2008: The XBRL consortium has approximately 550 members around the world
December 2008: SEC requires XBRL starting in 2009
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 Goods Sold 101 92 Gross Profit 44 40 Sales, general, and administrative 10 8 Net Income $ 34 $ 32
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
Where XBRL Comes In
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
What XBRL is not…
NOT a set of accounting standards
NOT a detailed chart of accounts
NOT a GAAP translator
NOT a software application
What XBRL is based on .. XML Specifications XBRL Specification Taxonomy Instance Document Builds Modules Bind to Domain Builds
THE XBRL Specification 2.1
The XBRL Specification provides the fundamental technical definition of how XBRL works.
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.
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.
Only one specification for the whole world
A Taxonomy is a dictionary of financial reporting terms or concepts
The concepts captured in a taxonomy are referred to as ELEMENTS . These Elements form the core of XBRL.
Separate Taxonomies are developed for different reporting purposes such as US GAAP, IFRS, bank regulatory reporting. etc
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 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
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
Why you might need an extension taxonomy
You want to include a financial statements item not in the standard taxonomy you are using.
Changing a label for a standard base taxonomy to match your label name
Changing the presentation structure of one or more standard base taxonomy elements to match the presentation structure of your report.
Changing the calculation structure of one or more standard base taxonomy elements to match the calculation structure of your report.
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
Closer Look at Taxonomies
Definition linkbase : Indicates for each concept whether it is a special case of some other defined concept.
Calculation linkbase : Indicates how one concept in a group of “sibling” concepts is related to the value of their parent concept.
Presentation linkbase : Indicates the order in which each concept should be presented when grouped with its siblings.
Label linkbase : Associates each concept with one or more presentation labels, one per language.
Reference linkbase : Associates each concept with one or more places in authoritative literature where the concept is defined.
Dimension linkbase: Captures detailed information about the horizontal and vertical axes of a table in a note to the financial statements.
An Instance Document is your XBRL financial report
Instance Documents will include:
Values (ex. numbers, blocks of text etc)
Tags to identify the values
Taxonomy references – Telling you where the tags are defined
Context – Information describing the reporting entity and period
Units/Measure – Information on unit of measure, currency etc.
XBRL Taxonomy Created by XBRL Consortium Consumed Rendered XBRL Document Created by Preparer Company Financial Statement TAGGING AT 101 Assurance XBRL Creation
FDIC & SEC Activities
The US Banking Industry [ pre-XBRL ]
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
The US Banking Industry [ post-XBRL ] Future 8900 Banks FDIC OCC FRB OTS NCUA FFIEC
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 )
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.
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.
Software Used Six Steps to XBRL , Journal of Accountancy , Feb. 2008
2009 (first quarterly report for period ending on or after June 15, 2009): Approximately 500 largest GAAP filers*
2010-2011: Remaining GAAP filers
2011: IFRS filers
By December 2011, all public companies will be filing XBRL financial information
XBRL documents provided as additional exhibits
Must also post XBRL documents to own Web site
* Public float > $5 billion
2009 SEC Mandatory Filing
Primary financial statements, notes, and financial statement schedules.
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
Use current (January 31, 2009) taxonomy
Updated EDGAR financial reporting system accepts XBRL filings
See EDGAR Filing Manual at: http:// www.sec.gov/info/edgar/edmanuals.htm
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 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”
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
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
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
Putting it all together: What are the opportunities for CPAs?
Providing XBRL services: Still many unknowns/questions/issues !
Errors found in SEC VFP filings
Extensions created when standard elements already exist
Text block elements too broad
Labels do not match html document (including information in parentheses)
Extensions for monetary items require assignment of debit/credit or definition, companies are not including
New elements created with company-specific information in the element name
Missing elements and amounts
Incorrect amounts & sign flips
Steps to Prepare an XBRL Instance Document
Introduction to Opportunities
Examination of an Assertion About XBRL-Tagged Data
Examination of Controls Over the Preparation of the XBRL-Tagged Data
AT Section 601, Compliance Attestation
Review of an Assertion About XBRL-Tagged Data
Center for Audit Quality [Alert #2009-55]
Assisting management in obtaining an understanding of XBRL, relevant requirements, implementation processes, and timetable
Providing observations and recommendations to management on its XBRL project management plan, implementation process or supporting documentation prepared by the client
XBRL team members?
