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  • Sets the stage on what they are going to see and why it matters
  • Sets the stage on what they are going to see and why it matters
  • Sets the stage on what they are going to see and why it matters
  • Sets the stage on what they are going to see and why it matters
  • XBRL is the use of a new Internet language (XML = Extensible Markup Language) for the corporate reporting supply chain. XBRL is simply an additional format for information included within company reports. Current information formats are things like ‘html’ or ‘.doc’ or ‘pdf’ or paper. XBRL provides yet another format for this information which makes it more useful to both the company and its stakeholders. XBRL, like other XML consortiums, provides its format to the public for free. It has been developed by a consortium of over 250 companies from around the world. The XBRL International consortium was founded by the AICPA in 1999 (announced August 1999, first meeting October 1999) And currently has active chapters in: Australia, Canada, Germany, IASB, Japan, UK, US, and Singapore; and has developing chapters in: Belgium, Hong Kong, India, Ireland, Netherlands, New Zealand, South Africa, Spain, Sweden, Taiwan It uses the reporting standards and practices in general use by companies and regulators around the world. XBRL allows the company information to be easily transported within company information systems and also transported and consumed by company stakeholders. The XBRL format is a convergence of three key attributes: Technology which uses XML as a primary platform for the transportation of information across disparate information environments Language of corporate reporting information as generally accepted in the market. Corporate Reporting Supply Chain Participants who actively engage in the development of XBRL. Taxonomy Defined - a description and classification system for the contents of business information Taxonomies represent up to hundreds of individual business reporting concepts, mathematical and definitional relationships among them, along with text labels in multiple languages, references to authoritative literature, and information about how to display each concept to a user. Extensions are available Instance Document Contains facts being reported (‘Sales’ for a specific period) Each item can be associated with business reporting concepts in a taxonomy Contains the context of facts being reported (‘actual’, ‘budget’, projected, etc.)
  • Notes:
  • XBRL Benefits for Consumers More timely, accurate, data for decisions – as demonstrated in the NASDAQ.com demo; this provides consumers with significant abilities to access and analyze the information contained with in the reports Accelerate adoption of reporting models – Certain consumers (regulators and other governmental authorities) promote flexibility in the adjustments needed for changes in the reporting models Lowers cost of e-filing initiatives – the re-use of reported information in a universally accepted format lowers the overall costs of supply chain participants and decreases the costs of other e-filing initiatives Facilitates language translations – promotes the capability to have on the fly language translation of the primary statements and some (say 70%) of the more narrative disclosures. XBRL Benefits for Preparers More precise & clear reporting – preparer determines the structure of the information used by the consumers rather than a third party aggregator & distributor. Enhanced functionality – The linkage of relevant resources to the document provides for a better preparation environment. Company policies, reporting resources and other relevant content is contextually available via the XBRL document. Better controls & audit trail – As a result of the enhanced automation of the reporting process and tighter connection between underlying systems and the company report, enhanced documentation and controls are provided.
  • XBRL Benefits for Consumers More timely, accurate, data for decisions – as demonstrated in the NASDAQ.com demo; this provides consumers with significant abilities to access and analyze the information contained with in the reports Accelerate adoption of reporting models – Certain consumers (regulators and other governmental authorities) promote flexibility in the adjustments needed for changes in the reporting models Lowers cost of e-filing initiatives – the re-use of reported information in a universally accepted format lowers the overall costs of supply chain participants and decreases the costs of other e-filing initiatives Facilitates language translations – promotes the capability to have on the fly language translation of the primary statements and some (say 70%) of the more narrative disclosures. XBRL Benefits for Preparers More precise & clear reporting – preparer determines the structure of the information used by the consumers rather than a third party aggregator & distributor. Enhanced functionality – The linkage of relevant resources to the document provides for a better preparation environment. Company policies, reporting resources and other relevant content is contextually available via the XBRL document. Better controls & audit trail – As a result of the enhanced automation of the reporting process and tighter connection between underlying systems and the company report, enhanced documentation and controls are provided.

