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  • Accounting Standard setters define the “WHAT” that must be complied with. This is accomplished via “due process” a methodology of research, development, debate, testing, exposure drafts for comment, and re-iteration until sufficient consensus is achieved and thereafter the new or updated standard is released with an effective date for implementation. In the IAS environment accounting standards are written on an inclusive exclude basis. Each standard is written on a conceptual basis so that whilst an example or illustration may be provided for interpretation of the standard it is not mutually exclusive. Currently the focus of IASB is on convergence of accounting standards globally and continued evolution of accounting standards from a historical cost basis to a fair value basis of accounting. In this scenario the latest standards issue reflect this growing trend and the evolution of accounting thinking down this track. The environment of the international accounting standard setting is dynamic, evolutionary, and politically charged. Understanding the past, the rationale for IASB and its future are key factors in determining the business case and the vision and scope of the project. Not to do so could result in important factors being ignored, overlooked or misunderstood and hence neither planned for, incorporated in the solution, or correctly dealt with. Preparers of financial statements have to interpret the accounting standards into the “how” of the real world. Real world experiences are fed back to the accounting standard setter who may or may not adjust the standards based on the objective of the accounting standards and the outcome produced. What is important is to convert the standards set by the IASB into an agreed accounting deliverable.
  • The central issue is to get accountants / preparers of financial statements to agree. Currently this doesn’t even happen within an audit firm. How then is it possible to consider a naming structure for financial information in an electronic format when no agreement exists in standard paper human consumable format of current financial reporting? If we do not build a solid business case based on a vision of the future that meets a business need – failing which we run the risk of producing a cool software solution that will be looking for a problem to solve. Nice but no cigar. Furthermore, this approach by proceeding directly to the construction phase of the development will become bogged down in the morass of discovering the solution whilst trying to build it. This is a very expensive method of learning by making mistakes, reversing and too-ing and fro-ing until hopefully a solution is attained. By clear definition of the business problem the vision is set for the development. It is critical that the “owners” of the problem space define the problem to be solved.
  • Accounting Standard setters define the “WHAT” that must be complied with. This is accomplished via “due process” a methodology of research, development, debate, testing, exposure drafts for comment, and re-iteration until sufficient consensus is achieved and thereafter the new or updated standard is released with an effective date for implementation. In the IAS environment accounting standards are written on an inclusive exclude basis. Each standard is written on a conceptual basis so that whilst an example or illustration may be provided for interpretation of the standard it is not mutually exclusive. Currently the focus of IASB is on convergence of accounting standards globally and continued evolution of accounting standards from a historical cost basis to a fair value basis of accounting. In this scenario the latest standards issue reflect this growing trend and the evolution of accounting thinking down this track. The environment of the international accounting standard setting is dynamic, evolutionary, and politically charged. Understanding the past, the rationale for IASB and its future are key factors in determining the business case and the vision and scope of the project. Not to do so could result in important factors being ignored, overlooked or misunderstood and hence neither planned for, incorporated in the solution, or correctly dealt with. Preparers of financial statements have to interpret the accounting standards into the “how” of the real world. Real world experiences are fed back to the accounting standard setter who may or may not adjust the standards based on the objective of the accounting standards and the outcome produced. What is important is to convert the standards set by the IASB into an agreed accounting deliverable.
  • Accounting Standard setters define the “WHAT” that must be complied with. This is accomplished via “due process” a methodology of research, development, debate, testing, exposure drafts for comment, and re-iteration until sufficient consensus is achieved and thereafter the new or updated standard is released with an effective date for implementation. In the IAS environment accounting standards are written on an inclusive exclude basis. Each standard is written on a conceptual basis so that whilst an example or illustration may be provided for interpretation of the standard it is not mutually exclusive. Currently the focus of IASB is on convergence of accounting standards globally and continued evolution of accounting standards from a historical cost basis to a fair value basis of accounting. In this scenario the latest standards issue reflect this growing trend and the evolution of accounting thinking down this track. The environment of the international accounting standard setting is dynamic, evolutionary, and politically charged. Understanding the past, the rationale for IASB and its future are key factors in determining the business case and the vision and scope of the project. Not to do so could result in important factors being ignored, overlooked or misunderstood and hence neither planned for, incorporated in the solution, or correctly dealt with. Preparers of financial statements have to interpret the accounting standards into the “how” of the real world. Real world experiences are fed back to the accounting standard setter who may or may not adjust the standards based on the objective of the accounting standards and the outcome produced. What is important is to convert the standards set by the IASB into an agreed accounting deliverable.
