10 Things Young CPAs Need to Know about XBRL
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10 Things Young CPAs Need to Know about XBRL

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"XBRL is the Napster of financial reporting & accouting" says Conor O'Kelly, First Vice-Chair of XBRL International and one of the worldwide leaders of XBRL. ...

"XBRL is the Napster of financial reporting & accouting" says Conor O'Kelly, First Vice-Chair of XBRL International and one of the worldwide leaders of XBRL.

Conor gives the the latest updates on XBRL from a young CPA perspective.

This is presentation for the Maryland Association of CPAs delivered via Skype at Salisbury University on April 5, 2011.

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10 Things Young CPAs Need to Know about XBRL 10 Things Young CPAs Need to Know about XBRL Presentation Transcript

  • 10 Things a YoungCPA Should knowabout XBRLConor O‟Kelly BComm, FCA, M.ScVice Chair, XBRL InternationalDublin, Ireland April 2011 XBRL for Young CPAs April 2011
  • 10 Things a CPA Should Know About XBRL 1. What is XBRL? 2. What are the benefits of XBRL? 3. Adoption Drivers 4. XBRL and IFRS 5. The Evolution of the Web and Its Impact on Business Reporting 6. Interactive Data and the Annual Report 7. Financial Reporting and Mobile Computing 8. Human Readable Interactive Data 9. Key Readiness Challenges 10.How do I join the conversation? XBRL for Young CPAs April 2011
  •  XBRL is a language for the electronic communication of business and financial data. It provides benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data. XBRL stands for eXtensible Business Reporting Language. It is one of a family of "XML" languages which is becoming a standard means of communicating information between businesses and on the internet. XBRL is being developed by an international non-profit consortium of approximately 600 major companies, organisations and government agencies. It is an open standard, free of licence fees. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world. XBRL for Young CPAs April 2011
  • 1. What does it mean for me?4 XBRL for Young CPAs April 2011
  • For business… Reduction in the administrative burden (i.e. cost) of providing data to Government Streamlined process of passing/aggregating data across different internal departments, offices or business units of a company. Increased interoperability of finance applications: Connect disparate accounting packages together more easily (especially across different accounting areas) Increase the ability to switch software providers in the future Increased ability to change providers of filing services (where used) driving increased competition for business and lower charges. Better interaction with the banks for loan applications and risk systems: Bank loan businesses money and request financial information at the inception of the loan and throughout the loan cycle Improved data quality (less errors due to less manual intervention). Avoidance of fines for non-compliance with a mandatory request to provide data.Source: OECD Forum on Tax Administration: Taxpayer Services SubGroup Guidance note Standard Business Reporting July 2009 http://www.oecd.org/dataoecd/36/52/43384923.pdf XBRL for Young CPAs April 2011
  • • Cut costs of tax preparation, tax calcs, tax effect accounting by 25 - 33%• Better analysis of client information• Less time spent on „data drudgery‟• Reduce Costs, Speed Cycle Times and Improve Accuracy• Improved staff engagement and satisfaction• Applying a taxonomy based approach drives new services such as: • Web based benchmarking and Business Intelligence • Online Accounting and STP for CompliancePeter William, CEO Deloitte Digital XBRL-enabled workflow in tax department Accounting practices that make their money from cut & paste of data should be warned that the writing is on the wall. Their days are numbered ...” Mark Tobin, Taxation Partner, Deloitte Melbourne Australia. XBRL for Young CPAs April 2011
  •  Economics ◦ EU Action Programme to reduce admin burden by 25% ◦ Compliance efficiencies / effectiveness – SBR programs converge towards global standards through the IMF, FSF, the Basel committee and G20 processes. IFRS Adoption and GAAP convergence Capital Market Transparency – US SEC Mandate, European Commission, China CSRC Alignment in Regulatory Consistency Integration with other standards- ISO, W3C, Swift, OECD XBRL for Young CPAs April 2011
  • The Basel Committee on Banking Supervision provides regularcooperation on banking supervisory matters designed to ensure that abank holds capital reserves appropriate to the risk the bank exposesitself to through its lending and investment practices. Ensuring capitalallocation is more risk sensitive; Separating operational risk fromcredit risk, and quantifying both; align economic and regulatorycapital more closely to reduce the scope for regulatory arbitrage.•XBRL Adopted by US FDIC for US Banking Quarterly Call Reports•Feb09- Committee of European Banking Supervisors (CEBS)published work plan outlining priority activities to establish theframework for harmonised supervisory reporting by 2012, inconjunction with CEIOPS. Priority activities includes developments toboth the COREP (COMmon REPorting) and FINREP (FINancial REPorting)taxonomies.•Oct2008 Reserve Bank of India launch XBRL Basel II reporting forIndian Banking Sector .•Emerging Basel II XBRL projects in South America, Chile, Brazil,Argentina, Colombia, Mexico and Asia XBRL for Young CPAs April 2011
