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An Introduction to XBRL 2007 Acc. Educators Conf. Some of the Following Slides were Adopted from Content on the XBRL Web Site PowerPoint PPT Presentation


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An Introduction to XBRL 2007 Acc. Educators Conf. Some of the Following Slides were Adopted from Content on the XBRL Web Site. Thomas Tribunella, PhD, CPA [email protected] , 315.312.2544. The Big Picture.

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An Introduction to XBRL 2007 Acc. Educators Conf. Some of the Following Slides were Adopted from Content on the XBRL Web Site

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An Introduction to XBRL2007 Acc. Educators Conf.Some of the Following Slides were Adopted from Content on the XBRL Web Site

Thomas Tribunella, PhD, CPA

[email protected], 315.312.2544


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The Big Picture

  • Since before the time of Luca Pacioli financial data and information was contained in documents.

  • It is now possible to identify, transfer, and store financial information electronically.

  • XML and XBRL allows us to tag bits (grains, elements) of financial information so they can be used and reused in a variety of reports.


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Lowering Financial Reporting Cost

  • Today’s reporting processes are hampered by:

    • Rework and delay

    • Ad hoc and non-repeatable tasks

    • Very labor intensive operations

Printed

Financials

Regulatory

Filings

Web Site

Accounting

System

Tax

Return

Explanatory

Text

Third Party

Information

Trade

Filings


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XBRL

“Digital Bits”

Lowering Financial Reporting Cost

  • A Common interchange format and storage system is good management practice to:

    • Reduce redundancies & discrepancies

    • Repeat processes using tools

    • Create a platform for continuous reporting

Printed

Financials

Regulatory

Filings

Web Site

Accounting

System

Tax

Return

Explanatory

Text

Third Party

Information

Trade

Filings


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What is XBRL?

  • XBRL (eXtensible Business Reporting Language) is a text and data markup language similar to HTML (Hyper Text Markup Language).

  • XBRL was created in the Meta-Language, XML (eXtensible Markup Language).

  • XBRL allows content (such as financial statements) to be electronically labeled with concept based tags.

  • It is an open standard, free of license fees.

  • It is extensible so companies can modify the basic XBRL taxonomy (with XML) to fit their needs.


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Why Should Accountants Care About XBRL?

  • All publicly traded companies in the US must file financial statements with the SEC (Securities and Exchange Commission) under the SEC Act of 1934.

  • 10-K: Annual Report.

  • 10-Q: Quarterly Report.

  • 8-K: Material Corporate Events (the company changes auditors).

  • SEC Rule 33-8529: The SEC is now accepting the filing of financial statements and other information using XBRL (since April 2005).

  • For now the program is voluntary, however, it may be mandatory in the future.

  • Therefore, accountants should be aware of XBRL and the SEC’s EDGAR (Electronic Data Gathering And Retrieval) system.


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The Post-Enron Environment

“One large-scale and potentially revolutionary private sector initiative that already is under way is a collaboration by a growing number of companies, accounting firms, and the AICPA to develop a common “tagging" system for various financial accounts, which goes under the acronym ‘XBRL’. …I would urge the SEC to encourage this project … One possibility: require EDGAR submissions to be in XBRL by a specific date.”

- Bob Litan, Brookings Institution,

testimony to US Senate Banking Committee,

on the post-Enron environment, March 14, 2002


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CFO Support

"We see XBRL as not only the future

standard for publishing, delivery and

use of financial information over the

Web, but also as a logical business

choice.”

- John Connors, CFO, Microsoft

on releasing his company’s financials in XBRL


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EDGAR System

  • EDGAR: Electronic Data Gathering And Retrieval.

  • EDGAR is the gigantic electronic database that contains the SEC filings of thousands of companies.

  • EDGAR contains reports in ASCII (American Standard Code for Information Interchange), HTML, and now XBRL.

  • With more companies converting to XBRL much of the information will soon be XML compliant.


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XBRL and Taxonomy Theory

  • XML code organization is based on a taxonomy.

  • XML and XBRL tags are organized in hierarchal taxonomies.

  • The stronger the taxonomy, the easier it is for companies to create instance documents and queries.

  • Physically fragmented segments of financial information are linked together by conceptually-based electronic tags.

  • When the system is queried or mapped into a spreadsheet, the appropriate pieces of information are aggregated into the user interface or application saving much research time.

  • XML and XBRL enables industries to build and use their own taxonomies.


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What is a taxonomy?

  • A taxonomy is a hierarchal classification system.

  • Items (concepts) in a taxonomy are taxons.

  • Taxons are defined and classified by their attributes (characteristics of the concept being classified).

  • Taxonomies enforce the organization and inheritance of related concepts.

  • All child taxons inherit the attributes of parent taxons all the way back to the root (top taxon).

  • A taxonomy leaf has no children (bottom taxon).


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US GAAP 2.0 Taxonomy Snippet

Human readable labels

XBRL “tag” names


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Benefits of XML and XBRL

  • Automatic tagging by accounting, database and enterprise systems.

  • Drill-down to the transaction level from the financial reports.

  • Quicker and more periodic reporting capabilities.

