XBRL - (35 slides, 685k, no XML) Neal Hannon 5-14-01

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  • Standard-based electronic language for financial information, reporting & analysis. XBRL
  • 1. When financial reports are hard to interpret, to analyze and to compare, investors perceive greater investment risk and become more reliant on secondary (perhaps unreliable) sources. 2. Investors, auditors, tax preparers, regulators, and all users of financial information re-enter data. Why? 3. Using formats like Word, HTML, Acrobat, etc. means using tools generalized for any document.
  • OASIS - Organization for the Advancement of Structured Information Standards.
  • XBRL - (35 slides, 685k, no XML) Neal Hannon 5-14-01

    1. 1. Neal Hannon and Saeed Roohani XBRL Educational Resource Center At Bryant College XBRL Education Co-Chair E-Mail: xbrl@bryant.edu Phone: 401.232.6195 The Next Technology Revolution XML XBRL Rhode Island Society of Certified Public Accountants May 17, 2001
    2. 2. Defines Tags
    3. 3. XBRL International is gaining strength <ul><li>XBRL activities occurring in— </li></ul><ul><ul><li>United States </li></ul></ul><ul><ul><li>Canada </li></ul></ul><ul><ul><li>Australia </li></ul></ul><ul><ul><li>China & Hong Kong </li></ul></ul><ul><ul><li>Japan </li></ul></ul><ul><ul><li>Malaysia </li></ul></ul><ul><ul><li>New Zealand </li></ul></ul><ul><ul><li>Singapore </li></ul></ul><ul><ul><li>Taiwan </li></ul></ul><ul><ul><li>Germany </li></ul></ul><ul><ul><li>India </li></ul></ul><ul><ul><li>Ireland </li></ul></ul><ul><ul><li>Netherlands </li></ul></ul><ul><ul><li>Nordic Federation (Denmark, Norway, Sweden) </li></ul></ul><ul><ul><li>South Africa </li></ul></ul><ul><ul><li>Spain </li></ul></ul><ul><ul><li>Switzerland </li></ul></ul><ul><ul><li>United Kingdom </li></ul></ul><ul><li>And on a global level through the— </li></ul><ul><ul><li>International Accounting Standards Council </li></ul></ul><ul><ul><li>International Press Telecommunications Council </li></ul></ul><ul><ul><li>International Standards Organization </li></ul></ul>
    4. 4. XBRL International is gaining strength <ul><li>On a Global level through the— </li></ul><ul><ul><li>International Accounting Standards Council </li></ul></ul><ul><ul><li>International Press Telecommunications Council </li></ul></ul><ul><ul><li>International Standards Organization </li></ul></ul><ul><li>On a Country Level: </li></ul><ul><ul><li>United States </li></ul></ul><ul><ul><li>Canada </li></ul></ul><ul><ul><li>Australia </li></ul></ul><ul><ul><li>China & Hong Kong </li></ul></ul><ul><ul><li>Japan </li></ul></ul><ul><ul><li>Malaysia </li></ul></ul><ul><ul><li>New Zealand </li></ul></ul><ul><ul><li>Singapore </li></ul></ul><ul><ul><li>Taiwan </li></ul></ul><ul><ul><li>Germany </li></ul></ul><ul><ul><li>India </li></ul></ul><ul><ul><li>Ireland </li></ul></ul><ul><ul><li>Netherlands </li></ul></ul><ul><ul><li>Nordic Federation (Denmark, Norway, Sweden) </li></ul></ul><ul><ul><li>South Africa </li></ul></ul><ul><ul><li>Spain </li></ul></ul><ul><ul><li>Switzerland </li></ul></ul><ul><ul><li>United Kingdom </li></ul></ul>
    5. 5. How we are organized – US Jurisdictional Chair Working Group Gary Gannon Object Mike Willis (PWC) Process Geni Whitehouse (Navision) Web site Eric E. Cohen (PwC) Tools Louis Matherne (AICPA) Mike Willis (PwC) Strategy David Vun Kannon (KPMG) Luther Hampton (e-Numerate) Specification Zach Coffin (KPMG) Liv Watson (Edgar Online Inc) Liaison Neal Hannon (IMA, Bryant College) Jenia Gorfunkel (S&P) Education Sergio de la Fe (KPMG) Domain Christy Reichhelm (Microsoft) Communications
    6. 6. XBRL Impact <ul><li>&quot;The explosive growth of the Internet is not only changing the way companies conduct their business, </li></ul><ul><li>it also promises to forever alter the way they communicate business performance.” </li></ul><ul><li>- CFO Magazine, February 2000 </li></ul>
    7. 7. XBRL Documents <ul><li>XBRL for Financial Statements </li></ul><ul><li>XBRL for General Ledger </li></ul><ul><li>XBRL for Journal Entry Reporting </li></ul><ul><li>XBRL for Credit Reporting </li></ul><ul><li>XBRL for Performance Press Releases </li></ul><ul><li>XBRL for Risk Reporting </li></ul><ul><li>XBRL for Regulatory Filings </li></ul><ul><li>XBRL for Tax Filings </li></ul><ul><li>XBRL for Assurance Schedules </li></ul><ul><li>XBRL for Authoritative Literature </li></ul><ul><li>XBRL for “Business” Reporting </li></ul>