  • Oct2008- EU President Barroso appointed HighLevel Group on Financial Supervision in EUaiming to promote e-gov and identify best practices in IT use in order toenable the EU to contribute to international and multi-national initiatives.The group are encouraging the Commission (and Member States) toconsider a „pull model – once only‟;European Parliament (EP) resolution of 21 May 2008 – a call for the EC toencourage Member States to harmonise the classification of financialinformation and promote the use of new technology, such as XBRL;Council meeting of 7 November 2008 – aiming to promote commonstandards between financial centres, more transparency andcomprehensive information systems, and reformed multilateralsurveillance.26 January 2009 - EC announced plans to revise the operational frameworkand decision-making processes of the Committee of European SecuritiesRegulators (CESR), Banking Supervisors (CEBS) and Insurance &Occupational Pensions Supervisors (CEIOPS ). Seeking to safeguardfinancial stability by improving supervisory co-operation, the decision alsoproposes provide direct funding to those committees and to keyinternational financial reporting and auditing standard-setting bodies,namely the IASC Foundation, the European Financial Reporting AdvisoryGroup (EFRAG) and the Public Interest Oversight Body (PIOB). The proposalis now in the co-decision procedure for approval by the EP and the Council.XBRL Europe endorses the position of FEE regarding the setting up of“harmonised rules” and specifically the “fundamental review of the Basel 2rules” and the extended use of the IFRS (comment N°25) High Level Group on Financial Supervision in EU – De Larosiere Report (Feb 2009) XBRL for Young CPAs April 2011 http://ec.europa.eu/internal_market/finances/docs/de_larosiere_report_en.pdf
  • Requires submission of XBRL-formatted financial statements andfinancial statement schedules via an „XBRL Exhibit‟ for annual, quarterlyfilings and registration statements (and via posting XBRL Exhibit oncorporate website)„Disclosure neutral‟Phase-in, however early adoption is permitted:Domestic and foreign large accelerated fliers using US GAAP with aworldwide public float of greater than $5 billion (at Q2 of most recentcompleted fiscal year) - beginning with a periodic report on Form 10-Q, Form 20-F or Form 40-F containing financial statements for a fiscalperiods ending on or after June 15, 2009.Remaining large accelerated filers using US GAAP – beginning with aperiodic report on Form 10-Q, Form 20-F or Form 40-F containingfinancial statements for a fiscal period ending on or after June 15,2010.All remaining smaller domestic filers as well as foreign private issuersusing IFRS – beginning with a periodic report on Form 10-Q, Form 20-F or Form 40-F containing financial statements for a fiscal periodending on or after June 15, 2011. http://WhiteHouse.gov http://USA.gov http://Recovery.gov XBRL for Young CPAs April 2011
  • Multi-agency program to reduce the reporting burden by 25% ormore by:•removing unnecessary/duplicated information from govt forms•adopting a common reporting language, based on internationalstandards and best practice providing business with a singlesecure online sign-on to the agencies involved•utilising business software to automatically pre-fill governmentforms•providing an electronic interface to enable business to report togovernment agencies directly from their accounting software,which will provide validation and confirm receipt of reports-making financial reporting to government a by-product ofnatural business processes.Emerging as a governmental compliance best practice in:- Govt of Netherlands SBR Project- State Controllers Office, State of Nevada- Danish Commerce and Companies Agency (DCCA),- Govt of New Zealand SBR- Govt of Australia – Dept Treasury- Singapore SBR- Government of Ireland eGov policy- Government of Poland- United Kingdom HMRC/Companies Hse joint filing- Ministry of Corporate Affairs India- European Commission driving SBR “joint filings” projects in EUcountries- Belgium, Denmark, Ireland, UK, Estonia, Lux, Poland,Italy XBRL for Young CPAs April 2011
  • 3. What does it mean for me?12 XBRL for Young CPAs April 2011
  • NO SE FI NL DE CZ DK IASB LU PL RU HU CA SI UK IE BE RO MD US ES IT BM CN FR MX CY LB JP KR CH AE IN MTEstablished XBRL HKJurisdictions CO SG MYProvisional XBRLJurisdictions BR XBRL Projects Ongoing AU CL ZA NZ AR Countries that require or permit IFRSs Countries seeking convergence with the IASB on pursuing adoption of IFRSs XBRL for Young CPAs April 2011
  • Sept2009: published for public comment an exposure draft ofthe IFRS for SMEs Taxonomy. The Taxonomy is a completetranslation of the International Financial Reporting Standardfor Small and Medium-sized Entities (IFRS for SMEs) into XBRL(eXtensible Business Reporting Language).Sept2009: Release of IFRS Taxonomy 2009 labels in DutchAug2009: Release of IFRS Taxonomy 2009 labels in ItalianJuly 2009: Release of IFRS Taxonomy 2009 labels in FrenchJan2009 the IASC Foundation released the near final versionof the IFRS Taxonomy 2009 for public comment.26 Feb09 -released its IFRS Taxonomy Module Manager(ITMM) for open source.Feb2009 the IASC Foundation released the simplified Chinesetranslation of the complete label linkbase for the IFRSTaxonomy 2008,Jun2009: released new support materials for the IFRSTaxonomy 2009 and Arabic and Spanish translations XBRL for Young CPAs April 2011
