XBRL: New Opportunities for CPAs Glen L. Gray, PhD CPA Department of Accounting & Information Systems 2009 Accounting & Au...
Speaker <ul><li>Glen L. Gray, PhD, CPA </li></ul><ul><li>Professor  </li></ul><ul><li>Accounting & Information Systems Dep...
Acknowledgements Apologies to anyone I missed . <ul><li>Mike Willis and Eric Cohen,  PwC </li></ul><ul><li>Charlie Hoffman...
A Brief History of Financial Reporting <ul><li>1969: Al Gore invents the Internet </li></ul><ul><li>1994: Commercializatio...
Calendar of Major XBRL Events
The First time……..
Calendar of Major XBRL Events
The Morgan Stanley Session April 2000
XBRL Membership Growth 13 80 130 210 300 550+ members 20+ jurisdictions 2000 2003 2006 2009 Time Members 100 200 300 400
XBRL International Governance cover
What are the Problems at the Ground Level?
The Basic Problem GrayCo Income Statement (Audited) Year ended Dec 31, 2008 (millions) 2008 2007 Sales $ 145 $ 132 Cost of...
Possible Solution <ul><li>Tag every piece of data using XML (not XBRL yet) </li></ul><ul><li>< CostOfGoodsSold > 101000000...
Basic XML Concepts & Terminology <ul><li>Anatomy of XML  element   < CostOfGoodsSold > 101000000 < /CostOfGoodsSold  >   <...
Basic XML Concepts & Terminology <ul><li>Need for  attributes </li></ul><ul><li>What are the problems with the following e...
A Remaining Problem Source: company annual reports Company Property, Plant and Equipment Sales Cost of Goods Sold Staples ...
Where XBRL Comes In
Some XBRL Terms GrayCo Income Statement (Audited) Year ended Dec 31, 2008 (millions) Label Context Scenario Attribute Valu...
What XBRL is not… <ul><li>NOT a set of accounting standards </li></ul><ul><li>NOT a detailed chart of accounts </li></ul><...
What XBRL is based on .. XML Specifications XBRL Specification Taxonomy Instance Document Builds Modules Bind to Domain Bu...
THE XBRL Specification 2.1 <ul><li>The  XBRL Specification  provides the fundamental technical definition of how XBRL work...
Taxonomies <ul><li>A Taxonomy is a dictionary of financial reporting terms or concepts </li></ul><ul><li>The concepts capt...
Anatomy of an XBRL Element XBRL Element Financial Reporting Concept
Anatomy of an XBRL Element
Anatomy of an XBRL Element
COUNTRY / JURISDICTION TAXONOMY LEVEL  STATUS Canada  GAAP Primary Financial Statements Ack Draft   Notes to Financial Sta...
COUNTRY / JURISDICTION TAXONOMY LEVEL  STATUS United States GAAP - Investment Management  App Final   XBRL US  Accountants...
Extension Taxonomies <ul><li>Why you might need an extension taxonomy </li></ul><ul><ul><li>You want to include a financia...
Taxonomies and Extensions can be thought of as the building blocks for XBRL reporting US GAAP Primary Terms US GAAP FS Ter...
Closer Look at Taxonomies
XBRL Linkbases <ul><li>Definition linkbase : Indicates for each concept whether it is a special case of some other defined...
Instance Documents <ul><li>An Instance Document is your XBRL financial report  </li></ul><ul><li>Instance Documents will i...
XBRL Taxonomy Created by XBRL Consortium Consumed Rendered XBRL Document Created by Preparer Company Financial Statement T...
FDIC & SEC Activities
The US Banking Industry  [ pre-XBRL ] <ul><li>Multiple copies of data exist inside multiple agencies ( error prone ) </li>...
The US Banking Industry  [ post-XBRL ]   Future 8900 Banks FDIC OCC FRB OTS NCUA FFIEC <ul><li>XBRL open source data stand...
Sample of 2008 SEC VFP Test Group 3M Company AGL Resources, Inc. Alcoa Inc. Altria Group, Inc. Anadarko Petroleum Corporat...
Sample of 2008 SEC VFP Test Group Final count: 141 organizations, 628 filings 3/16/2005 to 4/12/2009 Ford Motor Company Fo...
Software Used Six Steps to XBRL ,  Journal of Accountancy , Feb. 2008
Source: SEC VFP Survey (33-9002.pdf, page 133) 1 st  submission/ block-text footnotes & schedules Subsequent submission/  ...
2009 SEC Mandatory Filing <ul><li>Timeline </li></ul><ul><ul><li>2009 (first quarterly report for period ending on or afte...
2009 SEC Mandatory Filing <ul><li>Tagged disclosures…  </li></ul><ul><ul><li>Primary financial statements, notes, and fina...
XBRL:  A World-Wide  Phenomenon
Creating Your First Filing
Embedding XBRL Inside the Organization
The business information supply chain External Financial Reporting Business Operations Internal Financial Reporting Invest...
Subsidiary ERP’s Senior Management Current Management Reporting (SOX issues!) Supplemental information aggregation Control...
Services architecture leveraging taxonomies Transaction and or subsidiary  Data Senior Management Viewing and aggregation ...
The Answer - XBRL GL System 3 System 1 Identificador de la Cuenta Descripción Principal de la Cuenta Monto Monetario Fecha...
Putting it all together: What are the opportunities for CPAs?
Providing XBRL services:  Still many unknowns/questions/issues !
Errors found in SEC VFP filings  <ul><li>Extensions created when standard elements already exist  </li></ul><ul><li>Text b...
Steps to Prepare an  XBRL Instance Document
Introduction to Opportunities <ul><li>Advisory Services </li></ul><ul><li>Assurance Services </li></ul><ul><li>Agreed-upon...
Advisory Services <ul><li>Assisting management in obtaining an understanding of XBRL, relevant requirements, implementatio...
Preparing XBRL Documents for External Reporting <ul><li>Recommend fire drill to client(s) to work out issues before filing...
