XML - The markup language of the future


Overview

XML means "eXtensible Markup Language."   XML is not a single, predefined markup language, its a metalanguage.  A predefined markup language like HTML defines a way to describe information in one specific class of documents, XML lets you define your own customized markup languages for different classes of document.  XML can do this because its written in SGML, the international standard metalanguage for markup. XML is designed to make it easy and straightforward to use SGML on the Web.  It uses easy to define document types, easy to author and manage SGML-defined documents, and easy to transmit and share them across the Web.

How has electronic business reporting been done in the past?

Electronic business reporting is still a fairly new concept.  In the 1960's and 1970's a type of program called COBOL was introduced, these programs automated the process of dual entry accounting.  In the 1980's the industry was introduced to accounting software packages, these software packages were further advanced than the COBOL programs but still did not rectify the inefficiencies of electronic business reporting.  Although electronic business reporting hasn't had it's efficiency maximized as of yet, there have been major advancements in the industry, as accountants can now process up to twice as many transactions with the use of the programs than they could without them. As we advanced into the 1990's web based reporting was introduced.  Some of the software packages made the switch but for the most part reporting was now done with the use of HTML.   Viewing an  annual report on the web  may be formatted in many ways, (HTML, text, Microsoft Word, Word Perfect, Adobe Acrobat, Lotus 123,) or some other format.   Although the information is accurate and available it is not useful.  The information presented in a text file is unavailable for information analysis and unstructured in its format.  An example of this is the EDGAR database, the information is there and you can print it, but it is not suitable for analysis.

HTML has been very useful in the development of the Web and will continue to be a dominant piece of the Web.  As far as electronic reporting is concerned HTML must subside to its new competition.  HTML's downfall in electronic reporting will be that it provides only one way of describing information.

Table 1-1  The evolution of electronic reporting
Advantages
 Drawbacks
Automation of tedious manual accounting tasks
(e.g., posting to ledgers)		  Accounting transactions orientation only;
 non financial events not recorded
 Speed and accuracy Periodic rather than "real-time" reports
 Low cost (accounting packages only) Limited flexibility in generating "ad-hoc" reports
 Automatic generation of standard accounting reports for common needs (e.g., sales analysis reports, customer statements, financial statements). Data accessible only through proprietary file
management systems
Redundant data storage permits efficient generation of certain standard accounting reports Cross functional queries difficult to answer
HTML allows for the publication of all public company's financial reports on the Internet. HTML does not present information in a format necessary for analysis, and only provides one way of describing information.

How will XML change the approach we use today?

All of the drawbacks stated in the evolution of electronic reporting table have been addressed and rectified by XML.  An extension of XML, XFRML, will allow for more efficient preparation of financial statements because they will be created one time and rendered as printed reports, on web sites, as Edgar filings, or as other regulatory filings.
Analysts will benefit from the now available automated analysis, less re-keying of financial information from one form into another form, receiving information in the format you prefer for their specific style of analysis.
Accountants will now have automated disclosure checklists, drill downs from financial statements to authoritative literature used to prepare those statements and/of audit work papers which support those statements.

XML will allow for the Internet to develop into more than a way to access information.  XML will transform the Web into a medium that facilitates information, not just allows you to access it.  XML will allow the Internet to be more easily searched, sorted, navigated, displayed, personalized, and adapt to otherwise manipulate data into information.

XML bridges the gap between man and computer.  XML is a language that can be understood by both people and the computer, whereas HTML is not understood by the computer.  This is an important change that will allow for relationships to be created between pieces of information.  XML employs a mechanism  for finding the correct information in an appropriate format, consistently across every company, based on your preferences and learning style.

XML will allow groups of people or organizations to create their own customized markup languages for exchanging information in their domain (music, chemistry,
electronics, hill-walking, finance, surfing, petroleum geology, linguistics, cooking, knitting, stellar cartography, history, engineering, rabbit-keeping, mathematics, etc.).

Conclusion

XML is a standard for representing information in a structured way that can be understood by both humans and computers. It is a powerful middle ground between the approaches of SGML and HTML. The XML standard could become a universal format for business transactions and  files.  Any information that is printed, stored or transferred from one area to another is a candidate for XML.  XML omits the more complex and less used parts of SGML in return for the benefits of being easier to write applications for, easier to understand, and more suited to delivery and operability over the Web.

XML is such an important development because it removes two constraints which are holding back Web development:

   1.dependence on a single, inflexible document type (HTML)

   2.the complexity of full SGML, which allows many powerful but hard-to-program options.

XML and XFRML will revolutionize electronic reporting. If the accounting industry is to adapt XML as it's common language it would allow accountants to spend more time analyzing information than inputting information into systems.  XML also allows for customized reporting which allows for more informative decision making processes to be implemented.  The XML language has the backing of the "Big Five" accounting firms, through financial donations these firms are investing in this language in hopes for universal reporting in the near future.

References

"The XML Files"                               View the article              / View location on this page
"The SGML / XML Web Page"        View the article             /  View location on this page
"XFRML FAQ"                                  View the information     /  View location on this page
"Accounting Information Systems"    View the information     /  View location on  this page
"AICPA (XML Internet Capstone"   View the information     /   View location on this page

Glossary of Terms

XML -means "eXtensible Markup Language"
XFRML - XFRML is the digital language of business.  XFRML is the code name for XML-based specification.  It is a framework that allows the financial
community a standards-based method to prepare, publish in a variety of formats, reliably extract and automatically exchange financial reports
and the information they contain. XFRML is not about establishing new accounting standards but enhancing the usability of the ones that we
have through the digital language of business.
SGML - SGML is the Standard Generalized Markup Language, the international standard for defining descriptions of the structure and content of different types of electronic document.
Metalanguage - . is a language for describing other languages, which also lets you design your own markup.

Links

For further information on these topics visit the following links:

XML.org    XFRML.org     AICPA.org