The Impact of XBRL on Financial Reporting: A Conceptual Analysis

As changes in technology and evolution in economy continues across the globe, the requirements of financial reporting have severally been adjusted to satisfy the varying need of corporate stakeholders. This has led to the need to implore eXtensible Business Reporting Language (XBRL) in financial statements and this adoption has principally improved the development of business and financial reporting system. XBRL in business and financial reporting increases users’ confidence through the use of “bar code†and assurance service provided by the auditors. The purpose of this paper is to discuss the expected impact of XBRL on financial reporting as well as on the users of those reports. The implications for its adoption as well as the consequences on investors and accountants as companies begin to prepare reports based on XBRL are also discussed. The methodology adopted for this study is simply a desk review approach. As regulators, reporting entities and users of financial reports and other financial information are engrossed in cost savings, rising efficiencies and the excellence of information when dealing with financial reports, it is evident from the discussion of this paper that XBRL influence positively the integrity and transparency of business and financial information by allowing screening the facts of the information provided by organizations and the possibility of easy access and processing of financial information irrespective of diversity in language presentation of such reports or the application of different regulations. XBRL has the potential to play a significant role in providing machine readable reports and it offers cost savings, data integrity, greater efficiency and improved accuracy and reliability to all those concerned in using financial and business information.