Advisory Services: Warning… <ul><li>Avoid for audit clients… </li></ul><ul><ul><li>Performing project management of the XB...
Assurance <ul><li>Independent auditor not required to have any role in XBRL exhibits in SEC filings. </li></ul><ul><li>The...
Assurance Services <ul><li>Key components of audit/attestation/assurance engagement… </li></ul><ul><ul><li>Subject matter ...
Assurance Issues <ul><li>Paper financial statements  not same as  XBRL instance document (different subject matter/criteri...
Preparation & Assurance Questions 1 <ul><li>Was the appropriate standard taxonomy chosen based on the industry and applica...
Preparation & Assurance Questions <ul><li>Is  everything  tagged that should be tagged?  </li></ul><ul><li>Was the most ap...
Audit Approach (AICPA) <ul><li>“ Attest Engagements on Financial Information Included in XBRL Instance Documents” ( AT 910...
PCAOB Guidelines (2005!) <ul><li>PCAOB published 11-page staff Q&A regarding XBRL on May 25, 2005. </li></ul><ul><li>A3. A...
PCAOB Guidelines <ul><li>Q5. What criteria…? </li></ul><ul><li>A5. US GAAP Version 2.1…suitable criteria [however] Company...
Agreed-Upon Procedures <ul><li>Firm’s report identifies procedures performed and results. </li></ul><ul><li>Report does no...
Examination of an  Assertion  about XBRL-Tagged Data <ul><li>SEC Rules note that issuers can obtain third-party assurance ...
Examination of  Controls  Over the Preparation of XBRL-Tagged Data <ul><li>Not likely to be a stand-alone service </li></u...
AT Section 601, Compliance Attestation <ul><li>AT section 601 provides guidance on performing an examination or agreed-upo...
General Requirements under SEC Rule 405 Regulation S-T <ul><li>Information in interactive data format should  not be more ...
Review  of an Assertion about XBRL-Tagged Data <ul><li>Generally consist of inquiries and analytical procedures designed t...
Management Assertions (SAS 106) & Related Audit Objectives <ul><li>Assertions about account balances </li></ul><ul><ul><li...
Risk Based Approach for Conceptualizing Assertions <ul><li>Data Deficiencies in the XBRL Instance Document </li></ul><ul><...
Risk Based Approach for Conceptualizing Assertions <ul><li>Deficiencies of the Mark-up in the XBRL instance Document </li>...
Risk Based Approach for Conceptualizing Assertions <ul><li>Deficiencies of XBRL Taxonomies  used by the Filer </li></ul><u...
XBRL Resources
XBRL Showcase <ul><li>www.xbrl.org/ProductsandServices / </li></ul><ul><li>35 vendors listed </li></ul><ul><li>Different m...
Where to go from here… <ul><li>Visit  www.xbrl.org  &  www.xbrl.us  -- include general and technical information about XBR...
Where to go from here… <ul><li>Search on XBRL at: </li></ul><ul><ul><li>www.aicpa.org  and  www.journalofaccountancy.com <...
Questions? Thank You [email_address]
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XBRL: New Opportunities for CPAs

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  • XBRL May 13, 2010 Roger Debreceny, roger@debreceny.com
  • Notes:
  • Notes:
  • Notes:
  • Priority : Reporting burden : there are more and more regulatory reporting requirements and they are more and more perceived as expenses (administration costs by the regulated entities) Flexibility in handle changes : link to the EDIFACT standard which is used by several entities. EDIFACT doest not integrate the latest technology development like XML / Web Services….While the EU directives recommends the usage of the new technology to facilitate the access and the communication of the financial information in Europe Interconnectivity of standard content : facilitate the exchange of information with the EU supervisory entities. Consistency is key as it is not worth to set up an European financial market if you can not compare / analyse the financial information of a French bank with the one of a Spanish bank
  • Priority : Reporting burden : there are more and more regulatory reporting requirements and they are more and more perceived as expenses (administration costs by the regulated entities) Flexibility in handle changes : link to the EDIFACT standard which is used by several entities. EDIFACT doest not integrate the latest technology development like XML / Web Services….While the EU directives recommends the usage of the new technology to facilitate the access and the communication of the financial information in Europe Interconnectivity of standard content : facilitate the exchange of information with the EU supervisory entities. Consistency is key as it is not worth to set up an European financial market if you can not compare / analyse the financial information of a French bank with the one of a Spanish bank
  • XBRL May 13, 2010 Roger Debreceny, roger@debreceny.com
  • While all companies have a consolidation package…..which works for the debit and credit data environment; they also still have the excel worksheet hell environment operating in parallel. It is this parallel data aggregation model that is typical human control in nature and operating at a frequency driven by regulatory requirement rather than management desire. Benefits to Companies Standardized XML schema produces consistent data aggregation and supports consistent reporting environment Business logic coupled with Web services provides real time risk reports Extensible data interfaces have lower maintenance costs Minimal impact on current working processes
  • AAA XBRL Workshop May 13, 2010 University of Delaware, 2005
  • AAA XBRL Workshop May 13, 2010 University of Delaware, 2005
