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Understanding XBRL

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  • 1. Compiled By
    Sumit Binani
    MBA (IIM-Cal), AICWA, FCS, ACA
    &
    CS Mamta Binani
    UNDERSTANDING XBRLeXtensibleBusinessReportingLanguage
  • 2. Need for XBRL is not new
    Businesses Exchange Information
    100 ways to exchange info is part of the problem
    Clients, Stakeholders, Regulators, Bankers, Auditors
    Use of diff technology to compare benefits & costs
    Need for a common standard accepted format for data exchange
    XBRL has stood out of the pack
    BUSINESS CASE FOR XBRL
  • 3. Evaluation Criteria-Effectiveness & Efficiency
    Cost of Capturing data(training, maintenance, multiple software tools)
    Timeliness of data
    Flexibility of Data Collection
    Quality of Data
    Reuse of Data
    BUSINESS REPORTING SOLUTIONS
  • 4. XML Standard: Low training cost. Lots of standard software for working with XML.
    Open Standards Provide Leverage: Free tools, free standards, not locked into one specific vendor.
    Commercial off-the-shelf software can be used
    Cheap Business Rules Engines Improve Data Quality.
    Flexible, Extensible, Comprehensive Solution
    Structured versus Unstructured Data
    Automated Exchange of Data within same org
    XBRL CHARACTERISTICS
  • 5. Access to Data
    Timeliness, Quantity, Accuracy, Type of data
    SEBI, RBI, MCA, Auditor, Banks, Holding Co
    Onsite data is most qualitative and accessible
    Transparency, Accuracy, is often questioned
    XBRL is not about imposing any specific reporting burden
    Automobile Companies – Quality Control Ex
    REACH VS RICHNESS OF DATA
  • 6. We have both reach and richness?
    Every entity could generate electronic audit schedules of data in XBRL.
    Regulators, auditors’ systems could read this data whenever they want from their location.
    A secure web service could be provided by every company and used by auditors, regulators (the SAME systems used for internal audit of the data, NOT different systems) rather than the endless paper, spread sheets,Worddocuments, etc.
    How would that impact business reporting?
    WHAT IF
  • 7. Consider an invoice. Data on the invoice might include:
    the invoice number, "I-10001“; the invoice date, "July 1, 2005“; the quantity of each line item, "500 boxes“; • the amount of each line item, “Rs 3000“; • the total amount of the invoice, “Rs 9000"
    The metadata for the invoice, which is data which expresses the information the invoice must contain, might be things like:
    the invoice number must start with the letter "I", be followed by a dash, and must be a 5 digit number,
    the invoice MUST contain an invoice number, an invoice date, at least one line item, and a total
    METADATA-Data about data
  • 8. Expressed in a consistent, standard way, can be read by a computer application.
    Can be exchanged automatically between applications along with the data being expressed, resulting in new and better ways to transform and evaluate data.
    Driven applications can be updated by Business Users - cost-effectively than "hard coded" applications
    In terms of financial reporting, we see applications driven by XBRL financial metadata (a standardized set of financial terms, or taxonomies)
    METADATA-Data about data
  • 9. The fact that data can be defined in an organized way rather than unstructured, semantic meaning can be expressed as metadata,
    At a relatively low cost because the applications are useful, flexible, and therefore used by so many.
    A key to improving business reporting is metadata driven computer applications using open standards to express that metadata.
    XBRL lays the platform for the same
    METADATA
  • 10. One of the most powerful features of XBRL
    Types of business rules might be:
    Definitions such as "Assets = Liabilities + Equity“
    Calculations such as "Total Property, Plant and Equipment = Land + Buildings + Fixtures + IT Equipment + Other“
    Process oriented such as "If property, plant, and equipment exists; then a property, plant and equipment policy must exist and property, plant and equipment disclosures must exist.
    Instructions or documentation such as "Cash flow types must be either operating, financing, or investing.
    Separate from the Processing Logic -empowers Business User
    BUSINESS RULES CAPABILITY
  • 11. And what if the business rules are also in a global standard format?
    One can exchange the rules with others. for example,
    1. use the rules to explain the data you are collecting,
    2. which data needs to be collected,
    3. validate the data prior to it being submitted, and
    4. which data collection forms should be used by the type or quality of entity submitting data.
