StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Extensible Business Reporting Language Technology in Accounting Information System - Research Paper Example

Cite this document
Summary
"Extensible Business Reporting Language Technology in Accounting Information System" paper provides an overview of the characteristics of XBRL and also its advantageous impacts on accounting information systems. It also described the limitations and costs involved in the adoption of XBRL…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.6% of users find it useful
Extensible Business Reporting Language Technology in Accounting Information System
Read Text Preview

Extract of sample "Extensible Business Reporting Language Technology in Accounting Information System"

of the of the Number XBRL Technology in Accounting Information System Introduction The development in technology has facilitated companies to produce and use accounting information systems. For enhancing the financial reporting process, an open and free standard specifically XBRL based on XML is prepared through compliance with the accounting guidelines (Baldwin, Amelia and Trinkle 1-24). XBRL (extensible business reporting language) is an XML (extensible markup language) supported standard for the electronic communication of accounting and business information. The primary objective of XBRL is to ease the preparation, publishing, exchange and analysis of financial statements. Due to numerous benefits, XBRL captured the market and now-a-days few biggest economies in the world such as US, China, France and Japan organizations are obliged to implement XBRL for financial reporting (Geerts, Guido, et al 815-840). XBRL assures control of data sources and in addition, it ensures the integrity of reporting information by using the structured format of XML that are adapted to the financial particularities. It helps in facilitating and automating the import of data from diverse computing environments. Along with summiting the regulatory constraints, the enterprises that are implementing XBRL are benefitting from an innovative context for improvement and cost diminution relative to their reporting processes. Recently, XBRL has come out to be a viable option for the public sectors (Jiu, Li, Wang and Gong 84-96). There exists number of extensions of XBRL such as XBRL IFRS and XBRL US GAAP that are created for the adoption of specific norms and rules for reporting in financial accounting. The objective of the report is to explain the impacts of technological advancements such as XBRL in accounting information system and its relevance. 2. Literature Review The evolution in the world of XBRL was exceptionally rapid, progressing from the state of initiative of American accounting expert Charles Hoffman in 1988 to the state of international standard that are used internationally and promoted by a significant number of national and international jurisdictions. Considerable numbers of paper are dealing with the problems of XBRL and its significance in accounting information systems (Baldwin, Amelia and Trinkle 1-24). This research report goes beyond the research preoccupation for adopting XBRL as a standard format and tool generally in business reporting and particularly in financial reporting. This research report will review the effects of emerging technologies on accounting information systems (AIS) majorly focusing on XBRL. This report will be segmented into four sections. The first section relates to the characteristics of XBRL, the second section focuses on the impacts of XBRL on accounting information systems (AIS) and its advantages. The third section deals with analyzing the impacts of XBRL in internal reporting and the fourth section describes the implementation costs and limitations of XBRL. The last segment concludes the research report. 2.1. Characteristics of XBRL Frequently termed “bar codes for reporting”, XBRL makes reporting more precise and efficient. It permits unique tags to be allied with reported facts, allowing individuals to publish reports with assurance that the information contained in them can be consumed and analyzed precisely (Songsheng, Chen, Wenying and Donglin 66-75). In addition to permitting the exchange of summary business reports such as financial statements and uncertainties and performance reports, XBRL has the ability to allow tagging of transactions that can themselves be cumulated into XBRL reports (Songsheng, Chen, Wenying and Donglin 66-75). These transactional capabilities permits system-independent swap and investigation of significant quantities of supporting information and can be the solution to transforming reporting supply chains. 2.2. Technical Perspective of XBRL Characteristics XBRL includes four major components such as XML standard, XBRL taxonomy, instance documents and XBRL specifications. XBRL is based on XML. The XML (Extensible markup language) is considered to be a markup language which defines a set of regulations for programming documents (Kim, Joung, Jee-Hae and Gyun 127-153). XML was developed with an objective of achieving simplicity, generality and usability over the internet. The structure of XML is primarily centered on documents. However, it is extensively used for the representation of arbitrary data configurations like web services. XBRL utilizes XML syntax and related XML technologies for correlating financial data points with theoretical information. All the documents of XBRL are based on XML and hence are extensible for various purposes. XML documents are both machine and human readable and in addition, they are transferrable between various software platforms (Kim, Joung, Jee-Hae and