  • AAA XBRL Workshop May 13, 2010 University of Delaware, 2005
  • AAA XBRL Workshop May 13, 2010 University of Delaware, 2005
  • XBRL: New Opportunities for CPAs

    1. 1. XBRL: New Opportunities for CPAs Glen L. Gray, PhD CPA Department of Accounting & Information Systems 2009 Accounting & Auditing Conference
    2. 2. Speaker <ul><li>Glen L. Gray, PhD, CPA </li></ul><ul><li>Professor </li></ul><ul><li>Accounting & Information Systems Department </li></ul><ul><li>California State University, Northridge [CSUN] </li></ul><ul><li>Academic Member of XBRL-US since January 2000 </li></ul><ul><li>Many XBRL articles, speeches, panels, and presentations </li></ul><ul><li>145-page research report published by The IIA Research Foundation: XBRL: Potential Issues and Opportunities for Internal Auditors </li></ul>
    3. 3. Acknowledgements Apologies to anyone I missed . <ul><li>Mike Willis and Eric Cohen, PwC </li></ul><ul><li>Charlie Hoffman, UBmatrix </li></ul><ul><li>Yossef Newman, Deloitte </li></ul><ul><li>Walter Hamscher, Standard Advantage </li></ul><ul><li>Liv Watson, IRIS India </li></ul><ul><li>Jan Pasmooij, Royal NIVRA, Netherlands </li></ul><ul><li>Roger Debreceny, U. of Hawaii </li></ul><ul><li>Clinton “Skip” White, U. of Delaware </li></ul><ul><li>Raj Srivastava , U. of Kansas </li></ul><ul><li>Neal Hannon, The Gilbane Group </li></ul><ul><li>Greg Zegarowski, Financial Leadership Corporation </li></ul><ul><li>Amy Pawlicki, AICPA </li></ul><ul><li>Paul Penler, E&Y </li></ul><ul><li>XBRL International </li></ul><ul><li>XBRL US </li></ul><ul><li>Center for Audit Quality </li></ul>
    4. 4. A Brief History of Financial Reporting <ul><li>1969: Al Gore invents the Internet </li></ul><ul><li>1994: Commercialization of the Internet </li></ul><ul><li>1999: FASB and IASC each publish reports on financial reporting on the Internet </li></ul><ul><ul><li>Most large companies are including financial reporting information on their Web sites </li></ul></ul><ul><ul><li>No consistency in terms of content, format, and navigation </li></ul></ul><ul><ul><li>Probably violating financial reporting regulations! (Still true?) </li></ul></ul><ul><ul><li>Boundary problems (In or out of financials?) </li></ul></ul><ul><ul><li>Automated searches almost impossible </li></ul></ul><ul><li>October 1999: First XBRL meeting with 13 members </li></ul><ul><li>2008: The XBRL consortium has approximately 550 members around the world </li></ul><ul><li>December 2008: SEC requires XBRL starting in 2009 </li></ul>
    5. 5. Calendar of Major XBRL Events
    6. 6. The First time……..
    7. 7. Calendar of Major XBRL Events
    8. 8. The Morgan Stanley Session April 2000
    9. 9. XBRL Membership Growth 13 80 130 210 300 550+ members 20+ jurisdictions 2000 2003 2006 2009 Time Members 100 200 300 400
    10. 10. XBRL International Governance cover
    11. 11. What are the Problems at the Ground Level?
    12. 12. The Basic Problem GrayCo Income Statement (Audited) Year ended Dec 31, 2008 (millions) 2008 2007 Sales $ 145 $ 132 Cost of Goods Sold 101 92 Gross Profit 44 40 Sales, general, and administrative 10 8 Net Income $ 34 $ 32
    13. 13. Possible Solution <ul><li>Tag every piece of data using XML (not XBRL yet) </li></ul><ul><li>< CostOfGoodsSold > 101000000 < /CostOfGoodsSold > </li></ul><ul><ul><li>Intelligence built into data (parsing is easy) </li></ul></ul><ul><ul><li>Map once, use many </li></ul></ul><ul><ul><ul><li>For analysis </li></ul></ul></ul><ul><ul><ul><li>For different reporting requirements </li></ul></ul></ul><ul><ul><ul><li>For different formatting requirements </li></ul></ul></ul><ul><ul><li>Free lunch? </li></ul></ul><ul><ul><ul><li>Bigger files </li></ul></ul></ul><ul><ul><ul><li>Tags pose security risk </li></ul></ul></ul>
    14. 14. Basic XML Concepts & Terminology <ul><li>Anatomy of XML element < CostOfGoodsSold > 101000000 < /CostOfGoodsSold > </li></ul><ul><li>Starting tag = < CostOfGoodsSold > </li></ul><ul><li>Ending tag = < /CostOfGoodsSold > </li></ul><ul><li>Element name or element-type = CostOfGoodsSold [no spaces and case sensitive] </li></ul><ul><li>Element content = 101000000 </li></ul>
    15. 15. Basic XML Concepts & Terminology <ul><li>Need for attributes </li></ul><ul><li>What are the problems with the following elements? </li></ul><ul><ul><li><price>34.50</price> </li></ul></ul><ul><ul><li><receipt_date>05/04/2008</receipt_date> </li></ul></ul><ul><li>Adding attributes <price currency=“USD”>34.50</price> <receipt_date date=“ISO 8601”>2008-05-04</receipt_date> </li></ul>
    16. 16. A Remaining Problem Source: company annual reports Company Property, Plant and Equipment Sales Cost of Goods Sold Staples Total property and equipment Sales Cost of goods sold and occupancy costs ExxonMobil Property, plant, and equipment, at cost, less accumulated depreciation and depletion Total revenue and other income Crude oil and product purchases Intel Property, plant and equipment, net Net revenue Cost of sales Amazon.com Fixed assets, net Net sales Cost of sales IBM Plant, rental machines and other property Total revenue Total cost Wal-Mart Property and equipment, net Net sales Cost of sales
    17. 17. Where XBRL Comes In
    18. 18. Some XBRL Terms GrayCo Income Statement (Audited) Year ended Dec 31, 2008 (millions) Label Context Scenario Attribute Value 2008 2007 Sales $ 145 $ 132 Cost of Goods Sold 101 92 Gross Profit 44 40 Sales, general, and administrative 10 8 Net Income $ 34 $ 32