Transcript

  • 1. Identifying, Monitoring & Responding to Corporate Vulnerability Perspectives on the Future of Corporate Reporting March 22, 2004
  • 2. Predicting systemic corporate crises Is elusive for public & private sectors today
    • Several elements are needed to improve the ability of both public and private sector companies to effectively predict systemic corporate crises:
    Relevant Economic Trend Data Timely, Accurate Financial Data Reliable Market Data Predict Crises!
  • 3. Quality data serves as the foundation for better predicting systemic corporate crises
    • Reliable, timely data is foundation upon which methodologies and analytics for predicting and analyzing corporate crises are built.
    Analytics Methodology Data Most financial institutions are not dependent on a single methodology or model Depth, quality and breadth of data are key drivers of credit capabilities
  • 4. Solutions do exist, but are primarily limited to areas where data is readily available
    • Where data is abundant, commercially available and proprietary tools provide a big part of the answer.
      • AM Best
      • Bureau Van Dijk
      • CreditAnalyzer LLC
      • Crisil (India)
      • Dun & Bradstreet
      • Egan Jones Ratings Co
      • Fair Isaac & Company
      • Fitch Ratings
      • ICRA (India)
      • IQ Financial (Misys ’04)
    Comml. Services Providers Primarily limited to North America, Europe and Industrialized Asia Tools/Services
      • Probability of Default Models
      • Bankruptcy Prediction
      • Early Warning Models
      • Ratings Service
      • Risk Scoring
      • Data Services (Ratings, LIED, Recoveries, etc.)
      • Kamakura
      • Moody’s/KMV
      • Moody’s Investor Service
      • Phillipines Ratings Svcs Corp.
      • RiskMetrics Group
      • Standard & Poor’s
      • Thai Ratings & Info Services
      • tradeRadar.net
      • UBS Warburg
  • 5. Availability of consistent, reliable data is hampering improvement efforts
    • There are several key reasons why consistent, reliable data to improve the ability to predict corporate crises are not widely available:
      • Standards – There is a broad lack of global and/or regional standards for collecting and presenting market and financial data, particularly among global companies
      • Timeliness – The amount of time between when companies report financial performance and when it is audited (or verified), released and consumed is too long
      • Processes – Despite significant expense in automating reporting processes over the past 10 years, manual and spreadsheet driven-processes still prevail, increasing complexity and the possibility for errors
      • Availability – In certain developing regions, consistent, reliable economic, market and financial data is not readily produced, accessible or usable
  • 6. Improving the availability of critical data is possible…but not overnight
    • Improving availability, reliability and usefulness of data will require focused efforts in addressing the following areas:
      • Development and adoption of global financial reporting standards.
      • Use of open data standards such as XML/XBRL to describe data elements and facilitate validation
      • Increased automation in the production, dissemination and consumption of data
  • 7. Regulators & Exchanges around the globe are leading efforts to streamline reporting
    • Australian Tax Office
    • Autoriteit Financaiele Markten (Netherlands Authority for the Financial Markets)
    • Banco de Espana
    • Bank of Japan
    • Bundesbank
    • Danish Commerce & Companies Agency
    • Dutch Tax Authority
    • Dutch Water Authority
    • The Irish Revenue
    • KOSDAQ – Korea
    • Luxembourg Stock Exchange
    National Tax Agency of Japan New Zealand Exchange Patent and Registration Office (PRV – Sweden) Shenzhen Exchange Tokyo Stock Exchange Toronto Stock Exchange UK Financial Services Authority UK Inland Revenue US Federal Financial Institutions Examination Council (includes the FDIC and the Federal Reserve Board)
  • 8. Case Study: US FFIEC Call Report Modernization Project…Today
    • Multiple copies of data exist inside multiple agencies ( error prone )
    • Avg of 60 – 75 days to receive, validate + publish filings ( not timely )
    • Estimated processing costs over next 10 years - $65 million ( costly )
    • March 2003 reports had nearly 18,000 errors that needed to be corrected ( integrity issues )
      • 1,000 basic math errors
      • 17,000 quality (validation) errors
    Today 8900 Banks FDIC OCC FRB OTS NCUA
  • 9. Case Study: US FFIEC Call Report Modernization Project…the Project
    • The FFIEC awarded a $39 million 10-year project to modernize its Call Report (principal regulatory filing) process to a combined team of Unisys, PwC and Microsoft. The project involves:
      • Standardization of call report data among agencies
      • Creation of standard instructions and validations
      • Construction of Central Data Repository
      • Establishment of metadata management capability for providing context to call report data using XBRL
      • Web services applications to transmit and receive secure XBRL-formatted report data
  • 10. Case Study: US FFIEC Call Report Modernization Project…Future
    • XBRL open source data standard used for communicating report requirements, validations, instructions ( timeliness/flexibility )
    • Filers required to submit data in XBRL format over the web ( automation )
    • Multiple sources of data SINGLE SOURCE ( integrity )
    • Processing Time 60-75 days 2 Days ( timeliness )
    • Processing Costs $65M $39M, a savings of $26M ( cost/efficiency )
    Future 8900 Banks FDIC OCC FRB OTS NCUA FFIEC
  • 11. What is XBRL?
