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School of Business | Department of Accounting | Accounting | 2012
Thesis number: 13042
XBRL and the qualitative characteristics of useful financial statement information
Author: Lindfors, Klaus-Johan
Title: XBRL and the qualitative characteristics of useful financial statement information
Year: 2012  Language: eng
Department: Department of Accounting
Academic subject: Accounting
Index terms: laskentatoimi; accounting; tilinpäätös; balances of books; informaatio; information; standardit; standards; laatu; quality
Pages: 130
Full text:
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Key terms: XBRL, harmonization and standardization, interoperability, comparability, interactivity, understandability, faithful representation, relevance, Design Research
Purpose of the Thesis

The purpose of the thesis is to explore, identify, describe and evaluate technological and accounting issues and problems and their potential solutions that are related to the eXtensible Business Reporting Language (XBRL), together with providing some further research ideas.

Research Methods and Data

The thesis is conducted as a literature review of scientific journal articles and working papers. XBRL has emerged as a solution to many so-called “wicked” problems related to financial reporting in the Internet, a field where little theoretical understanding can a priori be taken for granted, and where pragmatic problem-solving procedures are needed to develop a solution that can be adopted for general use. The review follows the phases of a constructive Design Research process. Technological and accounting issues are discussed and evaluated at each phase, with the qualitative characteristics of useful financial statement information, relevance and faithful representation as the two fundamental qualitative characteristics and comparability and understandability as the most pertinent of the enhancing qualitative characteristics, used as the main accounting evaluation criteria.


The results indicate that there still remain many types of significant technical deficiencies in the first officially filed XBRL financial statements. Moreover, XBRL seems to bring in new types of deficiencies, which jeopardize the faithful representation objective of financial statements. Consequently, new types of assurance assertions and procedures are being developed. The flexibility of both accounting standards and XBRL taxonomies seem to lead to severe interoperability and accounting comparability problems, which might be mitigated by for instance adopting strictly template-based accounting standards. Tentative results indicate that XBRL does enhance the usefulness of financial statements by making them more understandable to users, thereby helping them make better investment decisions. The mandatory adoption of XBRL seems to have affected market information conditions in many countries somewhat, but it has not been established yet that XBRL would be affecting the content or relevance of the financial statement information itself. XBRL is viewed by many constituencies as an enabling technology in a longer-term shift from a paper-based to electronic financial reporting paradigm. At present, however, XBRL can be viewed as a regulator-driven infrastructure project, and affordable end-user software will probably be needed for its adoption and acceptance among the investing public. Europe and Finland are lagging behind in introducing XBRL, which may actually help in the end by enabling learning from the mistakes of others.
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