    19. 19. What XBRL is not… <ul><li>NOT a set of accounting standards </li></ul><ul><li>NOT a detailed chart of accounts </li></ul><ul><li>NOT a GAAP translator </li></ul><ul><li>NOT a software application </li></ul>
    20. 20. What XBRL is based on .. XML Specifications XBRL Specification Taxonomy Instance Document Builds Modules Bind to Domain Builds
    21. 21. THE XBRL Specification 2.1 <ul><li>The XBRL Specification provides the fundamental technical definition of how XBRL works.  </li></ul><ul><li>The spec defines XML elements and attributes that can be used to express information used in the creation, exchange, and comparison tasks of business reporting. </li></ul><ul><li>XBRL consists of a core language of XML elements and attributes used in XBRL instances as well as a language used to define new elements and taxonomies of elements referred to in XBRL instances, and to express constraints among the contents of elements in those XBRL instances. </li></ul><ul><li>Only one specification for the whole world </li></ul>
    22. 22. Taxonomies <ul><li>A Taxonomy is a dictionary of financial reporting terms or concepts </li></ul><ul><li>The concepts captured in a taxonomy are referred to as ELEMENTS . These Elements form the core of XBRL. </li></ul><ul><li>Separate Taxonomies are developed for different reporting purposes such as US GAAP, IFRS, bank regulatory reporting. etc </li></ul>
    23. 23. Anatomy of an XBRL Element XBRL Element Financial Reporting Concept
    24. 24. Anatomy of an XBRL Element
    25. 25. Anatomy of an XBRL Element
    26. 26. COUNTRY / JURISDICTION TAXONOMY LEVEL STATUS Canada GAAP Primary Financial Statements Ack Draft   Notes to Financial Statements Ack Draft China China Listed Company Taxonomy Framework Ack Draft   China Fund Company Taxonomy Framework Ack Draft   China Financial Listed Company Information Disclosure Taxonomy Ack Draft IASB IFRS General Purpose, 2005 rules Ack Final   IFRS General Purpose, 2004 rules Ack Final   IFRS General Purpose, 2003 rules Ack Draft International Global Common Data Taxonomies Ack Draft Ireland GAAP Commercial and Industrial Ack Draft Israel Israeli Annual and Periodic Reports General Purpose Financial Reporting, extension for International Financial Reporting Standards (IL-IFRS-GP) Ack Draft Japan EDINET Taxonomy Ack Final Korea GAAP Primary Financial Statements Ack Draft New Zealand   GAAP Commercial and Industrial Ack Draft Spain General Data Idenfication Ack Final Thailand Listed Companies - Banking Services Ack Draft   Listed Companies - Commercial and Industrial Ack Draft   Listed Companies - Securities Companies Ack Draft United Kingdom GAAP Commercial and Industrial Ack Draft
    27. 27. COUNTRY / JURISDICTION TAXONOMY LEVEL STATUS United States GAAP - Investment Management  App Final   XBRL US  Accountants' Report Taxonomy 1.0 Ack Final   XBRL US Country Taxonomy 1.0  Ack Final   XBRL US Currency Taxonomy 1.0  Ack Final   XBRL US Document and Entity Information Taxonomy 1.0  Ack Final   XBRL US Exchange Taxonomy 1.0 Ack Final   XBRL US GAAP Taxonomy 1.0  Ack Final   XBRL US  Management's Discussion and Analysis Taxonomy 1.0  Ack Final   XBRL US Management Report Taxonomy 1.0  Ack Final   XBRL US  North American Industrial Classification System (NAICS) Taxonomy 1.0  Ack Final   XBRL US SEC Certification Taxonomy 1.0  Ack Final   XBRL US Standardized Industrial Classification (SIC) Taxonomy 1.0  Ack Final   XBRL US State-Province Taxonomy 1.0  Ack Final   GAAP - Commercial and Industrial (superseded by the 2008 version) App Final   GAAP - Banking and Savings (superseded by the 2008 version) App Final   GAAP - Insurance (superseded by the 2008 version) App Final   GAAP - Brokers and Dealers (superseded by the 2008 version) Ack Draft   GAAP - Pensions (superseded by the 2008 version) Ack Draft      SEC Certification (superseded by the 2008 version) App Final   Management Report (superseded by the 2008 version) App Final   Accountants Report (superseded by the 2008 version) App Final   MD&A (superseded by the 2008 version) App Final   ICI Mutual Fund Risk/Return Summary Taxonomy Ack Final
    28. 28. Extension Taxonomies <ul><li>Why you might need an extension taxonomy </li></ul><ul><ul><li>You want to include a financial statements item not in the standard taxonomy you are using. </li></ul></ul><ul><ul><li>Changing a label for a standard base taxonomy to match your label name </li></ul></ul><ul><ul><li>Changing the presentation structure of one or more standard base taxonomy elements to match the presentation structure of your report. </li></ul></ul><ul><ul><li>Changing the calculation structure of one or more standard base taxonomy elements to match the calculation structure of your report. </li></ul></ul>
    29. 29. Taxonomies and Extensions can be thought of as the building blocks for XBRL reporting US GAAP Primary Terms US GAAP FS Terms US GAAP Bank Terms First Raleigh Bank Terms Foundation Terms Industry Terms Company Specific Terms
    30. 30. Closer Look at Taxonomies
    31. 31. XBRL Linkbases <ul><li>Definition linkbase : Indicates for each concept whether it is a special case of some other defined concept. </li></ul><ul><li>Calculation linkbase : Indicates how one concept in a group of “sibling” concepts is related to the value of their parent concept. </li></ul><ul><li>Presentation linkbase : Indicates the order in which each concept should be presented when grouped with its siblings. </li></ul><ul><li>Label linkbase : Associates each concept with one or more presentation labels, one per language. </li></ul><ul><li>Reference linkbase : Associates each concept with one or more places in authoritative literature where the concept is defined. </li></ul><ul><li>Dimension linkbase: Captures detailed information about the horizontal and vertical axes of a table in a note to the financial statements. </li></ul>
