In Washington, a new language is being devised that will be spoken across US companies. The new lingo is Extensible Business Reporting Language, an XML data tag system that, while still adhering to US accounting principles, will set a standard for reporting financial information.
The nonprofit working on this project is XBRL US, the American arm of XBRL International, the global consortium for the system's implementation. XBRL US is currently gathering input from the variety of interests that would need to be fluent in the new language - analysts, regulators, and the 500 or so groups that make up the XBRL US membership among them.
Ultimately, the system will give everyone access to data that comes directly from the companies compiling it. It will come to them via an automated process that is less expensive and drastically reduces the potential for human error.
"XBRL really improves communication between the creator and user of that information," says Michelle Savage, VP of communication for XBRL US. "It's a way of better communicating a message that's more accurate, transparent, and faster to market."
Savage's role is to make sure that a very difficult topic gets communicated to stakeholders, including capital markets, investors, security analysts, and others.
"This will be used by multiple markets, so we must make it come to life for all these audiences," she notes. "I'm trying to make this as non-technical as possible. It makes it a very interesting product to market and communicate about. I think that's what makes it fun."
Savage's experience across a number of industries, including newswires and finance, is now collectively being put to use. She's also been involved with the XBRL "movement" for a long time, helping to lead a couple of its groups before becoming a staffer.
The push towards creating the language and the technology to support it actually began in 1998. The idea for this standardized reporting system reached the American Institute of Certified Public Accountants, and the US arm was eventually created from there. XBRL US has been a standalone entity since 2006.
Now, there are murmurs that the SEC will propose a rule change that could start the official phasing in of XBRL by the end of the year, meaning preparers from public companies, newswires, and other groups will need to pick up the language quickly.
"When you create something that is a standard, you want to make sure a lot of stakeholders have a say in how it's created," Savage notes. "It can be frightening and 'tech-y,' so our challenge is to make it real to each audience."
To help, Savage has volunteers working to get the message out.
"Communications is a vital component of this whole endeavor," says Paul Penler, an executive director at Ernst & Young, who is also chair of the XBRL Outreach Committee. Ultimately, Penler would also be using the XBRL code as part of his day job.
"There's a ton of energy being put into development and creation activities, which would all be for naught if there can't be an effective mechanism to educate, create awareness, and obtain feedback from the market," he adds.
Together, they realize that the broad communications message - "Better. Faster. Cheaper." - has to be supplemented with specifics for respective audience members.
"So investors, analysts, and lenders who use the data will have a focus on benefits from a processing side," Penler says.
The communications task is a tricky one, but Savage feels the work will bear fruit for everyone.
"We're making major changes in how that information is used and created, changing the way people do business," she notes. "It's been challenging, but exciting."
VP of communications, XBRL US
VP, investor relations services, PR Newswire
Marketing director, Bantam Doubleday Dell