A new day of financial analysis has arrived in the form of the eXtensible Business Reporting Language (XBRL), a standard whose goal, according to XBRL.ORG, "is to provide an XML-based framework that the global business information supply chain will use to create, exchange, and analyze financial reporting information." The XBRL Project Committee, led by the American Institute of Certified Public Accountants (AICPA), in July finalized the XBRL 1.0 specification, which defines XML tags for financial reporting. As companies begin to use XBRL for annual reports, Securities and Exchange Commission (SEC) filings, and other data, XML-enabled applications will become investment-research power tools.

The first generation of XBRL tools is aimed at accountants, who will populate generic templates with data and publish them directly to the Web. From there, anyone can extract and analyze the data using XML-enabled spreadsheets and charting applications. Among the first such applications to market will be Microsoft Excel and Microsoft Access upgrades.

XBRL consists of a core language of XML elements and attributes used in document instances as well as a language to define new elements and taxonomies of elements referred to in document instances. XBRL uses XML's Canonical Form to create hierarchical taxonomies for different accounting standards. Each hierarchy identifies the document instances and their attributes used for financial reporting. An XML schema defines these taxonomies' syntax. XBRL includes relatively few XML elements, but it has a rich set of attributes that are applicable to most elements.

Each instance document is a collection of XBRL and other custom user elements that represent accounting, financial, or other business-related information in accordance with the XBRL specification. An instance document is essentially useless without the associated taxonomy, which explains the information in the instance document. The taxonomy explains the meaning of those elements and how those elements relate to one another.

In XBRL, the most fundamental concept is the item. An item is a fact that you're reporting about a given company with a corresponding time period. For example, an item might convey that a company with a stock market ticker symbol of SAMP reported revenues of $7 million for the year 1998. An item doesn't have to be numeric.

A group is a set of related items that can appear in any order and be interspersed among other text and elements in any XML document. The XBRL instance documents transmit some set of financial facts. There is no constraint on how much or how little the set contains.

An equally important part of the XBRL framework is the element and its relationship to other elements within a taxonomy. In XBRL, the notion of a taxonomy element corresponds exactly to the notion of an element within an XML schema. Although any given item can refer to only one taxonomy within any given XML document, any number of XBRL items can refer to any number of taxonomies, and you can compose taxonomies together to extend other taxonomies.

In the ensuing "infobonanza," individual investors and financial professionals will have faster and easier access to financial reporting data. XBRL can help analysts discover companies that might otherwise have gone unnoticed. XBRL is more than a year old, but it's bound to keep evolving. Having codified the US generally accepted accounting principles (GAAP), the XBRL Steering Committee plans to address worldwide standards. Using a consistent set of international tags will simplify comparison of US and non-US companies, making XBRL a requirement for emerging markets hoping to attract US capital.

XBRL is a great case study in developing flexible XML documents. For more information, visit the XBRL.ORG Web site.