    32. 32. Instance Documents <ul><li>An Instance Document is your XBRL financial report </li></ul><ul><li>Instance Documents will include: </li></ul><ul><ul><li>Values (ex. numbers, blocks of text etc) </li></ul></ul><ul><ul><li>Tags to identify the values </li></ul></ul><ul><ul><li>Taxonomy references – Telling you where the tags are defined </li></ul></ul><ul><ul><li>Context – Information describing the reporting entity and period </li></ul></ul><ul><ul><li>Units/Measure – Information on unit of measure, currency etc. </li></ul></ul>
    33. 33. XBRL Taxonomy Created by XBRL Consortium Consumed Rendered XBRL Document Created by Preparer Company Financial Statement TAGGING AT 101 Assurance XBRL Creation
    34. 34. FDIC & SEC Activities
    35. 35. The US Banking Industry [ pre-XBRL ] <ul><li>Multiple copies of data exist inside multiple agencies ( error prone ) </li></ul><ul><li>Avg of 60 – 75 days to receive, validate + publish filings ( not timely ) </li></ul><ul><li>Estimated processing costs over next 10 years - $65 million ( costly ) </li></ul><ul><li>March 2003 reports had nearly 18,000 errors that needed to be corrected ( integrity issues ) </li></ul><ul><ul><li>1,000 basic math errors </li></ul></ul><ul><ul><li>17,000 quality (validation) errors </li></ul></ul>Today 8900 Banks FDIC OCC FRB OTS NCUA
    36. 36. The US Banking Industry [ post-XBRL ] Future 8900 Banks FDIC OCC FRB OTS NCUA FFIEC <ul><li>XBRL open source data standard used for communicating report requirements, validations, instructions ( timeliness/flexibility ) </li></ul><ul><li>Filers required to submit data in XBRL format over the web ( automation ) </li></ul><ul><li>Multiple sources of data SINGLE SOURCE ( integrity ) </li></ul><ul><li>Processing Time 60-75 days 2 Days ( timeliness ) </li></ul><ul><li>Processing Costs $65M $39M, a savings of $26M ( cost/efficiency ) </li></ul>
    37. 37. Sample of 2008 SEC VFP Test Group 3M Company AGL Resources, Inc. Alcoa Inc. Altria Group, Inc. Anadarko Petroleum Corporation Autodesk Inc. Automatic Data Processing, Inc. Banco Bradesco S.A. Banco Itaú Holding Financeira S.A. Bowne & Co. Inc. Brazilian Petroleum Corporation Bristol-Myers Squibb Company Broadridge Financial Solutions Comcast Corporation Commonwealth Edison Company Community Bankers Acquisition Corp. Crystal International Travel Group, Inc. The Dow Chemical Company Dupont E. I. de Nemours and Company EDGAR Online Inc. E*TRADE Financial Corporation Exelon Corporation Exelon Generation Company, LLC Fastenal Co.
    38. 38. Sample of 2008 SEC VFP Test Group Final count: 141 organizations, 628 filings 3/16/2005 to 4/12/2009 Ford Motor Company Ford Motor Credit Company General Electric Company Gol Intelligent Airlines, Inc. Infosys Technologies Limited Lehman Brothers Holdings Inc. Liberty Global, Inc. Liberty Media Corporation Microsoft Corporation Net Servicos De Comunicacao SA NYSE Euronext Oceanic Exploration Company Old Mutual Capital, Inc. PECO Energy Company PepsiCo, Inc. Pfizer, Inc. R.R. Donnelley & Sons Company Radyne Corporation South Financial Group, Inc. Tenet Healthcare Corporation United Technologies Corporation W. R. Grace & Co. Xerox Corporation XM Satellite Radio Holdings, Inc.
    39. 39. Software Used Six Steps to XBRL , Journal of Accountancy , Feb. 2008
    40. 40. Source: SEC VFP Survey (33-9002.pdf, page 133) 1 st submission/ block-text footnotes & schedules Subsequent submission/ block-text footnotes & schedules 1 st submission/ detailed footnotes & schedules Subsequent submission/ detailed footnotes & schedules Preparation face financials $31,369 $4,312 $4,312 $4,312 Preparation footnotes $1,750 $1,750 $25,000 $12,500 Preparation schedules $250 $250 $2,500 $1,250 Software and filing agent services $6,140 $6,140 $6,140 $6,140 Web site posting $1,000 $1,000 $1,000 $1,000 Total cost $40,509 $13,452 $38,952 $25,202
    41. 41. 2009 SEC Mandatory Filing <ul><li>Timeline </li></ul><ul><ul><li>2009 (first quarterly report for period ending on or after June 15, 2009): Approximately 500 largest GAAP filers* </li></ul></ul><ul><ul><li>2010-2011: Remaining GAAP filers </li></ul></ul><ul><ul><li>2011: IFRS filers </li></ul></ul><ul><ul><li>By December 2011, all public companies will be filing XBRL financial information </li></ul></ul><ul><li>XBRL documents provided as additional exhibits </li></ul><ul><li>Must also post XBRL documents to own Web site </li></ul>* Public float > $5 billion
    42. 42. 2009 SEC Mandatory Filing <ul><li>Tagged disclosures… </li></ul><ul><ul><li>Primary financial statements, notes, and financial statement schedules. </li></ul></ul><ul><ul><li>Initially, notes and schedules would be tagged as blocks of text, and a year later, they would provide the details tagged within the notes and schedules </li></ul></ul><ul><li>Use current (January 31, 2009) taxonomy </li></ul><ul><li>Updated EDGAR financial reporting system accepts XBRL filings </li></ul><ul><li>See EDGAR Filing Manual at: http:// www.sec.gov/info/edgar/edmanuals.htm </li></ul>
    43. 43. XBRL: A World-Wide Phenomenon
    44. 44. Creating Your First Filing
    45. 45.
    46. 46.
    47. 47.
    48. 48.
    49. 49.
    50. 50.
    51. 51.
    52. 52.
    53. 53.
    54. 54.