    BUSINESS RULES CAPABILITY
  • 12. Humble beginning back in 1997
    Charlie Hoffman, a USA CPA, Visionary behind XBRL using power of XML technology
    XBRL is about better way of reporting accounting, financial and other information to interested users
    One of the goals of XBRL is to create the information once and be able to easily present it in many ways
    Reduces Time, Save Costs, Enables Quick Information & analysis
    HISTORY
  • 13. HISTORY OF XBRL
    • October 1999
    • 14. XBRL committee formed ; More than a dozen member organisations in USA
    • 15. December 2000
    • 16. Membership >70 organisations
    • 17. February 2001
    • 18. Membership >100 internationally, UK XBRL launched
    • 19. June 2001
    • 20. XBRL for US GAAP Financial Statements announced
    • 21. October 2001
    • 22. XBRL Australia and Japan launched
    • 23. February 2002
    • 24. Recognised XBRL jurisdictions include Australia, Canada, Germany, Hong Kong, Japan, Singapore, UK
    • 25. ....... And the developmental journey continues
  • Incorporated as Section 25 Company
    Managing Affairs of Indian Jurisdiction of XBRL International
    Objectives
    promote and encourage the adoption of XBRL in India as the standard for electronic business reporting in India
    facilitate education and marketing of XBRL
    Develop, manage & update XBRL taxonomies
    represent Indian interests within XBRL International
    contribute to the international development of XBRL
    XBRL INDIA
  • 26. Global effort to build “the digital language of business” by participants of the business reporting supply chain
    XBRL permits the automatic exchange and reliable extraction of financial information across all software formats and technologies, including the Internet.
    It enhances efficiency by allowing tagged (coded identifier) financial information to be transmitted in many formats and deployed with various analytical tools.
    Users of Transnational Data (change label from eng to other)
    WHY XBRL
  • 27. External
    Financial
    Reporting
    Business
    Operations
    Internal
    Financial
    Reporting
    Investment
    and Lending
    Analysis
    Investors
    Financial
    Publishers
    and Data
    Aggregators
    Companies
    Auditors
    Trading
    Partners
    Regulators
    Management
    Accountants
    Software Vendors
    Business Reporting Supply Chain
    Processes
    Participants
    Benefitting out of creation of digital version of financial information using a common language
    Adapted from “XBRL for CFOs” (www.xbrl.org)
  • 28. Communicate financial info electronically
    No need to re-key data
    Easier and cheaper than EDI
    Built upon eXtensibleMarkupLanguage (XML)
    Free public standard defining data sharing, publishing & exchange systems.
    Separates information from style
    Single source-can be output to any format
    SALIENT FEATURES OF XBRL
  • 29. Credit Application
    Banks
    +
    Text
    Text
    +
    Regulatory Filings
    ASIC/ATO
    Text
    returns
    Report
    GL
    Report
    +
    Statements
    in Print
    +
    Report
    +
    +
    Statement in PDF
    +
    C of A
    Statement
    on Web
    Text
    +
    Today: A Convoluted Information Supply Chain
    Operational Data Stores
    Investors
    Corp.
    Auditor
    Adapted from “XBRL for CFOs” (www.xbrl.org)
  • 30. With XBRL: Multiple Outputs from a Single Specification
    Printed
    Financials
    Accounting
    System
    Regulatory
    Filings
    XBRL
    Web Site
    Tax
    Returns
    Other Sources of Information
    Bank
    Filings
    Source “XBRL for CFOs” (www.xbrl.org)
  • 31. Printed
    Financials
    Investors
    Regulatory
    Filings
    Web Site
    Tax
    Returns
    Other Parties
    Bank
    Filings
    XBRL: Information flow TO stakeholders
    XBRL
    Source “XBRL for CFOs” (www.xbrl.org)
  • 32. THE TECHNOLOGY
    The basis of XBRL is the XML.
    XML is a recommendation of the World Wide Web (W3C) and is a subset of SGML (Standard Generalised Markup Language).
    HTML is also a subset of SGML, but XML has been designed to overcome some limitations of HTML.
    A key feature of XML is that is separates information from the way it is presented.
    XML works by first defining a structure for the data – referred to as a schema. This defines the structure and the elements names for data without referring to any values of the data.
    Secondly, files (called instance documents) are created that contain the data, but do not contain any information about how that data is to be presented or published.
    As a result, the data is also separated from its presentation or style.
  • 33. HOW XBRL WORKS
    Simply put, traditional financial statement data is tagged using a taxonomy to create an instance document.
    XBRL’s delivery unit is the instance document.
    The instance document is transmitted by the party who prepares the information to the party who can use it.
    Understanding how XBRL works must therefore include some acquaintance with the necessary inputs to instance documents, the way in which instance documents are prepared for delivery, and some of the terminology XBRL’s developers have created.
  • 34.
  • 35. APPLYING TAXONOMIES
    Taxonomies contain definitions that are used to create tags that will be incorporated in instance documents.
    All taxonomies must comply with the rules in the XBRL Specification, but they differ because they are specific to the type of information to be electronically expressed and to the related presentation requirements.
    Taxonomies developed for the U.S. thus far reflect U.S. generally accepted accounting principles and reporting requirements primarily for four different industries: insurance, investment management, commercial and industrial, and banking and savings institutions.
    These taxonomies were exposed for public comment, revised, and granted approved status by XBRL International.
  • 36. APPLYING TAXONOMIES
    The 4 approved taxonomies contain definitions and information about financial reporting concepts, for example, goodwill, net income, gross sales, and cash and cash equivalents.
    A financial reporting concept within XBRL is called an element.
    Each element is assigned XBRL basic attributes and relationships.
