB (Universal Serial Bus) is. What a fantastic thing. Plug and play, it actually works great. It would be fantastic if those who are in charge of such things could pull off creating one set of accounting standards, one electronic format. Wouldn’t that be fantastic!
Undoubtedly IFRS and XBRL are opportunities to improve financial reporting globally. It will be very interesting to see how all this turns out.
(11) Is there anything you can think of that has not been commonly communicated relating to the value of XBRL that should be?
In my view, it has not been commonly communicated what XBRL really is. People generally are told that XBRL is a means to exchange information. But that is not really what XBRL is; rather, that is one of the things that XBRL enables. It enables way, way more things than exchanging information. The best definition of XBRL I have seen is on Wikipedia:.
XBRL (Extensible Business Reporting Language) is an open standard which supports information modeling and the expression of semantic meaning commonly required in business reporting.
In my view, XBRL is a way of expressing semantic meaning and one of the things you can do because of that is exchange information. In my view, exchanging information is a by-product of XBRL. What is interesting to me are all the things you can do with that semantic meaning inside taxonomies and financial reports.
An example of this benefit is a disclosure checklist which is commonly used in creating a financial statement. Imagine an application which could, for example, tell you that you forgot to disclose a property, plant, and equipment policy. It is trivial to write an application which says basically, “If you have a line item on your financial statement called ‘Property, Plant and Equipment,’ then you need to have X,Y, and Z policies and disclosures.” The FDIC uses this type of business rule extensively within their systems; they call them reportability rules. I think they have two thousand such rules.
Because financial statements where XBRL is used are structured data (rather than unstructured data), a computer application can take advantage of this and automate things like a disclosure checklist. VERY, VERY, VERY few people every mention this, but in my view (as a CPA and a financial statement preparer), this is the highest value of XBRL. This attribute will both improve the quality of financial reports of all sorts and reduce the cost of preparing these reports, as many of these things checked manually can be automated if XBRL, or any structured format really, is used.
And this notion of an electronic automated disclosure checklist (and I do realize that not everything in a disclosure checklist can be automated) is only ONE example of how XBRL can be used. There are many, many others.