    55. 55. Embedding XBRL Inside the Organization
    56. 56. The business information supply chain 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 You are here Central Banks XBRL Ledger XBRL “ Financial Statements” Presentation has focused on XBRL “FR”
    57. 57. Subsidiary ERP’s Senior Management Current Management Reporting (SOX issues!) Supplemental information aggregation Controls Controls Controls Controls Controls Controls Controls Controls Controls Controls Controls Controls Controls Controls Control located with data or in supplemental manual processes
    58. 58. Services architecture leveraging taxonomies Transaction and or subsidiary Data Senior Management Viewing and aggregation for department & management Web Services ‘ Wrap & Map’ XBRL Controls Controls Controls Controls Controls Controls ACORD XBRL GL ACORD XBRL GL ACORD XBRL GL
    59. 59. The Answer - XBRL GL System 3 System 1 Identificador de la Cuenta Descripción Principal de la Cuenta Monto Monetario Fecha de Asignación/Ingreso Account Number Account Description Entry Amount Posting Date Account# Description Amount PostDate System 2 accountMainID accountMainDescription amount postingDate accountMainID accountMainDescription amount postingDate accountMainID accountMainDescription amount postingDate XBRL GL XBRL GL XBRL GL Across language Across data definitions Across file formats
    60. 60. Putting it all together: What are the opportunities for CPAs?
    61. 61. Providing XBRL services: Still many unknowns/questions/issues !
    62. 62. Errors found in SEC VFP filings <ul><li>Extensions created when standard elements already exist </li></ul><ul><li>Text block elements too broad </li></ul><ul><li>Labels do not match html document (including information in parentheses) </li></ul><ul><li>Extensions for monetary items require assignment of debit/credit or definition, companies are not including </li></ul><ul><li>New elements created with company-specific information in the element name </li></ul><ul><li>Missing elements and amounts </li></ul><ul><li>Incorrect amounts & sign flips </li></ul><ul><li>Duplicate items </li></ul>
    63. 63. Steps to Prepare an XBRL Instance Document
    64. 64. Introduction to Opportunities <ul><li>Advisory Services </li></ul><ul><li>Assurance Services </li></ul><ul><li>Agreed-upon Procedures </li></ul><ul><li>Examination of an Assertion About XBRL-Tagged Data </li></ul><ul><li>Examination of Controls Over the Preparation of the XBRL-Tagged Data </li></ul><ul><li>AT Section 601, Compliance Attestation </li></ul><ul><li>Review of an Assertion About XBRL-Tagged Data </li></ul>Center for Audit Quality [Alert #2009-55]
    65. 65. Advisory Services <ul><li>Assisting management in obtaining an understanding of XBRL, relevant requirements, implementation processes, and timetable </li></ul><ul><li>Providing observations and recommendations to management on its XBRL project management plan, implementation process or supporting documentation prepared by the client </li></ul><ul><ul><li>XBRL team members? </li></ul></ul><ul><ul><li>Outsourcing (filing agent)? </li></ul></ul><ul><ul><li>Software selection? </li></ul></ul><ul><ul><li>Timeline? </li></ul></ul><ul><li>Providing comments on the client’s mapping of its financial statements to the XBRL US GAAP Taxonomy </li></ul>
    66. 66. Preparing XBRL Documents for External Reporting <ul><li>Recommend fire drill to client(s) to work out issues before filing is required: </li></ul><ul><ul><li>Allocation of work between client, CPA, and 3 rd parties </li></ul></ul><ul><ul><li>Degree of changes to face of financial statements to match standard taxonomy [could be zero] </li></ul></ul><ul><ul><li>Decide on block vs. detailed footnotes </li></ul></ul><ul><ul><li>Develop/implement/test/modify extension taxonomies </li></ul></ul><ul><li>Develop plan for official filing based on fire drill results </li></ul>
    67. 67. Advisory Services: Warning… <ul><li>Avoid for audit clients… </li></ul><ul><ul><li>Performing project management of the XBRL implementation project; </li></ul></ul><ul><ul><li>Selecting or recommending a specific software product for the client to use; </li></ul></ul><ul><ul><li>Mapping the client’s financial statements to the XBRL US GAAP Taxonomy ; </li></ul></ul><ul><ul><li>Designing a plan for the client to implement, or designing controls over that process; </li></ul></ul><ul><ul><li>Preparing a prototype of the client’s financial statements using XBRL ; </li></ul></ul><ul><ul><li>Providing ongoing support to management in tagging financial statements. </li></ul></ul>
    68. 68. Assurance <ul><li>Independent auditor not required to have any role in XBRL exhibits in SEC filings. </li></ul><ul><li>The following standards do NOT apply: </li></ul><ul><ul><li>AU 550-- Other Information in Documents Containing Audited Financial Statements , </li></ul></ul><ul><ul><li>AU 722-- Interim Financial Information </li></ul></ul><ul><ul><li>AU 711-- Filings under Federal Securities Statutes </li></ul></ul><ul><li>However, the client may request the audit firm perform procedures or report on the XBRL instance document… </li></ul>
    69. 69. Assurance Services <ul><li>Key components of audit/attestation/assurance engagement… </li></ul><ul><ul><li>Subject matter </li></ul></ul><ul><ul><li>Client assertions about subject matter </li></ul></ul><ul><ul><li>Criteria </li></ul></ul><ul><ul><li>Attestation of client’s assertions about subject matter in compliance with criteria </li></ul></ul><ul><li>Paper financial statements vs. XBRL </li></ul><ul><ul><li>What are the subject matters, assertions, criteria, and attestations? </li></ul></ul><ul><ul><li>Are they the same of different? (Yes, no, maybe!) </li></ul></ul>
    70. 70. Assurance Issues <ul><li>Paper financial statements not same as XBRL instance document (different subject matter/criteria) </li></ul><ul><li>Current audit opinion focuses on document level (fair view) </li></ul><ul><li>XBRL document is a dataset , presentation via a style sheet, so no fair view ? XBRL needs assurance on data-level </li></ul><ul><li>No taxonomy for the audit opinion or guidance how to connect the opinion to an instance document, could be the FS </li></ul><ul><li>No guidance yet about signing audit opinions and validations of the signature </li></ul><ul><li>No audit tools (as opposed to validation tools) available for analyzing instance documents </li></ul>
