The Role of XBRL in Europe

Abstract

Digital financial statements have been designed under two main hypotheses: The first one considers that human beings are their target audience and the second one assumes that users belong to a specific accounting jurisdiction or capital market. Obviously, these hypotheses are no longer accepted. The former because it is necessary to make machines understand the accounting language to facilitate the automatic exchange of information between softbots and/ or software applications. The latter because in order to facilitate securities markets globalization it is necessary to adopt a unique set of international accounting standards. These two needs have to be satisfied. The response to the first one is XBRL, the Extensible Business Reporting Language. The European solution to the second one, is going to be the adoption of the IASB's International Accounting Standards. In this paper, the role of XBRL in the European solution is analyzed. The main conclusions are that the adoption of IAS and the use of XBRL will facilitate the communication of information in a homogeneous way, that they will allow the interchange of data between software applications and also the automatic analysis of financial information. In summary, they are going to play a key role for the development of the global European Stock Market.