    8. 8. XBRL Support <ul><li>“ I would like to see you develop valuation models that result in consistent, comparable and fair values of assets and liabilities. I would like to see you hone specific, but plain English definitions for the types of information you believe should be included in public disclosure. 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.” </li></ul><ul><li>- Arthur Levitt, Chairman, U.S. Securities & Exchange Commission </li></ul><ul><ul><li>October 24, 2000, at the Fall Council of the AICPA (Las Vegas, Nevada) </li></ul></ul>
    9. 9. <ul><li>XML for Financial Reporting </li></ul><ul><li>Enables a dramatic improvement in the processing of financial reports </li></ul><ul><li>XBRL documents can be— </li></ul><ul><ul><li>Prepared efficiently </li></ul></ul><ul><ul><li>Exchanged reliably </li></ul></ul><ul><ul><li>Published more easily </li></ul></ul><ul><ul><li>Analyzed quickly </li></ul></ul><ul><ul><li>Retrieved by investors simply to enable smarter investments </li></ul></ul>
    10. 10. <ul><li>XBRL is: </li></ul><ul><ul><li>NOT a new accounting standards but enhances the distribution and usability of existing financial statement information </li></ul></ul><ul><ul><li>Enabler and an extension for relational database functionality for all financial statement information </li></ul></ul>Benefits
    11. 11. Problems XBRL Addresses <ul><li>Ineffective communication to investors </li></ul><ul><li>Inefficient aggregation and analysis </li></ul><ul><li>Inefficient creation of financial statements </li></ul>
    12. 12. Why XBRL ? <ul><li>Enable business reporting that leverages the Internet & XML </li></ul><ul><li>Effective access and analysis of business reports </li></ul><ul><li>Improve corporate communications with stakeholders </li></ul>
    13. 13. Process Benefits: Lowering Financial Reporting Cost <ul><li>Today’s external reporting processes </li></ul><ul><ul><li>Rework and delay </li></ul></ul><ul><ul><li>Ad hoc and non repeatable </li></ul></ul><ul><ul><li>No path forward </li></ul></ul>Who benefits Regulatory Filings Web Site Tax Return Trade Filings Printed Financials Accounting System Third Party Information Explanatory Text
    14. 14. Process Benefits: Lowering Financial Reporting Cost <ul><li>Common interchange format and storage is good information management practice </li></ul><ul><ul><li>Reduces redundancies & discrepancies </li></ul></ul><ul><ul><li>Repeatable processes using tools </li></ul></ul><ul><ul><li>A platform for continuous reporting </li></ul></ul>Who benefits Regulatory Filings Web Site Tax Return Trade Filings Printed Financials Accounting System Third Party Information Explanatory Text XBRL Documents
    15. 15. XBRL: Interoperability & Multiple Uses Other Sources of Information Other Sources of Information G/L Package XBRL ERP Custom Developed Systems Other Sources of Information XBRL US GAAP Financial Statement In English US GAAP Financial Statement In Dutch US GAAP Financial Statement to the Web US GAAP Financial Statement to Print US GAAP Financial Statement to Cell Phone XBRL
    16. 16. XBRL: Interoperability & Multiple Uses Other Sources of Information Other Sources of Information G/L Package XBRL ERP Custom Developed Systems Other Sources of Information XBRL US GAAP Financial Statement EDGAR Filing Tax Filing Bank Filing Press Release XBRL XBRL Investors & Creditors News Agencies And Others Government
    17. 17. Once Every Event is tagged in XBRL… Other Sources of Information Other Sources of Information G/L Package XBRL ERP Custom Developed Systems Other Sources of Information XBRL IAS Financial Statement in German US GAAP Financial Statement In English French Tax Filing Canadian Banking Filing EDGAR 10k line item via Cell Phone XBRL XBRL Investors & Creditors News Agencies And Others Government
    18. 18. XBRL Working Model: Planned Specifications External Financial Reporting Business Operations Internal Financial Reporting Investment and Lending Analysis Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators XBRL for G/L Journal Entry Reporting XBRL for EDGAR Filings XBRL for Financial Statements XBRL for Tax Filings XBRL for Business Event Reporting Software Vendors Management Accountants Companies