    71. 71. Preparation & Assurance Questions 1 <ul><li>Was the appropriate standard taxonomy chosen based on the industry and applicable GAAP? </li></ul><ul><li>Was the extension taxonomy properly created for new concepts and relationships not included in the standard taxonomy. Some related questions include: </li></ul><ul><ul><li>Was a tag included in the extension taxonomy that already existed in the applicable standard taxonomy? </li></ul></ul><ul><ul><li>Are the customizations of labels, presentation order, and calculations, as captured in applicable linkbases, appropriate? </li></ul></ul>1 List inspired by Eric Cohen CICA presentation, 2004
    72. 72. Preparation & Assurance Questions <ul><li>Is everything tagged that should be tagged? </li></ul><ul><li>Was the most appropriate XBRL tag chosen for each fact or concept in the source document? Two general types of errors could occur here: </li></ul><ul><ul><li>Judgment error </li></ul></ul><ul><ul><li>Mechanical error </li></ul></ul><ul><li>Were there tags in the standard taxonomy that would have been expected to be used, but were not used? </li></ul><ul><li>Are contexts consistent and appropriate? </li></ul>
    73. 73. Audit Approach (AICPA) <ul><li>“ Attest Engagements on Financial Information Included in XBRL Instance Documents” ( AT 9101.47–.54 ) </li></ul><ul><li>.52 …practitioner should consider performing include: </li></ul><ul><li>• Compare the rendered Instance Document to the financial information. </li></ul><ul><li>•  Trace and agree the Instance Document's tagged information to the financial information. </li></ul><ul><li>• Test that the financial information is appropriately tagged and included in the Instance Document. </li></ul><ul><li>• Test for consistency of tagging (for example, an entity may use one taxonomy tag for one year and then switch to a different tag for the same financial information the following year. In this case, the financial information for both years should use the same tag). </li></ul><ul><li>• Test that the entity extension or custom taxonomy meets the XBRL International Technical Specification (for example, through the use of a validation tool).  </li></ul>
    74. 74. PCAOB Guidelines (2005!) <ul><li>PCAOB published 11-page staff Q&A regarding XBRL on May 25, 2005. </li></ul><ul><li>A3. An auditor may be engaged to examine and report on whether the XBRL-Related Documents accurately reflect the information in the corresponding part of the official EDGAR filings… under AT section 101, Attest Engagements , as amended. </li></ul><ul><li>A4…the auditor must have sufficient knowledge of the applicable SEC Regulations, EDGAR Filer Manual requirements, and XBRL taxonomies and specifications to perform the examination. </li></ul>
    75. 75. PCAOB Guidelines <ul><li>Q5. What criteria…? </li></ul><ul><li>A5. US GAAP Version 2.1…suitable criteria [however] Company extensions of those taxonomies normally do not go through the same development processes as [standard taxonomies]. Accordingly, the auditor should evaluate whether company extensions represent suitable and available criteria as described in AT section 101. </li></ul>
    76. 76. Agreed-Upon Procedures <ul><li>Firm’s report identifies procedures performed and results. </li></ul><ul><li>Report does not express an opinion and makes no representations regarding the sufficiency of the firm’s procedures. </li></ul><ul><li>Report is restricted to the client and the named parties who have agreed to the procedures & accepted responsibility for the sufficiency for their purposes. </li></ul><ul><li>It is not appropriate for companies to refer to services in a publicly available document </li></ul>
    77. 77. Examination of an Assertion about XBRL-Tagged Data <ul><li>SEC Rules note that issuers can obtain third-party assurance under the PCAOB Interim Attestation Standards, AT section 101 </li></ul><ul><ul><li>AT 9101.47–.54 suggests rending, but this procedure alone does not sufficiently address the risk that errors could exist in the tagged financial information. </li></ul></ul><ul><li>Criteria: SEC Rules and the XBRL US GAAP Taxonomy Preparers Guide </li></ul><ul><ul><li>What about extension taxonomies? Are they subject matter or criteria ? </li></ul></ul><ul><ul><li>What about highly-technical XBRL Specification 2.1? What content? How do you decide? Skills? Specialist? </li></ul></ul><ul><li>How is materiality assessed? Document as a whole vs. line-by-line? </li></ul>
    78. 78. Examination of Controls Over the Preparation of XBRL-Tagged Data <ul><li>Not likely to be a stand-alone service </li></ul><ul><li>Probably conducted in conjunction with other XBRL services </li></ul><ul><li>Client’s focus is on just delivering an accurate & complete XBRL document [controls and efficiency are secondary for now] </li></ul><ul><li>Because XBRL document creation is bolt-on (after-the-fact), tagging is typically not part of a company’s SOX 404 internal control over financial reporting [but that could change in the future] </li></ul>
    79. 79. AT Section 601, Compliance Attestation <ul><li>AT section 601 provides guidance on performing an examination or agreed-upon procedures engagement related to: </li></ul><ul><ul><li>A n entity's compliance with the requirements of specified laws, regulations, rules, contracts, or grants or </li></ul></ul><ul><ul><li>The effectiveness of an entity's internal control over compliance with specified requirements. </li></ul></ul><ul><li>SEC Rule 405 of Regulation S-T imposes certain content, format, submission and posting requirements that an entity’s compliance could be evaluated against. </li></ul><ul><li>However, the EDGAR Filer Manual includes highly detailed, technical information; as such, audit firms should consider carefully whether they have the technical expertise to perform such compliance services. </li></ul>
