The Institute of Management Accountants is advocating the use of XBRL to facilitate broader adoption of integrated reporting to give stakeholders a deeper understanding of a company’s performance and prospects for future success.

The International Integrated Reporting Council published a discussion paper, Towards Integrated Reporting, Communicating Value in the 21^st Century, making the case for integrated reporting and calling for feedback on how to drive acceptance and adoption. The IIRC defines integrated reporting as bringing together material information about an entity’s strategy, governance, performance, and prospects in a way that reflects the commercial, social, and environmental context in which it operates.

Looking well beyond the financial performance conveyed in a typical set of financial statements, an integrated report would provide a clear and concise understanding of how an entity creates and sustains value while also demonstrating good stewardship of its resources, according to the IIRC. The IMA’s XBRL Committee answered the discussion paper by pointing out that XBRL is the perfect tool to facilitate such reporting and drive more widespread adoption of it.

The IMA XBRL Committee is a standing advisory committee reporting to the IMA board, made up of experts in XBRL, internal and external corporate reporting, accounting and other standards, information technology, market adoption, research and academia. The committee says XBRL is already used by companies representing more than 75 percent of the world’s market capitalization for reporting financial information, making it the logical choice for extending the benefits it provides to financial reporting to the full scope of integrated reporting.

Brad J. Monterio, chair of the XBRL committee, said analysts, investors, regulators and even management are increasingly realizing that financial information alone is not enough to present a full picture of market performance. A growing number of hedge funds, venture capital funds, and private equity funds are paying close attention to integrated reporting, he said. “In some cases, they are looking only at companies that prepare this information,” he said.

The IIRC discussion paper is a platform for developing an integrated reporting framework for the global marketplace, Monterio said, so the IMA committee is looking at the framework from an XBRL perspective. “It’s a logical conclusion that if XBRL is becoming the standard for financial information to make it usable, can the same benefits be applied to nonfinancial information?” he said.

The IMA is encouraging the IIRC to develop an XBRL taxonomy in tandem with any integrated reporting framework to facilitate a more streamlined adoption. “CFOs and executive team members need to be aware that integrated reporting is the next stage of corporate reporting and the marketplace is placing value on this information.”

XBRL is revolutionary. But until its benefits are seen, this doesn’t matter.

2011: a review of XBRL in the United States

The year of 2011 marks several milestones in terms of the increase in quantity and the improvement in quality of XBRL data. Such changes will lead to widespread consumption of XBRL data for the year 2012 and beyond.

On the quantity side:

• Starting June 15, 2011, every company listed in the United States has been required to file their financial statements in XBRL, although many large companies have been doing so for more than two years.
• Over 7,800 companies have submitted their financial statements in XBRL to the SEC.
• There are more granular data from the footnotes: XBRL Level 4 detailed footnote tagging makes more this data easily accessible.
• Many financial analysts will be satisfied if they have the most recent three to five years of financial data. Many large companies have had close to five years of XBRL data available now.

On the quality side:

• More insights, better guidance: Armed with filing data from over 5,000 first-time XBRL filers in 2011, XBRL US, the FASB, and the SEC have been identifying common errors (see SEC’s Staff Observations) and conducting dozens of trainings, webinars and workshops to help companies prepare their XBRL filings.
• More accurate and complete: With the expiration of the limited liability provisions for XBRL exhibits two years after their first mandatory submission date, public companies will  be more serious about the accuracy and completeness of XBRL-tagged data (see XBRL Assurance Committee).
• Smarter XBRL software makes validation easier for preparers.

Consumption: the new theme in 2011

The two biggest XBRL events in 2011 reflected the shift of attention from preparation to consumption.

• “Get More Out of XBRL” is the theme of the 3rd Annual XBRL US National Conference, held between Sept. 26-27 in Nashville, TN.
• “Enhancing Business Performance” is the theme of the 23rd XBRL International Conference, held between Oct. 25-27 in Montreal, Canada.

XBRL Challenge: a new push in consumption

XBRL Challenge is a contest organized by XBRL US to promote the awareness of XBRL. Participants will develop “open source analytical applications for investors that leverage corporate XBRL data”. The deadline to submit the application is Jan. 31, 2012. XBRL US will reward the final winner in February of 2012 with a grand prize of US$20,000.

Getting application developers involved in XBRL is a great idea. They can make consumption by investors easier. They can create a new generation of financial applications.

As a software developer with a finance background, I fully understand the potential of XBRL. The global standard computer language can fundamentally change how financial data is defined, organized, and exchanged. The language defines the attributes of each data and its relationship to others. The standard taxonomy defines common terms used in the dataset. The language and taxonomy are the nuts and bolts for financial application development. Financial data can be dissembled and re-assembled by computer programs. Financial analysts can interact with the richer financial dataset in new ways.

On the other hand, the XBRL standard is complex, even for software developers. Unlike HTML, XBRL uses many XML files, and each serves its own purpose. Grasping XBRL is challenging.

Challenges bring talents. Application developers will make XBRL transparent to end users. Some system or data providers may also make application developers’ life easier.

As Philip Moyer said in a recent XBRL Challenge webinar, there is a critical mass of XBRL data now. Get application developers involved. Let them play with the data. Good things will usually follow.

Let’s expect to see some amazing apps using XBRL data in 2012.