    These are characteristics that are formally defined by the taxonomy. They include numerical or non-quantitative descriptors.
    The basic attributes and relationships are part of the data item’s context for purposes of XBRL.
    The basic attributes and relationships are designed to be sufficient to enable other computers to understand the data item they receive and to enable people at those computers to use the data item with their application software for analysis, comparisons, or other computerized operations they wish to perform.
  • 37. This illustration shows that the financial reporting concept goodwill is the XBRL element “goodwill,” which is assigned basic attributes and relationships.
    Basic
    Attributes
    Financial
    Reporting
    Concept:
    Goodwill
    XBRL
    Element:
    Goodwill
    Relationships
    to other
    Elements and
    Information
  • 38. 6 STANDARD ATTRIBUTES ARE IDENTIFIED FOR GOODWILL IN THIS ILLUSTRATION
    Goodwill
    Label
    XBRL
    Element:
    Goodwill
    Intangible Assets Goodwill
    Tag Name
    The excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed
    Basic
    Attributes
    Description
    Monetary
    Data Type
    Balance Type
    Debit
    Period Type
    Instant
  • 39. RELATIONSHIPS ARE IDENTIFIED FOR GOODWILL IN THIS ILLUSTRATION
    Publisher: IASB
    Name: AS 142
    Paragraph: 18
    URL: http://www.fasb.org/pdf/
    fas142.pdf
    URL Date: 2004-08-01
    XBRL
    Element:
    Goodwill
    Reference
    Relationships
    to other
    Elements and
    Information
    Condensed Balance Sheet (Assets)
    Assets
    Cash and cash equivalents
    Property plant and equipment
    Goodwill
    Total Assets
    Presentation
    Total Assets =
    Cash + Property plant and
    equipment + Goodwill
    Calculation
  • 40. Customization to Capture Unique Info
    “extensible” feature of XBRL.
    Compliance maximizes the comparability of the XBRL instance documents for external financial reports when extension taxonomies are employed.
    An organization can modify an element in a base taxonomy as well as supplement that base taxonomy,
    extension taxonomy must comply with the XBRL Specification.
    EXTENSION TAXONOMIES[facilitates Company Specific Business Needs]
  • 41. EXAMPLE OF EXTENSION TAXONOMIES
    EX-1
    A company presents goodwill before property, plant, and equipment in its balance sheet,
    It can create an extension to change the relationship that is defined in the base taxonomy to present it that way.
    EX-2
    Assume Company MB tags its financial statements using the commercial and industrial taxonomy.
    Company MB has a line item on its balance sheet for “XYZ Inventory.”
    Because it is unique to Company MB, “XYZ Inventory” is not listed in the commercial and industrial taxonomy.
    It therefore creates its own extension taxonomy that includes the new element.
    EX3For instance, if the generic element “sales” were too general for specific needs, a taxonomy could be extended with two new items “equipment sales” and “consumables sales.” Both would roll up to the “sales” element.
  • 42. INSTANCE DOCUMENT & STYLE SHEETS
    Tagging Operations leads to creation of Instance Document
    Instance Doc captures the base taxonomy and the extensions
    Softwares run the XBRL Instance Doc to produce desired report
    Reports enables users to analyse or otherwise process published info
    Instance documents that convey financial statements in XBRL can be created with the help of tagging software
    Certain software products can extract data in XBRL format from accounting databases
  • 43. INSTANCE DOCUMENT & STYLE SHEETS
    XBRL information is published with the aid of a style sheet application.
    The style sheet describes how documents are presented on screens or in print.
    It can convert the XBRL data in an instance document into a document that looks similar to financial information, such as a bsheet or income statement.
    It is a standard mechanism for organizing and presenting XBRL data.
    Style sheets are written in an extension of XML that is compatible with XBRL.
    The extensible style sheet language called XSLT is widely used to format and reformat XML documents, including XBRL documents.
  • 44. EXAMPLES OF BENEFIT FROM XBRL
    Spreadsheets
    Basel II Reporting
    Commercial & Consumer Loans
    Forms, Forms and Forms
  • 45. UPDATES FROM XBRL INDIA
    XBRL developed draft General Purpose Financial Reporting Taxonomy for Commercial & Industrial Companies (Mfg & Services Sector)
    Covers the financial statements confirming to Indian AS, Company Law & SEBI Listing norms while adapting architectural features of the IFRS general purpose taxonomy 2006
    MCA has finalised the taxonomy for C & I for filing Bsheet & P & L in XBRL
    XBRL Taxonomy for the banking sector is being developed
  • 46. MCA UPDATES ON XBRL
    Mandated certain class of companies to file balance sheet and accounts for the year ended 2010-11
    First Phase to Cover
    All Listed Companies in India and their subsidiaries including overseas subsidiaries
    All Companies having a paid up capital of 5 crores and above or Turnover of Rs 100 crores or above
    All Companies falling in phase 1 are permitted to file upto 30-9-2011 without any additional fee.
  • 47. ThankYou