    80. 80. General Requirements under SEC Rule 405 Regulation S-T <ul><li>Information in interactive data format should not be more or less than the information in the ASCII or HTML part of the report </li></ul><ul><li>Use of the most recent and appropriate list of tags released by XBRL U.S. or the IASCF as required by EDGAR Filer Manual. </li></ul><ul><li>Viewable interactive data as displayed through software available on the Commission’s Web site, and to the extent identical in all material respect to the corresponding portion of the traditional format filing </li></ul><ul><li>Data in the interactive data file submitted to SEC would be protected from liability for failure to comply with the proposed tagging and related requirements if the interactive data file either </li></ul><ul><ul><li>Met the requirements; or </li></ul></ul><ul><ul><li>Failed to meet those requirements, but failure occurred despite the issuer’s good faith and reasonable effort , and the issuer corrected the failure as soon as reasonably practical after becoming aware of it. </li></ul></ul>
    81. 81. Review of an Assertion about XBRL-Tagged Data <ul><li>Generally consist of inquiries and analytical procedures designed to provide a moderate level of assurance (i.e., negative assurance). </li></ul><ul><li>However, probably could not perform meaningful analytical procedures on XBRL-tagged data sufficient to achieve even this level of assurance and it is uncertain what other procedures could be identified that, when combined with inquiries, could form the basis for a review engagement. </li></ul><ul><li>Accordingly, the feasibility of a review engagement related to XBRL tagging is uncertain. If a review engagement could be developed, it would be important for the review report to communicate its limitations to users. </li></ul>
    82. 82. Management Assertions (SAS 106) & Related Audit Objectives <ul><li>Assertions about account balances </li></ul><ul><ul><li>Existence </li></ul></ul><ul><ul><li>Completeness </li></ul></ul><ul><ul><li>Rights and Obligations </li></ul></ul><ul><ul><li>Valuation or Allocation </li></ul></ul><ul><li>Assertions about classes of transactions and events </li></ul><ul><ul><li>Occurrence </li></ul></ul><ul><ul><li>Completeness </li></ul></ul><ul><ul><li>Accuracy </li></ul></ul><ul><ul><li>Cutoff </li></ul></ul><ul><ul><li>Classification </li></ul></ul><ul><li>Assertions about presentation and disclosure </li></ul><ul><ul><li>Occurrence and rights and obligations. </li></ul></ul><ul><ul><li>Completeness </li></ul></ul><ul><ul><li>Classification and understandability </li></ul></ul><ul><ul><li>Audit Objectives </li></ul></ul><ul><ul><li>Validity </li></ul></ul><ul><ul><li>Completeness </li></ul></ul><ul><ul><li>Ownership </li></ul></ul><ul><ul><li>Valuation </li></ul></ul><ul><ul><li>Cut-off </li></ul></ul><ul><ul><li>Classification </li></ul></ul><ul><ul><li>Disclosure </li></ul></ul>Based on research of Srivastava & Kogan
    83. 83. Risk Based Approach for Conceptualizing Assertions <ul><li>Data Deficiencies in the XBRL Instance Document </li></ul><ul><ul><li>Omissions of relevant data from the traditional format documents ( Completeness ) </li></ul></ul><ul><ul><li>Insertions of data not present in the traditional format documents ( Existence ) </li></ul></ul><ul><ul><li>Erroneous element values and / or attribute values (such as context, unit, etc.) ( Accuracy: Element Accuracy or Attribute Accuracy ) </li></ul></ul>
    84. 84. Risk Based Approach for Conceptualizing Assertions <ul><li>Deficiencies of the Mark-up in the XBRL instance Document </li></ul><ul><ul><li>Erroneous tagging of data that violates XML syntax rules (Violation of Well-formedness ) </li></ul></ul><ul><ul><li>Erroneous tagging of data that violates XML Schema (Violation of Validity ) </li></ul></ul><ul><ul><li>Inappropriate choice of XBRL elements to tag traditional format document data (Violation of Proper Representation ) </li></ul></ul>
    85. 85. Risk Based Approach for Conceptualizing Assertions <ul><li>Deficiencies of XBRL Taxonomies used by the Filer </li></ul><ul><ul><li>Improper choice of general and industry-specific XBRL taxonomies by the filer ( Proper Taxonomies ) </li></ul></ul><ul><ul><li>Violations of XML or XBRL language rules in XBRL taxonomy extensions by the filer ( Valid Taxonomy Extensions ) </li></ul></ul><ul><ul><li>Inappropriate introduction of new elements in XBRL taxonomy extensions ( Proper Extension Elements ) </li></ul></ul><ul><ul><li>Inappropriate / erroneous linkbases in XBRL taxonomy extensions (including the choice of inappropriate/misleading labels) ( Proper Linkbases ) </li></ul></ul>
    86. 86. XBRL Resources
    87. 87. XBRL Showcase <ul><li>www.xbrl.org/ProductsandServices / </li></ul><ul><li>35 vendors listed </li></ul><ul><li>Different mix of functions: </li></ul><ul><ul><li>Taxonomy creation </li></ul></ul><ul><ul><li>Instance document creation/conversion </li></ul></ul><ul><ul><li>Validation </li></ul></ul><ul><ul><li>Rendering/presenting </li></ul></ul><ul><ul><li>Analysis </li></ul></ul><ul><ul><li>Stand alone vs. Office add-in </li></ul></ul>
    88. 88. Where to go from here… <ul><li>Visit www.xbrl.org & www.xbrl.us -- include general and technical information about XBRL </li></ul><ul><li>Attend public and training days sponsored by XBRL, CalCPA, AICPA, vendors, etc. </li></ul><ul><li>Go to www.sec.gov and search on XBRL and “interactive data” </li></ul><ul><li>Visit Big 4 Web site and search on XBRL. </li></ul><ul><li>Google XBRL </li></ul><ul><li>Go to www.skipwhite.com </li></ul><ul><ul><li>The Accountant’s Guide to XBRL (3rd edition) </li></ul></ul><ul><ul><li>The Guide & Workbook for Understanding XBRL </li></ul></ul>
    89. 89. Where to go from here… <ul><li>Search on XBRL at: </li></ul><ul><ul><li>www.aicpa.org and www.journalofaccountancy.com </li></ul></ul><ul><ul><li>www.calCPA.org </li></ul></ul><ul><ul><li>Center for Audit Quality at www.thecaq.org </li></ul></ul><ul><ul><li>International Accounting Standards Board at www.iasb.org/xbrl regarding XBRL and IFRS </li></ul></ul><ul><ul><li>The Institute of Internal Auditors’ home page at www.theiia.org </li></ul></ul>
    90. 90. Questions? Thank You [email_address]

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