Gyun 127-153). Taxonomy can be explained as a list of elements that can be simple or complex that describes concepts with their characteristics. Associations between concepts and external resources can be explained through linkages. Taxonomy and linkbases comprises the metadata within the XBRL (Henderson, Dave, Steven and Brad 109-140). At the start, this format was not tied to a particular type of application and specifically not to a particular accounting standard. Through definition and usage of taxonomies, a data set description for a defined area of the application is established. XBRL taxonomies come under three major categories such as common purpose financial statement taxonomies, exceptional purpose regulatory accounting taxonomies and the general ledger taxonomy. Therefore, taxonomies are based on accounting principles and regulatory reporting regimes (Henderson, Dave, Steven and Brad 109-140). The taxonomies are developed for specific nations, accounting jurisdictions, regulatory entities and even specific organizations. Taxonomies along with producing quantity information also generate qualitative statements such as notes and management reports for the foregoing financial year. The authentic financial data is presented in an instanced document. An instance document can be defined as a list of facts or data points associated with the conceptual data defined by the related taxonomy (chain Sun and Wu 1319-1325). Within the instant documents, data points are also associated to context and unit information. 2.3. Development and Implementation of XBRL XBRL is developed and supported by XBRL International which is a non-profit consortium with around 600 worldwide member organizations, associations and government agencies. Recently, there are 26 jurisdictions which focus on the propagation of XBRL in their area (chain Sun and Wu 1319-1325). Currently, XBRL is mandatory for financial reporting and AIS in a number of countries. Affected by the XBRL initiatives, a further propagation in the area of disclosure, tax, share market fillings and banking regulation can be observed. 3. XBRL beneficial impacts on AIS Developing XBRL taxonomies requires an apparent and accurate understanding of accounting concepts. These basic concepts need to be mapped between parallel reporting standards. XBRL has ample and diverse possible positive impacts (Valentinetti, Diego and Antonio 95-110). The positive impacts of XBRL on AIS can be categorized as: 3.1. Quality XBRL assists increased comparability and lucidity. When standardized taxonomies are utilized, the contradictory use of technology is avoided and there exists a clear and normally understood mapping of financial elements (Valentinetti, Diego and Antonio 95-110). Moreover, it is confirmed that XBRL helps to find out a consistent representation of accounting information among the organizations and across the time intervals. Implementation of XBRL results to increased accuracy. As the information is automatically processible and transferrable among numerous stages and applications, XBRL facilitates the flawless amalgamation of process steps along the business reporting supply (Chain Sun and Wu 1319-1325). This results to a reduction of error prone steps such as rekeying of information due to mismatched applications and motivates the development of standardized reporting processes consisting internal controls. XBRL facilitates improved analysis of information. It eases out the access to important financial information resulting in considerable increase of search, manipulation and analysis abilities. This induces the development of new value adding, modified financial information services and enrichment of data usage as much time can be spent on analysis and decision making. 3.2. Flexibility System flexibility- XBRL is a homogeneous and platform independent structure which impacts on the information technology landscape on which the reporting supply chain is based on. It enables the flawless integration of incongruent technologies, stages and software applications along with the financial processes within organizations and among shareholders (Songsheng, Chen, Wenying and Donglin 66-75). This enhances the interoperability and connectivity among applications, alleviates the exchange of accounting information and minimizes the effort for data conversion. Conceptual flexibility- Along with the technical perspective, XBRL also introduces an enhanced theoretical flexibility. It sustains the inclusion of organization specific accounting information (Plumlee, David and Marlene 353-368). Organizations can adopt taxonomies for enhancing communication to specific shareholders or deal with special information requirements to profit from a minimized cost of capital as a result of the enriched disclosure. 3.3. Efficiency Condensed efforts- As XBRL is designed for an automated formation, publication, detection, utilization and reuse, it is widely perceived as a vehicle for substantial effort reduction in the processing of accounting data. The main accounting information only requires being prepared once and is obtainable in a machine readable format so that automated dispensation and access is aided (Wickop, Niels, Martin and Markus 112-130). This abridges information distribution in a timely manner and the same applies to the equivalent accounting and acquiescence to various financial reporting standards. XBRL enhances the audit processes as important information is always up-to-date and can be readily processed and therefore in this way, it enables the concept of uninterrupted auditing. Time savings- In literature, it is also approved that the decreased effort related to the electronic foundation, processing and exchange of accounting information through XBRL resulted to a decreased cycle time of financial reporting processes (Pinsker, Robert and Shaomin 47-50). XBRL assists an increased reporting frequency to ensure that the accounting information is publically available and therefore supporting a timely decision making practice. Enhanced communication- Implementation of XBRL in AIS noticeably develops the circulation of financial information among shareholders (Kim, Joung, Jee and Gyun 127-153). The essential financial information requires to be operated once and can be presented in various formats and languages via distinct communication channels such as web reporting. In addition, electronic formats ease the utilization and reuse of the accounting information. 