  • Real-time reporting and auditing (no delay).

  • Continuous reporting and auditing (constant feed of information from GL to financial reports).

  • XBRL may eliminate the accounting period.


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XBRL International

  • Scores of countries have agreed to implement XBRL.

  • Many organizations around the world have developed industry specific taxonomies using XML.

  • The IASB (International Accounting Standards board) has embraced XBRL.

  • The IASB is currently developing a set of international accounting taxonomies.


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XBRL Effected Industries

  • Scores of industries have developed industry specific taxonomies for their unique style of financial reports, for example:

    • Government

    • Not-for-Profit

    • Banking

    • Insurance

    • Energy

    • Transportation

    • Telecommunications

    • Investment Management

    • Real Estate

    • Healthcare


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XBRL Uses

  • XML and XBRL can be applied to many types of instance documents, such as:

    • Financial Statements

    • General Ledger and Journal Entry Reporting

    • Loan Documentation

    • Mutual Fund Performance

    • Economic Indicators

    • Performance-related Press Releases

    • Regulatory Filings

    • Tax Filings

    • Assurance Schedules

    • Authoritative Literature such as FAS

    • Management and Non-Financial Reporting


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XBRL International Uses

  • The Australia Prudential Regulation Authority (APRA) recently became the first banking regulator in the world to use XBRL to monitor the financial well being of 12,000 Australian super funds, insurers and banks required to report to APRA on a regular basis. APRA is sharing this aggregated data with the Australian Bureau of Statistics and the Reserve Bank of Australia for benchmarking and trend analysis.

  • In the United States, the Federal Deposit Insurance Corporation (FDIC) recently announced its desire to use XBRL for regulatory reporting for U.S. banks in the near future.

    - OASIS Web Page, October 2007


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XBRL for Financial Statements

XBRL for G/L

Journal Entry

XBRL for

Reporting

Regulatory Filings

Internal

External

Investment

Business

Processes

Processes

Financial

Financial

and Lending

Operations

Reporting

Reporting

Analysis

XBRL for Business

XBRL for Audit

XBRL for

Event Reporting

Schedules

Credit Filings

Financial

Publishers

Companies

Investors

Participants

Participants

and Data

Aggregators

Trading

Management

Auditors

Regulators

Partners

Accountants

Software Vendors

XBRL Working Model


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XBRL: 21st Century Digital Reporting

“XBRL is…perhaps the most revolutionary change in financial reporting since the first general ledger.”

- Accounting Today, September 2000


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Current Use of XBRL in the USA

  • For over two years, the SEC has permitted public companies to file their financial reports with the agency in interactive data format (XBRL), as part of a pilot program.

  • Recently, the market capitalization of companies participating in the voluntary program topped $2 trillion.

  • The collection of data tags being used for current filings on the SEC's EDGAR system, however, is relatively simplistic, using approximately 2,500 unique elements (XBRL Version 2.1).

  • That has required many companies to write their own custom tags, called extensions (XML code), to accurately represent their statements.

    - SEC Web Page, October 2007


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Auditing and XBRL

  • In performing the examination as set forth in AT section 101, the auditor should apply procedures as necessary to obtain sufficient evidence to provide a reasonable basis for an opinion on whether the XBRL-Related Documents accurately reflect the information in the corresponding part of the official EDGAR filings

  • Thus, the objectives of the examination procedures are to determine whether:

    • the XBRL data agrees with the official EDGAR filings, and

    • the XBRL-Related Documents are in conformity with the applicable XBRL taxonomies and specifications, as well as with the SEC requirements for format and content.

      - PCAOB Web Site, October 2007


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What will an Annual Report Be?

  • Electronic Data Collection and Publishing.

  • Automated Data Validation and Analysis.

  • Electronic Non-Financial Reporting.

  • Drill-Down to Transaction-level Reporting.

  • Quicker—more periodic—Reporting.

  • Real-time Reporting & Auditing (no delay).

  • Continuous Reporting & Auditing (constant feed of information).

  • Remote Regulation & Digital Policy Enforcement.

  • Global Convergence.


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Our Future is Clear

“The annual report of the 21st century will not be annual and it will not be a report.”

- Alan Benjamin, The 21st Century Annual Report (2000)


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References

  • XML Home Page: www.xml.org

  • XBRL Home Page: www.xbrl.org

  • CPA Journal Article on Using XBRL with Excel: www.nysscpa.org/cpajournal/2007/707/essentials/p66.htm

  • AIS Educator Journal Article on Using XML with Excel: www.atypon-link.com/AIS/doi/pdf/10.3194/aise.2006.1.1.11

  • SEC Home Page: www.sec.gov

  • AICPA XBRL Resource Page: thecaq.aicpa.org/Resources/XBRL/

  • EDGAR Home Page: http://www.sec.gov/edgar/searchedgar/webusers.htm

  • PCAOB on XBRL for Attestation Engagements: www.pcaob.org/standards/staff_questions_and_answers/2005/05-25%20.pdf

  • OASIS Home Page: www.oasis-open.org


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Questions and Comments

Thank you for your time and participation.


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