  • Accounting Standard setters define the “WHAT” that must be complied with. This is accomplished via “due process” a methodology of research, development, debate, testing, exposure drafts for comment, and re-iteration until sufficient consensus is achieved and thereafter the new or updated standard is released with an effective date for implementation. In the IAS environment accounting standards are written on an inclusive exclude basis. Each standard is written on a conceptual basis so that whilst an example or illustration may be provided for interpretation of the standard it is not mutually exclusive. Currently the focus of IASB is on convergence of accounting standards globally and continued evolution of accounting standards from a historical cost basis to a fair value basis of accounting. In this scenario the latest standards issue reflect this growing trend and the evolution of accounting thinking down this track. The environment of the international accounting standard setting is dynamic, evolutionary, and politically charged. Understanding the past, the rationale for IASB and its future are key factors in determining the business case and the vision and scope of the project. Not to do so could result in important factors being ignored, overlooked or misunderstood and hence neither planned for, incorporated in the solution, or correctly dealt with. Preparers of financial statements have to interpret the accounting standards into the “how” of the real world. Real world experiences are fed back to the accounting standard setter who may or may not adjust the standards based on the objective of the accounting standards and the outcome produced. What is important is to convert the standards set by the IASB into an agreed accounting deliverable.
  • Accounting Standard setters define the “WHAT” that must be complied with. This is accomplished via “due process” a methodology of research, development, debate, testing, exposure drafts for comment, and re-iteration until sufficient consensus is achieved and thereafter the new or updated standard is released with an effective date for implementation. In the IAS environment accounting standards are written on an inclusive exclude basis. Each standard is written on a conceptual basis so that whilst an example or illustration may be provided for interpretation of the standard it is not mutually exclusive. Currently the focus of IASB is on convergence of accounting standards globally and continued evolution of accounting standards from a historical cost basis to a fair value basis of accounting. In this scenario the latest standards issue reflect this growing trend and the evolution of accounting thinking down this track. The environment of the international accounting standard setting is dynamic, evolutionary, and politically charged. Understanding the past, the rationale for IASB and its future are key factors in determining the business case and the vision and scope of the project. Not to do so could result in important factors being ignored, overlooked or misunderstood and hence neither planned for, incorporated in the solution, or correctly dealt with. Preparers of financial statements have to interpret the accounting standards into the “how” of the real world. Real world experiences are fed back to the accounting standard setter who may or may not adjust the standards based on the objective of the accounting standards and the outcome produced. What is important is to convert the standards set by the IASB into an agreed accounting deliverable.
  • Accounting Standard setters define the “WHAT” that must be complied with. This is accomplished via “due process” a methodology of research, development, debate, testing, exposure drafts for comment, and re-iteration until sufficient consensus is achieved and thereafter the new or updated standard is released with an effective date for implementation. In the IAS environment accounting standards are written on an inclusive exclude basis. Each standard is written on a conceptual basis so that whilst an example or illustration may be provided for interpretation of the standard it is not mutually exclusive. Currently the focus of IASB is on convergence of accounting standards globally and continued evolution of accounting standards from a historical cost basis to a fair value basis of accounting. In this scenario the latest standards issue reflect this growing trend and the evolution of accounting thinking down this track. The environment of the international accounting standard setting is dynamic, evolutionary, and politically charged. Understanding the past, the rationale for IASB and its future are key factors in determining the business case and the vision and scope of the project. Not to do so could result in important factors being ignored, overlooked or misunderstood and hence neither planned for, incorporated in the solution, or correctly dealt with. Preparers of financial statements have to interpret the accounting standards into the “how” of the real world. Real world experiences are fed back to the accounting standard setter who may or may not adjust the standards based on the objective of the accounting standards and the outcome produced. What is important is to convert the standards set by the IASB into an agreed accounting deliverable.
