Best J-E financial glossary ever, available for free by the FSA thanks to the magic of XBRL

Thanks to some technological advances in the area of financial reporting, I am happy to pass along this very handy Japanese<>English financial glossary (3MB, Excel format). This treasure trove contains an extensive bilingual list of the terms used in Japanese financial statements, spanning all sectors and including terminology for investment business and mutual funds.
The file is a list of terms to used in XBRL. Ever heard of it? If you don’t work in investment or the finance department of a corporation, don’t feel bad if you haven’t. It’s a markup language, similar to XML or HTML, customized for the production of financial statements. (watch this awesome Japanese-language Flash animation to learn more).
The point is to standardize all aspects of producing the statements. Completely standardized and easily processed statements have all sorts  of advantages, from highly efficient analysis to potentially spotting massive frauds. And the advantages extend beyond mere numbers because the the format standardizes terminology across languages.  I have no clue how they came up with the translations (the FSA site mentions something about the terms being “extracted from past materials”), but from what I have reviewed they are all pretty solid. reports (perhaps with some slight overhyping of XBRL’s advantages by the SEC and others) that the system is set to be introduced to 500 of the largest US companies starting in April:

Adding XBRL tags to financial disclosures makes them searchable and much easier to compare. What used to be available only to financial professionals now will be easily accessible to anyone with an Internet connection. Investors, and regulators, in theory, will be able to analyze data faster and more easily, and possibly finding anomalies in corporate financial statements and investments.

The new rule, while not necessarily helping SEC and investors uncover problems that led to the collapse of the financial industry or discover investment fraud such as that allegedly perpetuated by Bernard Madoff, will improve financial analysis. To do so, XBRL would have to be applied to filings on all types of securities, including asset-backed securities and collateralized debt obligations.

The move will bring the United States into alignment with worldwide practices, said Diane Mueller, a member of the XBRL international steering committee and vice president of XBRL development at software vendor JustSystems.

Currently, financial disclosure records that public companies and mutual funds file are large, unwieldy documents often thousands of pages long. Only large financial institutions have been able to devote the time and staff necessary to parse through the documents and glean the most pertinent information and figures for analysis.

The adoption of XBRL, however, is likely to significantly change the way companies are analyzed. The addition of data tags will allow software to instantly comb through reports and identify the most critical information and figures. XBRL “makes for much easier and timely comparisons between companies,” Moyer said. “Today it’s extraordinarily difficult for investors to compare between balance sheets of two banks. They have different reporting styles, etc. [XBRL] starts to conform balance sheets and give you more comparability.”

Another advantage of XBRL for the commission is regulators will know instantly if a company’s filing is missing any key information because the software will automatically identify what data is missing when corporations electronically file documents and then notify the company and SEC. Previously, regulators had to manually check files to find missing information, Mueller said.

Speaking of worldwide practice, Japan’s Financial Services Agency, the financial regulator, was a step ahead, becoming one of the first major financial centers to mandate XBRL filing starting in April last year. Thanks in part to the Japanese authorities’ desire to be a leader in this area, they have provided an official FSA “XBRL taxonomy,” current as of March 2008, which is the file linked above.  
While this isn’t exactly news, it’s the first time I actually bothered to look. I had heard that the transition to XBRL could completely eliminate the need to translate financial statements manually, but wasn’t quite sure what it meant until now. Dig in, and mourn the coming loss of one source of translation work!

5 thoughts on “Best J-E financial glossary ever, available for free by the FSA thanks to the magic of XBRL”

  1. This is very cool. I imagine that there are some advantages if the banks (and freelancers) out there that have been independently compiling lists can conform their lists to this.

    I did not know about XBRL, but think the uses of it are quite laudable.

  2. That’s “Legal Astray” not ‘ashtray’ – one more strategically placed S and it would be even better.

    Cheers for the link

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