XBRL: The teenage years. (New Technologies).

XBRL is moving rapidly from its infancy into adolescence. The XBRL consortium now has more than 170 member organizations worldwide. In fact, says Rob Adler, president of Corporate Communications Broadcast Network, which manages and hosts investor relations Web sites, "By 2003 or earlier, we expect XBRL to be the standard for financial reporting."

But XBRL is not limited to financial reporting: General Electric plans to use XBRL Creator from Enumerate Solutions to gather information from more than 150 distinct general ledgers to help prepare its 40,000-page federal tax return.

SWINGING INTO ACTION

The XBRL 2.0 Specification was published last year establishing the structure and rules for using XML technology for a standardized representation of business reporting. A variety of taxonomies--or specific implementations--are being modified or developed to meet that specification.

Additionally, several government agencies, regulators and stock exchanges are evaluating XBRL. The SEC allows companies to post supplementary XBRL information to EDGAR in addition to the SEC-required format.

Nasdaq expects XBRL to improve the distribution and analysis of business information-particularly for the 10,000 companies not covered by Wall Street analysts. Currently, it may not be cost-effective to analyze these companies because it is labor intensive to extract business information from paper documents and SEC filings. With XBRL it could be a simple matter of downloading the data into a spreadsheet.

The FDIC is evaluating XBRL for bank reporting. While the Joint Financial Management Improvement Program-whose membership includes the Department of Treasury, General Accounting Office and Office of Management and Budget-has suggested that financial data should be exchanged using XBRL. They plan to leverage XBRL's straight-through reporting that allows incoming XBRL reports to be dropped directly into internal databases instead of re-entered from paper reports.

Morgan Stanley www.morganstanley.com/xbrl; Reuters, http://about.reuters.com/results/2001-prlhtml/xbrl.asp; and Microsoft, www.microsoft.com/msft have posted XBRL-formatted financials on their Web sites. EDGAR Online has established a Web site for companies that want to post XBRL financial reports, www.xbrl-express.com. The site currently has demonstration versions of financial statements for a wide variety of companies.

AN SEC REQUIREMENT?

The Enron collapse has increased interest in XBRL. The SEC is encouraging (and may mandate) companies to place more financial information on their Web sites to make it easier for investors to find information.

In his testimony to the Senate Banking Committee, Robert E. Litan, director, Economic Studies Program, The Brookings Institution and Bear, Stearns & Co. Inc. urged the SEC and committee to encourage and publicize the XBRL project and to encourage companies to use XBRL tags as early as possible. Litan suggested that the SEC set a specific date by which XBRL submissions for EDGAR will be required.

CPAs ARE INTEGRAL

The XBRL activity that will have widespread impact on CPAS in the near term is Bank of America's pilot-testing of XBRL reporting by their commercial loan customers who provide financial statements for lending and credit analysis purposes. BofA already has demonstrated using financial data from a real client that was transferred from QuickBooks to XBRL.

BofA's initial focus is on 20,000 loan customers with revenue between $10 million to $500 million. Recognizing that CPAs are likely to be advising these customers, BofA will encourage CPAS to help their clients generate or convert existing accounting information to XBRL files. The bank's customers should be motivated by the prepareonce-report-many efficiency of XBRL financial documents; they can reformat and subsequently submit that same documents to other institutions.

Eventually, XBRL electronic documents will be dropped directly into the credit analysis software developed by Moody's Risk Investment Services used by BofA. With less time allocated to processing of traditional paper documents, BofA could allocate more time to analysis and, therefore, reduce its risks. BofA envisions a second efficiency for them in that they will be able to submit these XBRL documents to their regulators.

MOVING UPSTREAM

XBRL for General Ledger also will impact CPAs in the future. XBRL-GL moves XBRL upstream toward the transaction level by developing XBRL taxonomies for tagging the chart of accounts and accounting transactions. XBRL-GL is not a standard chart of accounts, it's a standard method to tag existing charts of accounts.

XBRL-GL will allow drilling down from financial statements to trial balances to underlying transactions. Different XBRL-compatible accounting packages will be able to freely transfer information between them. These transfers could be directly between two accounting systems or all of the accounting data could be sent to a central data hub and translated into a common chart of accounts for consolidations.

This will be a real timesaver for CPAs who get trial balances and accounting details from their clients to enter into their own trial balance, tax or audit software. As these products become XBRL compatible, CPAs will simply request XBRL files. Although current accounting products have various export capabilities, file formats can vary greatly between products and even between versions of the same product.

More than 15 vendors either currently offer or soon will offer varying levels of XBRL functionality in their products or services. Monitor www.xbrl.org to see the updated list of vendor XBRL offerings and view demos on how XBRL will help all members of the business reporting supply chain.

Glen L. Gray, Ph.D., CPA, is a professor in the accounting and IS department in the College of Business & Economics at California State University, Northridge. Gray is also a member of the XBRL Steering Committee. You can reach him at glen.gray@csun. edu.