  • More about what XBRL is. Here are the Great Plains Financial Statements in an XBRL format. Can you see the differences between these financial statements and those in PDF format posted at their website?
  • Demo on XBRL……. Can remove this slide
  • Stig Endvoldsen defined the problem and recommended one accounting language as an important part of the solution in a converging global village. Ignoring his opinion will simply result in a waste of time until the wisdom of his statement is understood and implemented.
  • Sir David Tweedie’s statement is at the very core of the success of transparency of financial reporting namely, that it commences at the most granular level – the transaction. If the nature of the transaction is not understood or correctly classified the result of financial reporting will not meet the quality bar set. Secondly transactions analyzed by nature and classified accordingly are the same irrespective of locality (country) economic nature, profit or non profit motive, or public entity or private enterprise. Not surprisingly then that the IPSAS being issued by IFAC have utilized IAS as their base and are only altered where necessary.
  • Not surprisingly the vision is a restatement of the IAS vision, philosophy and objectives.
  • The vision for XBRL is an extension of IAS to include the dynamics of a binary environment. This extension has a significant impact on the size of the taxonomy as precision defined within a binary environment increases exponentially with each reduction of judgment that is an accepted part of disclosure for human consumption. At the Kansas U conference the same point was made by FRAAK what is needed is financial information not financial data for intlligent agents to add value.
  • It is vitally important to distinguish between facts and labels The UK taxonomy only found a 20% fit to IAS. This suggests that the UK and IAS standards only share 20% commonality between their accounting standards. This is not true the fit is probably 80% but labels are being used as facts and the UK labels are very different to IAS at this stage

web.bryant.edu web.bryant.edu Presentation Transcript

  • XBRL: The Time is Now Internet World 12-2001 by Neal Hannon XBRL.org, Bryant College XBRL: The Time Is Now Internet World, December 2001 Neal Hannon, XBRL.org Bryant College XBRL Educational Resource Center XBRL-US XBRL-IAS XBRL ASIA-Pacific
  • What Does XBRL Do? The purpose of XBRL is “to enhance the flow of financial information through the creation of a globally useful language in which to describe financial facts and concepts.” David vun Kannon XBRL is uniquely positioned to provide mobility and transportability to financial and business facts. Financial Professionals involved in Auditing, Consolidations, Mergers, Tax, Not-for-Profit, internal And business reporting will all be affected by XBRL.
  • Why is the Finance Profession Involved in XBRL? CORPORATIONS need to understand how business changes with the introduction of XML, Web Services and the rapid movement of information from computer to computer XBRL will soon become a dominant method of handling business reporting Other areas of business are also moving to XML enabled information. (HR, CRM, ERP, Insurance, etc.)
  • The Case for XML..
    • XML - a computer markup language that is extensible (flexible … can be added to)
      • XML is actually a bare-bones set of syntax rules to markup any kind of text and data
      • XML provides the structure of the text or data
      • XML describes to humans & to computers what the data is … not how to display it
    XML has become the fastest growing technology for information transportation and exchange the world of computing has ever seen. Business Integrator Magazine says that nearly nine out of every ten enterprises claim that XML will be an important technology for their IT strategies in 2002.
  • The Case for XBRL… “ I would like to see you take your XBRL project a step further , providing account classifications for companies in Common industries. In short, I challenge you to turn all of this data into meaningful information for investors.” Arthur Levitt, Former Chairman, SEC
  • The Case for XBRL… SEC Chairman Pitt complains that financial Reports are backward-looking, hard to understand, and don't highlight the Information investors need. Some of the improvements he is considering: SLICE `N' DICE Accountants are developing XBRL , a way of coding financial reports on the Internet, that will let investors download and manipulate companies' numbers any way they like Business Week, November 5, 2001
  • The Case for XBRL Financial Professionals will need to collect, interpret and report data in many different XML dialects XBRL provides a bridge not only to financial statements, but to all business reporting.