Outsourcing (filing agent)?
Providing comments on the client’s mapping of its financial statements to the XBRL US GAAP Taxonomy
Preparing XBRL Documents for External Reporting
Recommend fire drill to client(s) to work out issues before filing is required:
Allocation of work between client, CPA, and 3 rd parties
Degree of changes to face of financial statements to match standard taxonomy [could be zero]
Develop plan for official filing based on fire drill results
Advisory Services: Warning…
Avoid for audit clients…
Performing project management of the XBRL implementation project;
Selecting or recommending a specific software product for the client to use;
Mapping the client’s financial statements to the XBRL US GAAP Taxonomy ;
Designing a plan for the client to implement, or designing controls over that process;
Preparing a prototype of the client’s financial statements using XBRL ;
Providing ongoing support to management in tagging financial statements.
Independent auditor not required to have any role in XBRL exhibits in SEC filings.
The following standards do NOT apply:
AU 550-- Other Information in Documents Containing Audited Financial Statements ,
AU 722-- Interim Financial Information
AU 711-- Filings under Federal Securities Statutes
However, the client may request the audit firm perform procedures or report on the XBRL instance document…
Key components of audit/attestation/assurance engagement…
Client assertions about subject matter
Attestation of client’s assertions about subject matter in compliance with criteria
Paper financial statements vs. XBRL
What are the subject matters, assertions, criteria, and attestations?
Are they the same of different? (Yes, no, maybe!)
Paper financial statements not same as XBRL instance document (different subject matter/criteria)
Current audit opinion focuses on document level (fair view)
XBRL document is a dataset , presentation via a style sheet, so no fair view ? XBRL needs assurance on data-level
No taxonomy for the audit opinion or guidance how to connect the opinion to an instance document, could be the FS
No guidance yet about signing audit opinions and validations of the signature
No audit tools (as opposed to validation tools) available for analyzing instance documents
Preparation & Assurance Questions 1
Was the appropriate standard taxonomy chosen based on the industry and applicable GAAP?
Was the extension taxonomy properly created for new concepts and relationships not included in the standard taxonomy. Some related questions include:
Was a tag included in the extension taxonomy that already existed in the applicable standard taxonomy?
Are the customizations of labels, presentation order, and calculations, as captured in applicable linkbases, appropriate?
1 List inspired by Eric Cohen CICA presentation, 2004
Preparation & Assurance Questions
Is everything tagged that should be tagged?
Was the most appropriate XBRL tag chosen for each fact or concept in the source document? Two general types of errors could occur here:
Were there tags in the standard taxonomy that would have been expected to be used, but were not used?
Are contexts consistent and appropriate?
Audit Approach (AICPA)
“ Attest Engagements on Financial Information Included in XBRL Instance Documents” ( AT 9101.47–.54 )
.52 …practitioner should consider performing include:
• Compare the rendered Instance Document to the financial information.
• Trace and agree the Instance Document's tagged information to the financial information.
• Test that the financial information is appropriately tagged and included in the Instance Document.
• 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).
• Test that the entity extension or custom taxonomy meets the XBRL International Technical Specification (for example, through the use of a validation tool).
PCAOB Guidelines (2005!)
PCAOB published 11-page staff Q&A regarding XBRL on May 25, 2005.
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.
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.
Q5. What criteria…?
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.
Firm’s report identifies procedures performed and results.
Report does not express an opinion and makes no representations regarding the sufficiency of the firm’s procedures.
Report is restricted to the client and the named parties who have agreed to the procedures & accepted responsibility for the sufficiency for their purposes.
It is not appropriate for companies to refer to services in a publicly available document
Examination of an Assertion about XBRL-Tagged Data
SEC Rules note that issuers can obtain third-party assurance under the PCAOB Interim Attestation Standards, AT section 101
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.
