November 1999

Accounting Profession and Tech Companies to Create Digital Language for Financial Statements

The AICPA, six information technology companies, and the Big Five accounting and professional services firms are developing an XML-based specification for the preparation and exchange of financial reports and data.
The group developing the specification, which is currently called XFRML (for XML-based Financial Reporting Markup Language), hope it will be the digital language of business. This is a framework that will allow the financial community a standards-based method to prepare, publish in a variety of formats, exchange, and analyze financial reports and the information they contain. XFRML, which will be freely licensed, also will permit the automatic exchange and reliable extraction of financial information among various software applications.

Through this project, the organizations involved seek to improve access and lower distribution costs for financial information. In addition to the AICPA, the project working group includes representatives from Arthur Andersen LLP, Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP and PricewaterhouseCoopers LLP; Microsoft Corporation; the software companies FRx Software Corporation and Great Plains; a division of Interleaf, a company that provides XML-based content management solutions for e-business applications; FreeEDGAR.com/EDGAR Online, distributors of financial information over the Internet; and The Woodburn Group, a middle-market business information-systems consultant.

"We're committed to improving the accessibility of financial information," AICPA President and CEO Barry Melancon said. "Accounting is the language of business, and XFRML will make it easier to share information expressed in that language by permitting computer applications to understand our vocabulary. We encourage others to join this important effort."

The AICPA has created an XFRML website (http://www.xfrml.org) that includes a draft specification, background information, prototypes, and a mechanism to provide input to the project team. A prototype XML-based set of financial statements is currently in use by Great Plains to present its 1998 financial results on the company's website, http://www.greatplains.com/xml (Internet Explorer 5.0 required).

"While sharing business information has always been necessary, it has been a significant challenge," AICPA Chair Robert Elliott said. "XFRML will revolutionize the way financial information is communicated, accessed, and used."

XML (eXtensible Markup Language) is a self-describing, platform-independent, expandable and standardized method of exchanging information of all sorts. It is designed to work well over the Internet. XML can be used independently or incorporated into other computer applications that require flexible information sharing. XFRML will make use of XML to create the language for financial reporting. *