  • The Case for XBRL “ Do your main job first; get the financial statements right, then tackle enterprise data integration. But not until the integrity of the financial statements are at the highest level possible. The SEC is a strong supporter of increasing financial statement transparency.” Lynn Turner, former chief accountant for the SEC
  • Improves the way companies -- and applications -- share business reporting information How XBRL Works 1. Client Specific Data 3. XBRL information flows freely across the Internet or VPN, LAN and WAN 5. XBRL data can be used in applications B or other comparable applications Financial data Loan Analyzer Common XBRL Vocabulary 2. Application data is converted into a common XBRL vocabulary 4. XBRL-tagged data is mapped into applications specific data XML/XBRL translator XML/XBRL translator Client COA to Bank Taxonomy Bank Taxonomy
  •  
  • What software ‘sees’ is the differentiator and drives benefits
  • XBRL Business Uses The internal use of XBRL is just beginning to be explored, brought on by XBRL for General Ledger in public beta. New XBRL releases are compliant with the latest version of W3C’s XML Schema Internal Uses include: Account analysis Balanced Scorecard Automated exception reporting Wireless, PDA Cell Phone
  • Consider External Financial Reporting How much of this painting would be needed to represent $$ spent on external financial reporting for a major US corporation last year compared to total spending? Maybe 1%??? Can you guess why some companies are not thrilled with using XBRL for external reporting?
  • XBRL Business Uses External Uses include: SEC Filings IRS and State Tax Filing Annual Reports Creditor Reports Wireless, PDA Cell Phone Externally, XBRL focuses on the production of GAAP financial statements for the business financial reporting supply chain. The external focus of XBRL is evident by the heavy participation in XBRL.org by the AICPA and Big 5 Accounting firms
  • XBRL International International Accounting Standards and Major Countries are changing the way Accounting is conducted world-wide Hot spots of development include Australia, Singapore, Germany, Japan, followed by Canada, the Netherlands, Spain, South Africa, Hong Kong, Great Britain, and the Scandinavian countries.
  • Stig Enevoldsen (Chairman IASC) September 1998 “ The fact is that we not only speak different accounting languages but also give different interpretations of the same events and transactions…… “ I believe that the best way forward in accounting is to converge towards one single world-wide accounting language.”
  • Sir David Tweedie (current IASB Chairman) The mission of the newly-created IASB … is to increase the transparency of financial reporting by achieving a single, global method of accounting for transactions -- whether in Stuttgart, Sydney, Seattle or Singapore.
  • The Vision To produce High quality, Transparent, Comparable, General Purpose Financial Reporting to International Accounting Standards Using one accounting language One transaction methodology Which are useful for making economic decisions.
  • The Vision for XBRL Just do it Electronically in a binary environment With the Seamless Transfer Of Financial Information In a known state Without Human Intervention
  • Many Human Presentations One Fact in XBRL one fact with many labels For example profit / non profit organizations
  • Australian Prudential Regulation Authority XBRL@APRA: Data collection, management, exchange and dissemination using the XBRL e-standard John Turner Senior Project Manager
  • Why XBRL?
    • Build once - use many times
    • Encourage end-to-end integrity
    • Universal exchange format
    • Standards always beat proprietary development!
  • Background
    • Initial problems in our organisation:
      • New agency inherited multiple legacy systems
      • Information poor - data rich
      • Very complex data structures
      • Heavy dependence on a small number of staff
      • Poor form design
      • High provider burden - overlap between government agencies
    • Led to the “Statistics Project”
  • Project Objectives
    • APRA will provide its staff with accurate, timely and relevant information about regulated entities; and
    • APRA will act as the central repository of financial information about regulated entities
  • RBA Central Collections with Secure Electronic Feeds Reduce Burden ABS Benchmark data for regulated institutions Aggregate data for community External Access Institutions Supervisors receive standard reports and powerful ad-hoc analysis tools Modernised, harmonised collections Improve Access
  • The old way... Trial Balance Cash 100 Bills 9893 Bonds 982 1. Attempt to reconcile 15 different reports from 9 different sources... 2. Use a different data entry (or hard copy) mechanism for each user - APRA, ABS, RBA, Auditors, Stock Exchange etc etc 3. Place results on a diskette and mail off to appropriate user… hope that they don’t find the internal inconsistencies Repeat for each user of the data
  • The new way, today... 1. Financial data is sucked out of the General Ledger and Risk Management Data Warehouse…. 2…and dumped into an XBRL document in accordance with the accounting standards and prudential standards... 3…that document can be imported into APRA’s D2A application, validated, encrypted and... GL DW
  • The new way, today... 4…securely transmitted to APRA via the web, e-mail or disk... APRA Analysts Management Publications 5…and then passed on in XBRL form to the RBA and ABS.