Criteria: SEC Rules and the XBRL US GAAP Taxonomy Preparers Guide
What about extension taxonomies? Are they subject matter or criteria ?
What about highly-technical XBRL Specification 2.1? What content? How do you decide? Skills? Specialist?
How is materiality assessed? Document as a whole vs. line-by-line?
Examination of Controls Over the Preparation of XBRL-Tagged Data
Not likely to be a stand-alone service
Probably conducted in conjunction with other XBRL services
Client’s focus is on just delivering an accurate & complete XBRL document [controls and efficiency are secondary for now]
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]
AT Section 601, Compliance Attestation
AT section 601 provides guidance on performing an examination or agreed-upon procedures engagement related to:
A n entity's compliance with the requirements of specified laws, regulations, rules, contracts, or grants or
The effectiveness of an entity's internal control over compliance with specified requirements.
SEC Rule 405 of Regulation S-T imposes certain content, format, submission and posting requirements that an entity’s compliance could be evaluated against.
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.
General Requirements under SEC Rule 405 Regulation S-T
Information in interactive data format should not be more or less than the information in the ASCII or HTML part of the report
Use of the most recent and appropriate list of tags released by XBRL U.S. or the IASCF as required by EDGAR Filer Manual.
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
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
Met the requirements; or
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.
Review of an Assertion about XBRL-Tagged Data
Generally consist of inquiries and analytical procedures designed to provide a moderate level of assurance (i.e., negative assurance).
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.
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.
Management Assertions (SAS 106) & Related Audit Objectives
Assertions about account balances
Rights and Obligations
Valuation or Allocation
Assertions about classes of transactions and events
Assertions about presentation and disclosure
Occurrence and rights and obligations.
Classification and understandability
Based on research of Srivastava & Kogan
Risk Based Approach for Conceptualizing Assertions
Data Deficiencies in the XBRL Instance Document
Omissions of relevant data from the traditional format documents ( Completeness )
Insertions of data not present in the traditional format documents ( Existence )
Erroneous element values and / or attribute values (such as context, unit, etc.) ( Accuracy: Element Accuracy or Attribute Accuracy )
Risk Based Approach for Conceptualizing Assertions
Deficiencies of the Mark-up in the XBRL instance Document
Erroneous tagging of data that violates XML syntax rules (Violation of Well-formedness )
Erroneous tagging of data that violates XML Schema (Violation of Validity )
Inappropriate choice of XBRL elements to tag traditional format document data (Violation of Proper Representation )
Risk Based Approach for Conceptualizing Assertions
Deficiencies of XBRL Taxonomies used by the Filer
Improper choice of general and industry-specific XBRL taxonomies by the filer ( Proper Taxonomies )
Violations of XML or XBRL language rules in XBRL taxonomy extensions by the filer ( Valid Taxonomy Extensions )
Inappropriate introduction of new elements in XBRL taxonomy extensions ( Proper Extension Elements )
Inappropriate / erroneous linkbases in XBRL taxonomy extensions (including the choice of inappropriate/misleading labels) ( Proper Linkbases )
35 vendors listed
Different mix of functions:
Instance document creation/conversion
Stand alone vs. Office add-in
Where to go from here…
Visit www.xbrl.org & www.xbrl.us -- include general and technical information about XBRL
Attend public and training days sponsored by XBRL, CalCPA, AICPA, vendors, etc.
Go to www.sec.gov and search on XBRL and “interactive data”
Visit Big 4 Web site and search on XBRL.
Go to www.skipwhite.com
The Accountant’s Guide to XBRL (3rd edition)
The Guide & Workbook for Understanding XBRL
Where to go from here…
Search on XBRL at:
www.aicpa.org and www.journalofaccountancy.com
Center for Audit Quality at www.thecaq.org
International Accounting Standards Board at www.iasb.org/xbrl regarding XBRL and IFRS
The Institute of Internal Auditors’ home page at www.theiia.org