3.4. Development Enhanced market efficiency- Because of the enhanced quality of the accounting information induced by XBRL, the indirect effect of XBRL on the elimination of information asymmetries on the financial market can be observed. The lucidity of the financial information gets improved and the market power is changed from information giver to mediators (Jiu, Li, Wang and Gong 84-96). The organizations reporting in XBRL have an increased opportunity to attract the attention of investors. This leads to an enhanced efficiency of the financial markets and larger appreciation among shareholders which a more widespread disclosure helps to limit the cost of capital for enterprises. Sophisticated standardization- In literature review, it is assumed that XBRL has an impact on accounting standard setting (Hoffman, Charles and Mora 73-98). With the implementation of XBRL, possible weaknesses and inconsistencies in existing standards get exposed and it might speed up the accomplishment of synchronized international reporting standards. Additionally, it facilitates the enforcement of corporate revelation and accountability legislation. 4. Implications of XBRL in Reporting Process XBRL is being implemented all over the world. According to the authoritarian international organism in electronic reporting ground, the XBRL technology offers a shared platform for business reporting process, contributing to the reliability and facilitation of accounting information communication between internal and external users of the reporting enterprise (Henderson, Dave, Steven and Brad 109-140). XBRL can deal with both the internal reporting for the financial accounting data investigation at the organizational level, in terms of performance criterion and business activity justification. The external reporting aspires the publishing of information focused in accordance to domestic accounting rules and regulations to distinct beneficiaries from outside the organization. There exist three main components of XBRL that are capable to guide the enterprise reporting processes. The transactional component supervises the basic informational support from the organization business activity (Geerts, Guido, et al 815-840). The reporting component along with business information synthesizes role for the reports construction and aims at the external and internal information utilization. The analytical component can function inside as well as outside the enterprise with the main objective of extracting, processing and examining the accounting information resulting from the business reporting. Generally, internal reporting intend operational business processes, but evenly it provides a holistic illustration on the management processes such as acquisitions, human resources and payroll, production planning and cash management that represents a mandatory phase for external reporting method preparation (Efendi, Jap, Murphy and Jeffrey 173-189). From external reporting perspective, a situation that can be exposed for presenting the XBRL podium prospects is the centralization of data resulting from providers accounting statements by a regional revenue authority. From technological perspective, XBRL is the XML language application in financial reporting field allowing automatic information exchange and accounting data extraction by any information elucidation or existing technology (Du, Hui, Vasarhelyi and Xiaochuan 61-78). XBRL is reporting oriented and not accounting operation oriented which means that its utilization is recommended after the financial data aggregation from operational business doings and its presentation to consistent reports. 5. XBRL Implementation Costs and Limitations XBRL adaptations costs can be segmented into two main categories such as pre-implementation and post-implementation costs. For an enterprise, first category includes software licenses, the improvement time, implementation costs and the employee training costs. These costs may boost if some conformity with the given taxonomy is requested for the revelation of accounting information (Baldwin, Amelia and Trinkle 1-24). The post implementation costs implies to the exploitation expenditures generating after XBRL implementation like the review of the accounting information about to be reported by an outside XBRL publishing expert. A major limitation of XBRL adoption by an enterprise differs in relation to beneficiary of published information and reporting period. XBRL allows the attenuation of enterprise financial reporting period which provides the possibility of constant reporting. A more timely representation of facts shows a more relevant image of organizations financial position. For a lesser accounting period, if the beneficiaries are investors or stakeholders, the financial reporting does not replicate the actuality that enquires to be followed by a period of at least one year (Boritz, Efrim and Lev 24-33). Another possible limitation generating from XBRL implementation is that there are concerns that increased error rates and unperturbed auditing requirements may lead to unreliable information. Such problem may occur if the XBRL documents filling procedure is not totally automated by tools integrated in the enterprise information system or there is a misinterpretation of using XBRL standards by electronic reporting members. 