  • What about tomorrow?
    • APRA/ABS/RBA
    • ASIC?
    • ATO?
    • ASX?
    • S&P?
    • US FDIC
    • UK FSA?
    • Own Web pages
    GL DW
  • Business Payoffs
    • Immediate : avoid overlap between collections of three agencies that use these data
    • Longer term : build once, use many times based on single industry standard. This means that:
      • Stock Exchanges
      • Market Analysts
      • Securities Regulators
      • Tax Authorities
      • Ratings Agencies
      • and other users of financial disclosures
    • all reap the benefits.
  • Importance of Standards
    • The APRA/ABS/RBA agreed data requirements cover prudential data, macro-prudential data, monetary aggregates and data from financial institutions for development of financial and national accounts
    • Many of these data items will be covered by the forthcoming official Australian XBRL accounting taxonomies.
    • This will mean they can be extracted directly from institutional general ledgers - or other similar systems
  • Do You Need to Understand XML? Yes No
    • Basics of XML are needed to understand how business events are captured and stored
    • XML basics will be a core business skill soon.
    • XBRL is valid XML
    • This is Accounting, not computer science
    • I don’t have the time to fool with XML, I need to learn it first.
    • XBRL will soon go “under the covers” so I can ignore it.
  • XBRL Market Activities
    • MSDW SEC EDGAR filing
    • Singapore and Australia (APRA) efforts
    • XBRL Academic Competition
    • “ XBRL Essentials” and “Introducing XBRL: Decision Making in a Digital Economy”
    • Vendor support for XBRL
    • Jurisdictional Activity/Status
  • Vendor Implementations
    • ACCPAC
    • CaseWare
    • Creative Solutions
    • e-Numerate
    • eKeeper
    • KPMG’s “Columbus”
    • KPMG Consulting
    • Navision
    • Newtec
    • PPC
    • XBRL Solutions
    • SAP
    • FRS (South Africa)
    • FRx (Microsoft)
    • Hyperion
    • IBMATRIX
    • Syspro
  • XBRL Media Summary
      • 213 articles for 12 months ended August 31, 2001 generating over 36 million impressions 1
      • Equivalent to over $6.1 million in annual advertising 2
      • Generated stories in major financial publications: CFO, American Banker, Times of London, Barron’s, Financial Executive, Financial Times, Financial Director, Securities Industry News, Securities Week, Wall Street + Technology, Pensions & Investments
      • Secured major wire stories: Dow Jones, Bloomberg, Reuters, Newsbytes News, ABIX
      • 24 total news releases issued by Consortium and AICPA
    1-Does not include wire stories or Web stories which have virtually limitless impressions. 2-Based upon ad dollar equivalents extrapolated for a one-year period; does not include ad dollar equivalents for wire stories or Web stories.
  • Books, Articles, Videos
    • XBRL Essentials, Hoffman and Strand, June 2001
    • Introducing XBRL, Hannon and Coffin, January 2002.
    • AICPA E-business Update Video and Workbook, 2001.
    • IMA National Conference Video
    • Over 300 Articles, Special Section in Strategic Finance Magazine (June 2001), Monthly XBRL Column
    • SoftwareAG XML video www. softwareag .com
  •  
  • Neal Hannon [email_address] XBRL Education Work Group chair IMA IT Chair Photo and Creative Credit to Dave Garbutt, FRS, SA