EXtensible Business Reporting Language Research Paper

EXtensible Business Reporting Language - Research Paper Example Currently, the SEC requires that all companies should utilize the XBRL format in presenting their financial statements and reports. Owing to the constant push for the use of the new business and finance communication mode, this paper explores potential advantages and disadvantages of XBRL implementation for business entities. Advantages of XBRL The proponents of XBRL have hinted that entrepreneurs and business entities stand to benefit greatly from XBRL implementation. Some of these befits include: i. It Is Accepted Globally As a Business Information Sharing Tool XBRL is readily accessible in many parts of the world and enhances information dissemination and sharing in various languages through electronic means. XBRL makes it possible for investors to conduct nearly real-time assessments because increases information accessibility. Data tagged in XBRL can be transformed into various formats such as HTML or spreadsheets, depending on the needs of the users. Owing to its global presenc e and high level of accessibility and acceptability, it reduces the cost of mechanizing business information (Gelinas, Dull & Wheeler, 2012). ii. XBRL Benefits Many Stakeholders XBRL can be utilized by investors to perform analysis of financial reports by corporation, thus making it a desirable tool. It allows corporations to automate their information and reduce manual processes of financial reporting. For the government, XBRL facilitate the collection of information about various businesses in the country. XBRL also ensures high level of information sharing efficiency (Stabryla, 2012). iii. XBRL Can Be Multi-Purpose XBRL functions beyond financial reporting role. It is applicable in many business information sharing scenarios. It is capable of streamlining the process of preparing and reporting tax returns. It also facilitates distribution of non-financial information such as production quantities as well as stock reserves among others. XBRL can also be fundamental for ensuring in ternal organizational efficiencies by facilitating smooth flow of information electronically from source to where they are needed most. It also facilitates data sharing between organizations and their customers, suppliers and strategic partners among others (Garner, McKee & McKee, 2008). XBRL can facilitate mechanization of purchase process and invoice reception and many other processes. iv. It Facilitates Substantiation and Reusability XBRL can speed up the process of financial reporting and information sharing process of an organization. It can greatly enhance spreadsheet functionalities through facilitation of electronic information access, which helps to alleviate human input inaccuracy during entry. Information conveyed through XBRL remains for a long period of time and can be re-used over and over again if needed (Bergeron, 2004). v. It Is an Open Source The last benefit of XBRL is that it is an open source. Corporations can create taxonomies that can be used at no cost for th eir users. Because it is freely accessible, corporations can maximize from it while at the same time ensuring low cost of its implementation (Bergeron, 2004). Disadvantages of XBRL In spite of all the benefits that come with XBRL, there are some disadvantages that are associated with the tool. Some of these disadvantages include: i. XBRL Amplifies the Likelihood of Error One of the most pointed out shortcomings of XBRL is its