Getting your head around XBRL can be challenging. Much of this challenge is similar to trying to teach someone about algebra or calculus if they do not understand how to count or do not understand the mathematical operators of addition, subtraction, multiplication, and division.
Many people tend to try and dumb down the definition of what XBRL is in order to explain it. This occurs for two reasons. First, they think it makes iteasier to explain XBRL, but the common result is a poor communication of what XBRL truly is. Second, the person trying to explain XBRL may not truly understand XBRL themselve.
In my view, the best definition of XBRL can befound on Wikipedia. That definition is:
XBRL (eXtensible Business Reporting Language) is an open standard which supports information modeling and the expression of semantic meaning commonly required in business reporting.
A key term here is the”information modeling“. Many people associate the phrase “automating data exchange” with XBRL which is a mistake. Also, many people erroneously think of the term “data” when trying to get their heads around XBRL. Further, the name “XBRL” tends to get in the way of understanding what XBRL is, rather than helping one understand it. Left out of this definition though is the notion that XBRL is a formal agreed upon way to model information and the notion that the information model is readable by both humans and by computers.
This blog entry shows a high level model for XBRL.
Business reporting is only one type of information exchange, it is not the only type of information exchange. Further, the information exchange is a by product of what XBRL really does which is define the information model. That information model is what makes the information exchange possible. But the information model also makes a lot of other things possible!
Business people don’t generally grasp the true meaning of terms such as”syntax”, “semantics“, “meta data“, “business rules” or the difference between “structured” and “unstructured” information. Yet, these terms are critical to the understanding of what XBRL really is and why it is important