The eXtensible business reporting language (XBRL) has revolutionized the financial reporting system at the Securities and Exchange Commission (SEC). As members of the financial reporting community are aware of the importance of information technology, leaders of both public and private companies should consider the challenges and risks of adopting Inline XBRL. For instance, the most important challenges and risks to consider when adopting Inline XBRL are: (a) independent audit assurance, (b) appropriate set of controls and procedures, and (c) education review. Inline XBRL is currently replacing HTML submissions of separate files. The XBRL International will be responsible for Inline XBRL maintenance, including its format. Therefore, the European Securities and Market Authorities (ESMA) mandated the use of Inline XBRL as new technology with the intention of protecting the financial capital well-being in public markets.
In the last decade, the XBRL has grown at a rapid pace as a global communication technology accounting standard. In the global context, 150 projects have promoted its immediate use and applicability. XBRL’s main supporters are Australia, China, Europe, and the United States. The main achievement of the XBRL implementation was data management enhancement and its internal quality control system (Cooper, 2012).
XBRL has revolutionized the financial reporting system at the SEC. The EDGAR database under the XBRL translates the financial statements of companies into actual words. The taxonomy aspect was developed under USGAAP with the goal of creating better financial reporting practices by supporting disclosure requirements in financial statements. From 2009 to 2010, the SEC experienced a high filing compliance level by companies utilizing XBRL as a new accounting method of financial translation (Debreceny et al., 2011).
The quality of financial disclosure requirement under XBRL is a persistent topic of discussion among regulators in the financial market. Financial regulators argue that the data reported to the SEC should be free of error by demonstrating accuracy and reliability. Financial errors can lead companies to make incorrect business decisions. In an effort to report the appropriate information in the financial statements as a disclosure requirement, nonprofit organizations have joined the XBRL US Center for Data Quality to improve the quality and reliability of financial statements (Rohman, 2015).
Companies adopting XBRL as a reporting financial language will enjoy a sustainable path of technology financial language translation. In Malaysia, the main objective of XBRL is to raise the awareness of transparency among stakeholders. Publicly traded companies in Malaysia have experienced a positive outcome by creating strong governance and compliance in the financial sector. Future adopters suggest that in order to promote a healthy financial reporting language, the implementation and adoption of the XBRL are vital (Ilias, Razak, & Rahman, 2015).
The SEC and other financial regulators around the world have promoted the importance of reliable financial data. XBRL focuses on external financial reporting accounting by embracing the applicability of the internal accounting aspect. Throughout the years, XBRL has helped align and standardize financial reporting as one singular accounting language. Therefore, the implementation of XBRL has contributed to the efficiency and effectiveness of financial reporting standards in the international financial market arena (Markelevich & Riley, 2013).
Interim Institutional Director of Research and Planning
Carlos Albizu University – Miami Campus