    19. 19. XBRL: not a Transaction Protocol <ul><li>XBRL is merely a format to serialize complex, structured financial data: e.g., statements, G/Ls. </li></ul><ul><li>Therefore, it cannot replace OFX, ebXML, ANSI X.12 Trans Set 821, OMG G/L Spec, ... </li></ul><ul><li>Future message sets in those protocols could include XBRL tagged data if they need to send financial statements in the message body. </li></ul><ul><li>XBRL provides a framework and an AICPA approved vocabulary that can be extended to many other reporting frameworks. </li></ul>What it is
    20. 20. XBRL: not an accounting standard <ul><li>Means of communicating </li></ul><ul><ul><li>Current GAAP </li></ul></ul><ul><ul><li>Current practice </li></ul></ul><ul><li>Flexible standard </li></ul><ul><ul><li>Future standards </li></ul></ul><ul><ul><li>Future general practice </li></ul></ul>
    21. 21. XBRL Impact <ul><li>&quot;Coming down the road are standards like XML and XBRL that take data handling a major step forward from HTML, the current web standard. With these new standards, plus those for accounting, it will be possible to scan a universe of corporate data across the web and extract, say, the chairman's report for all companies with a certain market cap, EBITDA, and gearing. … </li></ul>
    22. 22. XBRL: A Fragment of a Raw Data <group> <group type=&quot;CurrentAssets.CashandCashEquivalents&quot;> <item period=&quot;1999&quot;>$1,611 </item> <item period=&quot;1998&quot;>$1,648 </item> </group> <ul><li>Raw Data in Spreadsheet… </li></ul><ul><li>Same Raw Data in XML (XBRL) Format </li></ul>1998 1999 Year 1648 CurrentAssets.CashandCashEquivalents CurrentAssets.CashandCashEquivalents Balance Sheet Coca Cola Co. 1611 CurrentAssets.CashandCashEquivalents CurrentAssets.CashandCashEquivalents Balance Sheet Coca Cola Co. Value Label Line Item Financial Statement Company
    23. 24. What software ‘sees’ is the differentiator and drives benefits (here is an example)
    24. 25. Importance of Reporting ” John Chambers Cisco CEO Year End Earnings Release Call August 10, 1999 … [W]hat excites the CEO is the ability to know what the business is doing at any given point in time, react quickly to market shifts and competitive threats and remain in tight control while empowering employees to make informed decisions more quickly. “
    25. 26. Best Practice The Virtual Close … has, in my opinion, just as much impact on a company’s future success or lack thereof as the well-published e-commerce area. John Chambers Cisco CEO Year End Earnings Release Call August 10, 1999 “ ”
    26. 27. XBRL Impact <ul><li>“ … If Europe moves quickly to take up these standards, it could give them an attractive lead in the race to accessible and comparative key data that would stimulate investor interest. It would undoubtedly spawn a plethora of research tools that would be useful to both private and professional investors.” </li></ul><ul><li>- Investors Chronicle, August 9, 2000 </li></ul>
    27. 28. XBRL and the Emergence of ‘e-Standards’ <ul><li>E-Standards are fundamental </li></ul><ul><li>HTML is the standard that enabled the web’s first ‘Big Step’ </li></ul><ul><li>XML is the web’s next ‘Big Step’ </li></ul><ul><ul><li>Over 200 XML-Based Specifications and Protocols exist, including— </li></ul></ul><ul><ul><ul><li>RosettaNet – computer company supply chain and trading webs </li></ul></ul></ul><ul><ul><ul><li>OBI - Open Buying on the Internet - retail e-commerce </li></ul></ul></ul><ul><ul><ul><li>FpML - Financial Products (Derivatives, Swaps, FX) </li></ul></ul></ul><ul><ul><ul><li>ACORD XML - Insurance industry information exchange standards derived from EDI. </li></ul></ul></ul><ul><ul><li>UN/CEFAC = EBXML </li></ul></ul><ul><li>XBRL is uniquely focused on financial reporting </li></ul>
    28. 29. <ul><li>ASB </li></ul><ul><li>IASC </li></ul><ul><li>FASB </li></ul><ul><li>IFAC </li></ul><ul><li>SEC </li></ul><ul><li>Territory Institutes </li></ul>Standard .orgs ( reporting vs ‘e’) Accounting / Auditing Reporting <ul><li>W3C </li></ul><ul><li>OASIS;UN/CEFACT (ebxml) </li></ul><ul><li>xml.org </li></ul><ul><li>RosettaNet </li></ul><ul><li>ACORD </li></ul>‘ e-Business’ CPAs participate / lead in these What about these?
