XBRL

Impact of XBRL (Extensible Business Reporting Language) on Pension Reporting

Impact of XBRL (Extensible Business Reporting Language) on Pension Reporting

Introduction

There is a growing level of excitement in the financial community around the eXtensible Business Re-porting Language (XBRL) standard because of the expectation that it will make it easier to collect, aggregate and publish financial results from publicly held companies (Bovee et al. 2002; Coffin 2001; Zarowin and Harding 2000). According to XBRL.org, “The goal of XBRL is to provide an XML based framework that the global business information supply chain will use to create, exchange, and analyze financial re-porting information including, but not limited to, regulatory filings such as annual and quarterly financial state-ments, general ledger information, and audit schedules.”

Thus, using XBRL, investment analysts can easily analyze and compare financial statements from different companies from an investment standpoint (Strand et al. 2001; Wat-son et al. 2000). While this new standard facilitates the interoperability of financial data contained in various financial statements, the XBRL taxonomy tags footnotes and other disclosures in a way that does not reflect the natural way in which an analyst, intelligent agent or application works. For instance, before analyzing financial statement elements, an analyst would examine the auditor's opinion and refer to the general accounting policies disclosures, including e.g., inventory valuation and depreciation methods.

In this way the quality and meaning of financial statement elements is enhanced. Similarly, when examining a particular financial statement element with a cross-reference to a footnote, the disclosure would add meaning by putting the element in context, elaborating it or disag-gregating it. The lack of interaction between element tags and disclosure tags presents processing problems for applications using the XBRL document. UML provides diagrams that permit the modeling of these natural interactions. These diagrams in turn can provide a schema for augmenting XBRL documents that then can be better processed by downstream users, including intelligent agents, and applications.

Framework

Financial documents, such as annual reports and SEC-mandated 10-K and 10-Q filings, provide the raw material for financial analysis. The order in which financial reports are normally presented differs, but current trends can be discerned from “Accounting Trends & Techniques,” published annually by the American Institute of Certified Public Accountants (AICPA), which reports the results of a survey of financial reporting trends garnered from the annual reports of 600 corporations registered with the Securities and Exchange Commission (SEC).

In the latest survey, which is the one used for purposes of this study, the annual reports were those of selected industrial, merchandising, technology, and service companies across 46 industry classifications for fiscal periods ending be-tween February 25, 2000 and February 4, 2001 (AICPA 2001). Rule 14a-3 of the Securities Exchange Act of 1934 states that information required to be included in annual reports to stockholders should included audited balance sheets for the two most recent fiscal years, and income and cash flow statements for each of the three most recent fiscal years.

In addition, the following should be included: (1) selected quarterly financial data; (2) disagreements ...