What Is Inline XBRL?
Inline XBRL (iXBRL) is an open standard that combines the human-readable format of an HTML document with the machine-readable data of eXtensible Business Reporting Language (XBRL). Within the broader category of Financial Reporting Standards, Inline XBRL allows companies to embed structured data directly into their traditional, visually formatted financial reports. This innovation means a single document can serve both as a presentation for human review and as a structured data source for automated data analysis and consumption by software. It streamlines the reporting process for public companies by eliminating the need to create separate XBRL and HTML versions of their filings, improving both the data quality and accessibility of financial information.
History and Origin
The evolution of digital financial reporting began with XBRL, which emerged in the late 1990s as a way to standardize the exchange of financial information. While XBRL provided machine-readability, it often required separate files from the traditional human-readable documents, leading to potential inconsistencies and a more cumbersome review process. The need for a single document that could serve both purposes spurred the development of Inline XBRL.
In June 2018, the Securities and Exchange Commission (SEC) in the United States voted to adopt amendments requiring the phased-in use of Inline XBRL for operating company financial statements and fund risk/return summaries.8 This mandate aimed to improve the quality and accessibility of data submitted by public companies and mutual funds.7 Prior to this, the SEC had collected XBRL data since 2009, but quality issues and a perceived lack of use had led to calls for improvement.6 The adoption of Inline XBRL addressed these concerns by integrating the structured data directly into the visually presented document, enabling a more seamless review process for both filers and data users.5 By 2021, the SEC completed its transition to Inline XBRL for many submissions, including annual reports on Form 10-K and quarterly reports on Form 10-Q.4
Key Takeaways
- Inline XBRL merges human-readable documents (like HTML) with machine-readable XBRL data into a single file.
- It improves the efficiency of financial reporting by reducing the need for duplicate filings and potential inconsistencies.
- Regulators worldwide, including the U.S. SEC and the European Securities and Markets Authority (ESMA), have mandated or adopted Inline XBRL for various regulatory filings.
- The format enhances transparency and accessibility of financial data for investors and analysts, making it easier to extract and analyze specific information.
- It empowers companies to maintain control over the presentation of their financial disclosures while ensuring compliance with structured data requirements.
Interpreting the Inline XBRL
Interpreting Inline XBRL involves understanding that the data is embedded within a document designed for human consumption. Unlike traditional XBRL files that required specialized software to view the structured data separately, Inline XBRL allows users to open a filing in a standard web browser and see the financial information in its familiar report format. When a user clicks on a specific financial data point, such as "Revenue" or "Net Income," the embedded XBRL tags become visible, revealing additional contextual information. This context might include the taxonomy element used to tag the data, its definition, units of measure, and the reporting period. This interactive experience significantly improves the usability of the data for investors, analysts, and regulators, allowing for more precise data analysis without needing to cross-reference separate documents.
Hypothetical Example
Imagine "ABC Corp." is preparing its annual report. In the past, they would create an HTML version of the report for visual presentation and a separate XBRL "instance document" containing the tagged data. This dual process introduced the risk of discrepancies if a number was updated in one file but not the other.
With Inline XBRL, ABC Corp. prepares a single HTML document. As they input their financial figures, say, for "Cash and Cash Equivalents" as of December 31, 2024, they simultaneously apply the relevant XBRL tag (e.g., us-gaap:CashAndCashEquivalents) directly to that number within the HTML. When the report is filed, a human reader can view the report as a regular webpage, seeing the amount, for example, "$150,000,000." A data analyst using a specialized viewer or software can then highlight that figure and immediately see its associated XBRL tag, confirming it represents cash and cash equivalents for that specific date. This seamless integration ensures high data quality and ease of use for all stakeholders in the capital markets.
Practical Applications
Inline XBRL has become a cornerstone of modern financial reporting and compliance for publicly traded entities. Its primary application is in the submission of regulatory filings to bodies such as the Securities and Exchange Commission (SEC) in the United States and the European Securities and Markets Authority (ESMA) in Europe, which mandates its use for annual financial reports under the European Single Electronic Format (ESEF).3
Companies use Inline XBRL to submit their financial statements, including footnotes and schedules, which allows regulators to process and analyze vast amounts of data more efficiently. This standardized, machine-readable format facilitates automated validation and comparison of financial information across different companies and reporting periods. Beyond compliance, Inline XBRL also finds application in enhancing corporate governance by providing greater transparency to investors, researchers, and data aggregators, enabling more robust financial analysis and informed decision-making.
Limitations and Criticisms
While Inline XBRL offers significant advancements in financial reporting, it is not without limitations or criticisms. One concern has been the initial costs associated with transitioning to the Inline XBRL format, particularly for companies that previously used older filing methods.2 Some early critiques of XBRL, which can also extend to Inline XBRL, pointed to potential issues with data quality if companies did not tag their information correctly or consistently. For instance, some suggested that despite the mandate, companies might not be sufficiently "vested" in the process, leading to less than optimal data usage by external parties.1
Furthermore, the complexity of taxonomy selection and extension can still pose challenges for preparers, potentially introducing errors if the most appropriate tags are not chosen. While Inline XBRL aims to simplify the filing process and improve data usability, the sheer volume and complexity of financial disclosures mean that ensuring perfect data quality and complete accuracy remains an ongoing challenge for both filers and regulators. Continued effort in training, standardization, and robust validation processes is essential to maximize the benefits of Inline XBRL and mitigate its potential drawbacks in risk management and reporting.
Inline XBRL vs. XBRL
The core distinction between Inline XBRL and XBRL lies in their presentation and integration. XBRL (eXtensible Business Reporting Language) is a markup language designed for the electronic exchange of business and financial data. Filings in pure XBRL typically consist of an "instance document" that contains only the tagged data in a machine-readable format, often requiring specialized software for interpretation and lacking any visual formatting for human readability.
Inline XBRL, on the other hand, is an evolution that embeds the XBRL data directly within a human-readable HTML document. This means that a single Inline XBRL file serves as both the visually formatted report that humans can read in any standard web browser and the structured, machine-readable data that software can process. The primary confusion between the two often arises because Inline XBRL uses XBRL. However, Inline XBRL significantly improves usability and reduces discrepancies by eliminating the need to create and maintain separate human-readable and machine-readable versions of financial disclosures. It essentially "inlines" the XBRL tags into the familiar document, enhancing transparency and streamlining the reporting workflow.
FAQs
What types of organizations use Inline XBRL?
Primarily, public companies and investment funds use Inline XBRL for their regulatory filings with bodies like the SEC. It is also adopted by various regulatory agencies and companies in other countries for financial and non-financial reporting.
Is Inline XBRL required for all companies?
In the U.S., the SEC requires most domestic and foreign public companies to submit their annual reports and quarterly reports, as well as certain other disclosures, in Inline XBRL format. Similar mandates exist in other jurisdictions, such as the European Union for IFRS financial statements.
How does Inline XBRL improve data analysis?
Inline XBRL allows financial data to be both visually presented and machine-readable within the same document. This enables automated data analysis by software, making it easier for investors and analysts to extract, compare, and analyze specific financial figures and disclosures more quickly and accurately than with traditional, unstructured documents.