Presentation Transcript

1. ACG 4401

   Introduction to XBRL
2. What is a Supply Chain?
3. Financial Reporting Supply Chain
4. Financial Reporting Supply Chain Who’s in the Supply Chain? all stages of the preparation, approval, audit, analysis, and use of financial reports. Participants in the financial reporting supply chain include: accountants working within organizations, company management, boards of directors, audit committees, outside auditors, standard setters, regulators, investment bankers, lawyers, credit rating agencies, investors, and others.
5. The International Federation of Accountants Financial Reporting Supply Chain Survey Results (2007) Financial Reports have become less useful Complexity Burdens of Compliance cause "the essence of the business" to be overlooked. Similar results were found in the 2008 follow-up survey
6. The International Federation of Accountants Financial Supply Chain Survey 2008 “despite improvements to the financial reporting process, the usefulness of financial reports has not improved much. The reliability of financial reports has certainly increased and so has the relevance of the information that they provide, but not their understandability.” “Examples of improvements include easier access to financial information (due to progress in web-based information and in XBRL5)…”
7. So what is XBRL? A tool to create efficiency in the Financial Reporting Supply Chain But First......
8. Networks and Connectivity What is the primary problem with networking/connectivity? Software applications that do not understand each other … therefore special interfaces must be designed & maintained, etc. And humans have different understandings and views of data and information produced by the applications
9. Electronic Data Interchange (EDI) Computer-Computer Exchange of Data Business Data Direct processing Standardized ANSI X12 US and Canada EDIFACT International
10. EDI Components
11. Electronic Data Interchange Set EDI Service Bureau
12. XML in Business What if you need to move information from one business application to another within your organization? What if you have data in a number of different databases that you frequently need to integrate, compare, share internally? What if you need to share information with trading partners & others outside your organization? XML provides the necessary rules, syntax & structure to make it possible!
13. XML How can you appropriately structure information exchanges so that they can be seamless & efficient? There are 2 parts to the solution: 1) Metadata – adding data about the data … data that gives the data more meaning Tags that give meaning to the Data 2) Agreement on structure of the data being shared … an agreed upon vocabulary defining the rules the metadata must follow Taxonomies create this structure In addition, the solution must be general enough to be able to be applied universally!
14. Metadata – Data about data - Flickr Flickr
15. What is this – Untagged Data
16. What is this?
17. How can we understand Untagged Data
18. Tags give meaning to the Data <?xml version="1.0" ?> <transactions> <transaction_794144497> <id>794144497</id> <type>Object Sale</type> <description>GazeboGiver</description> <deposit>200</deposit> <time>2008-03-13 23:14:32</time> <resident>Jumphere Carver</resident> <end_balance>17201</end_balance> </transaction_794144497> <transaction_789465371> <id>789465371</id> <type>Stipend Base</type> <description></description> <deposit>400</deposit> <time>2008-03-11 02:54:20</time> <resident>SYSTEM</resident> <end_balance>17001</end_balance> </transaction_789465371>
19. XML Extensible Markup Language Markup? Data being exchanged Sent from computer-to-computer (intra and inter-organizationally) Defining the data Enclosing the data with descriptions of what the data is <> Tags used to enclose data Used to create Vocabularies Standardized sets of tags (kind of like EDI) XBRL is one such vocabulary UBL is another
20. XBRL
21. XBRL: What is it? XBRL (Extensible Business Reporting Language) is a royalty-free, open specification for software that uses XML data tags to describe financial information for public and private companies and other organizations. XBRL benefits all members of the financial information supply chain by utilizing a standards-based method with which users can prepare, publish in a variety of formats, exchange and analyze financial statements and the information they contain.  The world's leading accounting, financial, government and software organizations are involved in the adoption and use of XBRL in the U.S.
