XBRL FAQ: Do I need to replace my software applications in order to leverage XBRL for internal purposes?
|Q Do I need to replace the accounting and operational software applications that I am using now in order to use XBRL to streamline my internal data access, aggregation, auditing/monitoring, and reporting processes?|
|A No. The key benefit of adopting XBRL for day-to-day use (“deeply embedded XBRL”) within a corporate information system is that it does not replace anything, nor it requires significant investment in new software. Quite the opposite: it preserves the IT investment in place by enabling the elimination of the inefficiencies that come from corporate data residing in different systems that are not easily interoperable, and by bridging the “information gaps” between them that usually translate into the manual creation of spreadsheets to fulfill specific internal and external reporting requirements.
Using XBRL Global Ledger (XBRL GL) as a standardized, application-independent representation of business data enables re-engineering the internal processes based on that data. No matter in what application or format the data is stored, it is possible to create consistent, automated processes to access and analyze it. Also, internal and external reporting needs can be fulfilled by leveraging existing (and free) XBRL taxonomies for end reporting, and/or by creating custom corporate taxonomies for internal use. XBRL GL seamlessly interacts with other XBRL taxonomies to populate end reports from source systems, and this enables a great degree of flexibility in their creation and maintenance. It also eliminates the need for costly manual activities and systems customizations.
Existing applications do not need to change at all. Most of the software required to map source data to XBRL GL is either free or is well established off-the-shelf software with a limited cost. On the processing side, a lot can be achieved using freely available tools such as the Deeply Embedded XBRL Toolkit (DEXT) or broadly available, non XBRL-specific applications like Microsoft Excel.
There are various resources and training courses available that provide guidance on how to deploy XBRL for internal benefit. It is possible, and actually recommended, to start small, from one prototype that is meaningful enough to show a benefit but also well delimited in scope, so that it can be completed quickly to evaluate the results and achieve the internal expertise necessary to apply the same approach more broadly over time. This gradual approach is not possible when internal inefficiencies in data-related processes are addressed by acquiring a new system.
Bottom line, the investment is limited, the effort required can be managed and optimized over time based on what processes are more critical and provide the greater internal benefits if successfully addressed, and the return is significant — with no need for a drastic intervention on the existing information system.