6. Conclusion XBRL (Extensible Business Reporting Language) recently is becoming the standard for reporting accounting data and improving the efficiency of accounting information systems. XBRL itself can be observed as just a language that enables preparation, investigation and communication of business information. The benefits of XBRL include cost cutback, increased competence, precision and reliability to every measures involved in supplying or using accounting data. Also, in the context of streamlining the financial reporting process, XBRL facilitates appropriate information distribution that is required to articulate the health of an enterprise and its business performance. Emerging technologies like XBRL will ease out the activities of accounting information systems and enhance its operations to achieve more financial benefits for an organization. The report provided an overview of the characteristics of XBRL and also its advantageous impacts on accounting information system. In addition, it also described the limitations and costs involved in the adoption of XBRL that needs to be considered before its implementation. Through detailed study, it can be stated that XBRL will ultimately set the standard for reporting and transmitting accounting information to the end users. XBRL will transform itself from supplementing traditional financial statements to become synonymous with the financial statements. In the upcoming years, with the increased technological advancement, XBRL taxonomy will act as a tool for allowing standardized loss reporting from financials to the regulators and will also enable organizations to compare its experience to that of peers. Works Cited Baldwin, Amelia A. and Brad S. Trinkle. "The impact of XBRL: A Delphi investigation." The International Journal of Digital Accounting Research 11.17 (2011): 1-24. Print. Boritz, J., Efrim and Lev T. "Firm-Specific Characteristics of the Participants in the SECs XBRL Voluntary Filing Program." Journal of Information Systems 21.2 (2014): 24-33. Print. Du, Hui, Miklos A. Vasarhelyi and Xiaochuan Z. "XBRL mandate: Thousands of filing errors and so what?" Journal of Information Systems 27.1 (2013): 61-78. Print. Efendi, Jap L., Murphy S. and Jeffrey W. "Longitudinal analysis of voluntary adoption of XBRL on financial reporting." International Journal of Economics and Accounting 2.2 (2011): 173-189. Print. Geerts, Guido L., et al. "Integrating information technology into accounting research and practice." Accounting Horizons 27.4 (2013): 815-840. Print. Henderson, Dave, Steven and Brad. "The determinants of inter-organizational and internal in-house adoption of XBRL: A structural equation model." International Journal of Accounting Information Systems 13.2 (2012): 109-140. Print. Hoffman, Charles and María Mora R. "Digitizing Financial Reports, Issues and Insights: a Viewpoint." The International Journal of Digital Accounting Research 13.19 (2013): 73-98. Print. Jiu-j., Li, Wang Fu-sheng and Gong Y. "Influence of XBRL on the accounting information quality." Management Science and Engineering (ICMSE) 42.6 (2013): 84-96. Print. Kim, Joung W., Jee-Hae L. and Won Gyun N. "The effect of first wave mandatory XBRL reporting across the financial information environment."Journal of Information Systems 26.1 (2012): 127-153. Print. Müller-Wickop, Niels, Martin S. and Markus N. "XBRL: impacts, issues and future research directions." Enterprise Applications and Services in the Finance Industry. Springer Berlin Heidelberg 12.4 (2013): 112-130. Print. Pinsker, Robert and Shaomin L. "Costs and benefits of XBRL adoption: Early evidence." Communications of the ACM 51.3 (2008): 47-50. Print. Plumlee, David R. and Marlene Plumlee A. "Assurance on XBRL for financial reporting." Accounting Horizons 22.3 (2008): 353-368. Print. Songsheng, Chen, Wenying L. and Donglin W. "How XBRL Affects the Cost of Equity Capital? Evidence from Emerging Market." Evidence from Emerging Market 15.8 (2014): 66-75. Print. Sun, W. C. and Wu, C. “Research of accounting information quality—Based on XBRL taxonomy.” In Management Science & Engineering (ICMSE), International Conference on Science 4.3 (2014): 1319-1325. Print. Valentinetti, Diego and Michele Antonio R. "Critical reflection on XBRL: A “customisable standard” for financial reporting?" International Journal of Accounting and Financial Reporting 3.2 (2013): 95-110. Print. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Effects of emerging technologies in Accounting Information Systems- Research Paper”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1694188-effects-of-emerging-technologies-in-accounting-information-systems-focusing-on-xbrl
(Effects of Emerging Technologies in Accounting Information Systems- Research Paper)
https://studentshare.org/finance-accounting/1694188-effects-of-emerging-technologies-in-accounting-information-systems-focusing-on-xbrl.
“Effects of Emerging Technologies in Accounting Information Systems- Research Paper”, n.d. https://studentshare.org/finance-accounting/1694188-effects-of-emerging-technologies-in-accounting-information-systems-focusing-on-xbrl.
  • Cited: 0 times
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us