    29. 30. The range of what is under development today………... HR CRM ACORD ANX RosettaNet FpML CHEMX “Horizontals” (Infrastructure) there are others….. “Verticals” (Industry Supply Chains) there are others……. Etc. XBRL is uniquely focused on business reporting
    30. 31. XBRL Adds Reporting to E-Commerce BUSINESS Customers Suppliers Investors Aggregators Regulators Creditors Lenders Tax Website ERP G/L Packages CRM <ul><li>Orders </li></ul><ul><li>A/P </li></ul><ul><li>Delivery </li></ul><ul><li>Orders </li></ul><ul><li>A/R </li></ul><ul><li>Delivery </li></ul>2-way 2-way Transaction Creation One way One way
    31. 32. XBRL Adds Reporting to E-Commerce BUSINESS Investors Aggregators Regulators Creditors Lenders Tax Website Transaction Creation ERP G/L Packages CRM <ul><li>Orders </li></ul><ul><li>A/P </li></ul><ul><li>Delivery </li></ul>Customers <ul><li>Orders </li></ul><ul><li>A/R </li></ul><ul><li>Delivery </li></ul>2-way 2-way Suppliers One way One way XBRL BUSINESS REPORTING (e-)Commerce OTHER XML INITIATIVES
    32. 33. Key XBRL Components <ul><li>XBRL / XML Specification (XBRL.org) </li></ul><ul><ul><li>Global architecture/technology </li></ul></ul><ul><li>XBRL hierarchical vocabulary (jurisdiction/industry) </li></ul><ul><ul><li>Dictionary of terms by jurisdiction/industry sector </li></ul></ul><ul><li>Style Sheets (preparer) </li></ul><ul><li>XBRL enabled tools (market) </li></ul>XBRL - What
    33. 34. <ul><li>Market driven model </li></ul><ul><ul><li>Start simple, be inclusive </li></ul></ul><ul><li>Broad supply chain participation </li></ul><ul><li>Members support XBRL </li></ul><ul><li>Members do not compete on the “framework” </li></ul><ul><li>Build structure & systems to support open community & market development </li></ul>Key to our Success
    34. 35. Steps in Technology Acceptance Visionaries Taxonomy Simplification/Tools Acceptance
    35. 36. XBRL Working Model: Supply Chain & Beneficiaries External Financial Reporting Business Operations Internal Financial Reporting Investment and Lending Analysis Processes Processes Participants Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators Today XBRL for Financial Statements Software Vendors Management Accountants Companies
    36. 37. Benefits to Today's Users <ul><li>1. Reduce cost of analyzing and reporting financial information </li></ul><ul><li>2. Increase speed and efficiency of business decisions </li></ul><ul><li>Enhance the distribution and access of existing financial statement information </li></ul><ul><li>More readily exchanged </li></ul><ul><li>Increase and enhance analysis </li></ul>
    37. 38. XBRL Taxonomies Under Development <ul><li>Commercial and Industrial Companies, US GAAP - Published </li></ul><ul><li>Federal Departments, US </li></ul><ul><li>Mutual Funds, US </li></ul><ul><li>Financial Institutions, US </li></ul><ul><li>Commercial and Industrial, IASC </li></ul><ul><li>Commercial and Industrial, German GAAP </li></ul><ul><li>Bank Call Reports - FDIC </li></ul>App to fin rep
    38. 39. How Do You Get There? Needs Assessment Design Solution/Business Plan Training & Education Implementation
    39. 40. XML Shortcomings? Lots of Hype, not a solution for everything Not a replacement for integration and middleware tools There are many different standards among industries Standards still evolving But, you can’t wait while the standards evolve….
    40. 41. XBRL Development & Adoption
    41. 42. Additional Education Sources <ul><li>www.xbrl.org - Student Competition </li></ul><ul><li>web.bryant.edu/xbrl </li></ul><ul><li>www.ebxml.org </li></ul><ul><li>www.w3.org ; www.xml.org </li></ul><ul><li>www.rosettanet.org </li></ul><ul><li>www.ibm.com/developer/xml </li></ul><ul><li>www.microsoft.com/industry/biztalk </li></ul>
    42. 43. Final Thought…….. <ul><li>Change is not what it used to be….. </li></ul><ul><li>Change has become a process; it’s become a permanent part of the external environment </li></ul>
    43. 44. Summary <ul><li>FASTER </li></ul><ul><ul><li>BETTER </li></ul></ul><ul><ul><ul><li>CHEAPER </li></ul></ul></ul><ul><li>Our profession will have to follow technology and record business activity in an real-time mode. </li></ul>
    44. 45. Concluding Remarks….. Embrace Change or Die!
    45. 46. http://web.bryant.edu/~xbrl/riscpa.ppt To download slides……….

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