The other day I posed the question Why use Inline XBRL? Another key reason is that an Inline XBRL document is easy for the preparer to understand.
There is one major concern that we hear from regulators around the world as they introduce XBRL. It is that controllers, CFOs and FDs that are providing XBRL information that relates to a financial report (as opposed to a form, where this concern doesn’t exist) don’t know how to be sure that the “bag of angle brackets” that they are producing accurately represents their financial statement.
Modesty doesn’t stop me from mentioning that tools like our very own Magnify (Touchstone) help resolve this issue, but nevertheless, the use of Inline XBRL takes away almost all of those concerns. It makes this process much simpler. The information that is marked up can, almost trivially, be identified and, vitally, the marked up information is exactly the same as the information that you read, simply because it is the same information. It works for text as well as for numbers. Inline XBRL also lets you incorporate web friendly navigation. You can, for example, have a report span multiple pages of HTML but be collated on the fly at the time of consumption into a single XBRL document.
Some regulators, by the way, have been getting around this problem, with what is in effect a parallel process i.e.: by asking companies to file a PDF document with full visual fidelity at the same time as the XBRL document. After all, the PDF looks and feels the way the preparer wanted it to and the XBRL is structured and contains the same information in a format that can be easily analysed. Honestly, this is not a great idea. It adds work to already overworked finance and compliance teams and, perhaps worse, creates uncertainty – what do you do if you have inconsistencies between the documents? Inline XBRL solves these problems.
My next article will look at why Inline XBRL is easier for Accounting Software Vendors to implement.