I kind of feel that my last blog may have given the impression that I am slightly bitter and twisted about XBRL.
That it’s a chore added to the humble accountant in order for the tax man to get more money from us hard working folks.
Well it doesn’t have to be hard…
It can actually be fun! Yes really! An opportunity!
Through the use of XBRL we can validate our financial reports more effectively than before. Also there are plenty of commercial off the shelf (COTS) products that give a familiar user experience to the accountant or other finance professional without them even knowing what’s being generated is XBRL.
Now here comes the cool part…
Are you ready?
If we start having more and more folks submitting financial data in a common reporting standard then we have the potential of accumulating a treasure trove of historical financial data that can be analyzed in a manner never done before.
But what good will that do?
We could identify financial risk like never before, help decide which companies to invest in, which sectors are doing well and which ones aren’t. We, as a group of shareholders, can look at the companies we are investing in like never before.
But only if the XBRL standard is mandatory, ordinary folk can get at the data and we have tools that can do the job.
The U.S, Securities and Exchange Commission (SEC) have paved the way by making the filing of financial statements mandatory by SEC listed companies. They have also made them public. This means an ever increasing treasure trove of financial data, ready to be mined.
And already there are companies with the tools to leverage this data. My own company Apurba’s Lyticas Product Suite allows someone to analyze and benchmark performance of SEC listed companies. Our software can extract Key Performance Indicators from those financial statements generated in XBRL.
We are not the only company with products and services out there that can do what I have mentioned. Thank goodness.
From a heady mix of diversity, competition and partnerships the use of XBRL can greatly benefit the global financial industry. This is just the beginning!