22. XBRL Defined A Vocabulary Adds Meaning and Context to data Turns data into Information Understandable Humans and Computer applications Reusable
23. Interactive Data XBRL Liberates financial data from financial documents How do we validate the data? Huge opportunity for CPA’s
24. What was accounting like before XBRL? Accounting Cycle Journal, Ledger, Trial Balance, Financial Statements Debits and Credits Text based! Manual input, manual interpretation, Re-entry of data for each separate use
25. X eXtensible Beyond original intended use Extended by End User Tags extend use B Business Financial Statement Reporting R Reporting Using US GAAP L Language XML Vocabulary based on XML Extensible Markup Language Rules for describing data XBRL
26. Instances and Taxonomies Instance Document An instance of a companies financial reporting What company What period What currency What purpose What information Taxonomy Dictionary of what tags can be used to mark-up data
27. XBRL Information Once in tagged format does NOT need to be re-entered So HTML statement for SEC Glossy Printed Annual report for investors HTML for investor section of web page ALL CAN BE DONE WITH ONE UNDERYLYING DATA SET, XBRL! Eliminate human error
28. Who is behind XBRL Securities Exchange Commission Public filings are currently voluntarily filed in XBRL format Mandatory public filings coming soon... Interactive Data! AICPA Efficiencies to the accounting profession Re-use of data without manual re-entering XBRL International Non-profit Organization Creates Standards XBRL U.S. Charged with creating US GAAP taxonomy
29. XBRL Milestones April 1998 XBRL is conceived by Charles Hoffman, a CPA with the firm Knight Vale and Gregory in Tacoma, Washington October 1999 AICPA hosts first meeting July 2000 Spec 1.0 is released and International organization created February 2005 SEC creates voluntary program for reporting XBRL financial data on EDGAR September 25th 2006 SEC’s chairman Christopher Cox announces contracts totaling $54 million ... To Modernize and Maintain the EDGAR Database to Use Interactive Data Complete XBRL Code Writing for U.S. GAAP Financial Statements Create Interactive Data Tools for Investors
30. XBRL Milestones September 2006 XBRL US, the United States jurisdiction of XBRL International, spins off from the XBRL committee of the AICPA. September 25th 2007 SEC’s chairman Christopher Cox announces the completion of all development work on data tags for financial reporting in accordance with U.S. generally accepted accounting principles October 9th 2007 SEC’s chairman Christopher Cox announces the creation of a new office within the 74-year old agency to lead the transformation to interactive financial reporting by public companies ... the new office is the agency-wide disclosure modernization program December 5, 2007 US GAAP Taxonomies released for Public Comments February 11, 2007 Second Draft of US GAAP Taxonomy Released for review Advisory Committee on Improvements to Financial Reporting (appointed by SEC Chairperson) recommended mandated XBRL tagged filings for largest 500 companies followed by a phased in approach
31. XBRL Milestones April 16, 2008 SEC Mandates use of XBRL June 5, 2008 Final XBRL “US” taxonomies Acknowledged January 2009 SEC Final Rules Published Today On 3rd XBRL US-GAAP Taxonomy
32. XBRL Mandated Filing Dates
33. SEC Rule 33-9002 Mandates the 3-year phase-in of XBRL for corporations beginning with the financial statements and block-tagged note disclosures for the 10-Q filings of large accelerated filers for periods ending on or after June 15, 2009. Includes a lower bar on liability for the XBRL filings than for those in HTML or text format. The rule prescribes that interactive filings are ‘‘deemed not filed for purposes of specified liability provisions” The XBRL filings are ‘‘furnished” as an exhibit and not necessarily ‘‘filed.” When the instance document is furnished in the second year, filers are required to detail tag the notes and explanatory disclosures in addition to providing the block-tagged notes. Other filers will phase-in by 2011 including foreign filers that will use the IFRS XBRL taxonomy.
34. The XBRL Structure Tags Description of what data is <Assets>1000</Assets> Attributes Meta-data (data describing data) <Assets bType = “debit”>1000</Assets> Relationships Is something described as <Inventory> related to <Assets> ?
35. XBRL – Lets put it all together Instance Document Contain tags describing data ICU Medical Schema Contains the definition of the tags LinkBases Contains relationships between tags Taxonomy Combination of Schemas (defining elements) and LinkBases (relating elements) XBRL US
36. Types of LinkBases Presentation How to organize output E.g. what tags make up Current Assets Calculation How related tags are summed (+ or -) Definition Different tag names are related for the same thing Inventory and Merchandise Inventory Reference A tag element and the standard reference (FASB) for an element Label Machine Readable to Human Readable CashAndCashEquivalents = Cash and Cash Equivalents
37. Some Early Findings Does it add up? Early evidence on the data quality of XBRL filings to the SEC Debreceny, Farewell, Piechocki, Felden, Gräning (2010) Journal of Accounting Public Policy Quality = correctness of the mathematical relationships implied by the taxonomy and implemented in the instance document. i.e. Current Assets = Cash + ST Investments + Inventory + … Found that there is an average of 1.8 errors per filing ¾ of the filings were error free There was an average of seven errors per filing, for those filings with errors. The median error was $9.1 m per filing with the maximum exceeding $7b.