This new language, XBRL - the eXtensible Business Reporting Language, formerly code-named XFRML - uses XML-based data tags to describe the data contained within financial statements for both public and private companies and benefits all members of the financial information supply chain.

XBRL is being introduced to the education community through conferences and seminars over the next several months. XBRL for financial statements will be fully developed within the next 18 to 24 months. The initial taxonomy will be published for public use in early July. It will take an additional 24 months to complete development of other taxonomies.

What is XML?
"XML is the foundation language for e-Business information exchanges," said Mike Willis, CPA, a partner with PricewaterhouseCoopers and chair of the American Institute of Certified Public Accountants (AICPA) XBRL steering committee. "This is important to professors because it moves accounting students into the Internet arena - to become a player in the information revolution."

XML (eXtensible Markup Language) is a language for defining and naming data adopted by the World Wide Web Consortium (w3c.org) in late 1997. The basic XML tagging scheme used in XBRL will provide some significant (although not 100 percent) ability for software applications to analyze data within financial statements. Using XBRL in existing financial statements will allow software applications to access and use the embedded information.

Market processes for e-Business require the interoperability of software applications and consistent protocols and formats for information interchange. XML enables the exchange of data between disparate software applications in a simple, straightforward manner.

XML or HTML?
Various processes use markup as a guide to modify, manipulate, format, display and transform documents. The concept and use of markup are exactly the same in XML as in SGML and HTML.

Where HTML is concerned with presentation of information, XML is focused on the nature of the information in the file. XML's main benefit is the interchange of hierarchical data between different companies, different departments within the same company, different applications or even different portions of the same program to communicate in a well-ordered, yet flexible way.

For example, say you would like to send your financial analyst a financial report. Ideally, you would send it electronically from your accounting software so the analyst can easily import it into his/her software. How would you go about doing this?

You could send the information as an Adobe Acrobat document, a Microsoft Word file or a plain text file. While this is convenient for humans, it is not as easy for a computer to extract information from any of these formats.

Or, you could work with the financial analyst's accounting department to come up with a custom format, such as a comma-delimited file. Of course, should the analyst later decide to change the file format to accommodate another client, you would have to make changes to your financial generator program as well.

XBRL offers a solution to this problem. Your accounting program could email the financial analyst a copy of the financial report in XBRL that is then read into their system. Because XBRL will be flexible, minor changes to the format will not affect the systems' ability to exchange information.

New Ways to Communicate
Since the invention of the Gutenberg printing press and mass printing was first made available to the public, the world has functioned as a paper society. Are the tools of yesterday still appropriate for today's business communications, including information contained within financial statements?

"The industry, in general, is working off paper documents whether it is financial information or tax returns as a communications medium. But this new media is much more powerful and we need to leverage it," Willis said.

Eliminating the Frustration
Over the years, accountants have been frustrated by the varied ways of delivering information from the same source. Whether it was photocopying, faxing, modeming or even email, no accounting and computer system communicated consistently and in the same manner. The ability to exchange this information between software applications will also facilitate the development of analytical tools for use by investors.

XBRL:

• Enables business reporting that leverages the Internet
  
• Enables users to more effectively access and analyze business reports
  
• Enables enhanced corporate communications with stakeholders

"Demands on accountants are changing dramatically. I don't necessarily believe that each accountant needs to learn computer programming. However, students need to know that XBRL will reduce time for creating and distributing financial information," said Liv Watson, senior director of the Information Technology Consulting Department at Gaither Rutherford & Co., LLP, and representative of the Institute of Management Accountants (IMA). She is co-chairperson of the XBRL Working Group.

XBRL Hot Conference Topic
Watson presented information about this emerging technology at the American Accounting Association (AAA) meeting for educators recently in St. Paul, MN. Willis said that PricewaterhouseCoopers and Morgan Stanley Dean Witter are hosting adjoining symposiums at the AAA annual conference to be held Aug. 13-16 in Philadelphia, PA.

"XBRL is one of those front and center topics," Willis said. "Two of our steering committee members will be reaching out to professors who are attending the AAA conference in August."

Many members of the Steering Committee will also attend an AICPA conference on XBRL in Chicago on July 9th, held in conjunction with the AICPA e-business conference.

As accounting students join the workforce, Watson feels they should be knowledgeable about XBRL so when they distribute information or evaluate an accounting system, they will need to know the right questions to ask.

XBRL Under the Higher Education Umbrella
"Is there a need to print huge textbooks when we can look at the Internet as a deliverer of this information?" she asked. "Our conclusion, in the short term, is to develop online courses for students, professors and professional accountants."

Courses on XBRL will be offered through the Web site www.xbrl.org. Information will be communicated through the professional associations such as AICPA and IMA.

Why is it important for accounting professors to integrate this new technology into their teaching curriculum?

"If I put my money into a university, I hope the school I chose prepares me for what I am to face in the real workforce," she said. "In a sense, there is an obligation to prepare students for what they are to expect."

For the next 60 days, the XBRL consortium requests public comments on the initial taxonomy on financial statements for commercial and industrial products companies. Readers should provide comments at www.xbrl.org.