    • XBRL ( eX tensible Business Reporting L anguage) is:
    • An information format designed for the Internet.
    • Free ly available
    • Developed and maintained by over 250 supply chain participants
    • Based on accepted reporting standards
    • The convergence of:
      • Technology = XML-based specification
      • Language/dictionary = Terms by jurisdiction/industry
      • Consortium Participants = Supply chain members
  • 12. Scope and role of XBRL External Financial Reporting Business Operations Internal Financial Reporting Investment, Lending, Regulation Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators Software Vendors Management Accountants Companies Economic Policymaking Central Banks XBRL Ledger XBRL Financial Statements
  • 13. XBRL International is a non-profit consortium
    • Manages the royalty-free intellectual property
    • Facilitates knowledge sharing with members
    • Provide a framework for further development
    Japan United States Australia Germany Canada United Kingdom IASB China Sweden Denmark Switzerland Netherlands New Zealand Brazil South Africa Korea Colombia Argentina Singapore Spain Ireland
  • 14. Here is how this works http://www.nasdaq.com/xbrl
  • 15. XBRL Links to other concepts
    • XBRL adds to XML:
    • Multi dimensional financial data representations
    • Financial reporting vocabularies (taxonomies)
    • Aliases and other definition relationships
    • Mathematical relationships between concepts
    • Flexibility about how to present items to users
    • Structure for authoritative policies and guidance
    • Reporting apps need these even when using XML
    Calculations Cash = Currency + Deposits Presentation Cash & Cash Equivalents Formulas Cash ≥ 0 References GAAP I.2.(a) Instructions Ad Hoc disclosures Definitions cashCashEquivalentsAndShortTermInvestments Label US $ FY2004 Budgeted XBRL Item “ 200”
  • 16. The Growing XBRL Family Over 250 and growing
  • 17.                                                                                                                                                                   
  • 18.  
  • 19.                                                                                                                                                                                                                                                                                                  
  • 20. Benefits of XBRL for Preparers
    • Lower cost of producing information
    • More timely, accurate, data for decisions
    • Enhanced analytical capabilities
    • Better control environment
    • Tell your own story ( precise & clear)
    • Accelerate adoption of reporting models
    • Enhanced functionality
    • Ease of use
  • 21. Benefits of XBRL for Consumers
    • Lower cost of consuming information
    • Faster access to information
    • More timely, accurate, data for decisions
    • Enhanced analytical capabilities
    • Enhanced functionality
    • More useful access to information
    • Ease of access to definitions enhance comparability
    • Facilitates language translations
  • 22. Benefits of XBRL for Regulators & Standard Setters
    • Reduced Reporting Burden on regulated entities
    • Improved data timeliness
    • Improved data accuracy
    • Enhanced validation
    • Simplified programming efforts
    • Improved flexibility in handle changes
    • Enhanced inter-connectivity of standards content
    • Enhanced consistency of data for analysis
    • More proactive use of standards and regulations within the market
    • Enables more efficient research
    • More effective way of identifying changes and/or relationship with other standards
  • 23. XBRL – Ready for Prime Time “ Some critics have suggested that XBRL is not ready for primetime. In fact, it is.” Hon. Richard H. Baker Chairman, Capital Markets Subcommittee
  • 24. Identifying, Monitoring & Responding to Corporate Vulnerability Perspectives on the Future of Corporate Reporting March 22, 2004