  • Context rich US GAAP and IFRS GAAP XBRL taxonomies issued by FASB and IASB including calculation, presentation, reference (GAAP) and language link-bases will supplement and may replace traditional paper bound volumes and become the de-facto standards for electronic business reporting. These taxonomies will become embedded into ERP systems, data warehouses, accounting systems and desktop reporting toolsets to produce XBRL financial reports.15 XBRL for Young CPAs April 2011
  • XBRL for Young CPAs April 2011
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  • …adding semantic intelligence..(borrowed from the airline industry) Tramore Bay , Waterford , Ireland - Latitude :55.1833 degrees and Longitude :-8.03333 degrees XBRL for Young CPAs April 2011
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  • Social Networks participants take datatransmitted from aircraft transpondersand collaborate to overlay onto GoogleMaps API for iPhone XBRL for Young CPAs April 2011
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  • Transparency accountants XML XSLT adoption emerging nations align analysts assurance auditors audit-committee benefits semantic-web G20 codification committee AJAX company complex contact copyright CFO corporate data XSBdownload dynamic IFRS enterprise exchange Financial Reporting Web 3.0 executives extensible fasb filings financial forms-free GAAP SOA hosts http iasb ima industry information stylesheet interactive international XIIinternet investors ireland webservices mobile language licenceglobal RSS Atom Cloud-Computing Offshore Outsourced GAAP versus IFRS US-GAAP Crowd-sourced Realtime Assurance XBRL OpenSource Social-Media CSR sustainability XHTML interoperability standards convergence XBRL for Young CPAs April 2011
  • 5. What does it mean for me? Technology is transforming the dialogue we have we our stakeholders. Traditional distribution channels for business reporting are being replaced with interactive digital media. User-demand for real-time interactive financial reports will drive the current generation from web based static financial reporting to an XBRL-enabled semantic web30 XBRL for Young CPAs April 2011
  • 6. Interactive Data and the Annual Report XBRL for Young CPAs April 2011
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  • 6. What does it mean for me?34 XBRL for Young CPAs April 2011
  • 7. Financial Reporting and Mobile Computing…in the not too distant future XBRL for Young CPAs April 2011
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  • 7. What does it mean for me? Web3.0, semantic web, XBRL and will be a disruptive force within business reporting and continue to drive transformation within the finance department and CPA firms in the coming years. Mobile applications will begin to store your XBRL data in the cloud as opposed to on the mobile device, and the applications will become more powerful as processing power is also offloaded to the cloud.42 18 March 2011 XBRL for Young CPAs April 2011
  • 8. Human Readable Interactive Data (iXBRL) Inline XBRL is a standard for embedding XBRL fragments into an HTML document or web page. The objective is to provide documents which can be viewed in a web browser while making use of XBRL tags which can be processed automatically by consuming applications. This specification defines the syntax for such documents and how the syntax maps into an XBRL instance. XBRL for Young CPAs April 2011
  • 8. What does it mean for me? XBRL fragments can be written onto XHTML web pages and consumed by standard web browsers enabling easier human reading. Wed Browser add-ons can be used in the review and sign-off process to ensure quality assurance. Additionally the “look and feel” of the printed financial statements can be preserved using iXBRL specification.46 XBRL for Young CPAs April 2011
  •  Raising awareness- understanding XBRL and what problem it solves Implementation Options – time spent planning your implementation project will save time later Selecting Software- XBRL is an evolving technologies. Software options are varied and evolving quickly Mapping Data – the mapping of data to taxonomies needs to be understood and practiced Visualising the Data- different regulators may require different options to make XBRL human-readable Quality Assurance- a blended skill-set of technology , XML languages and financial knowledge is required to ensure quality of your filings- build your team accordingly XBRL for Young CPAs April 2011
  • 9. What does it mean for me? 1. Get involved early 2. Understand what XBRL is and how it will impact you 3. Build the right team 4. Evaluate your strategies 5. Embrace technology as a change agent 6. Understand the overlaps between accounting skills and technology48 XBRL for Young CPAs April 2011
  • XBRL for Young CPAs April 2011
  • Conor OKelly is 1st Vice Chairman of XBRLInternational, the non-profit consortium of over 600members developing the XBRL Standard and a memberof the XBRL International Board of Directors.He is the past Chairman of XBRL Europe, theconsortium of European XBRL Members , past Chair ofXBRL Ireland and represents Ireland on the InternationalSteering Committee of XBRL International.He is a Fellow of Chartered Accountants Ireland with anMSc in IT Management . He has twelve yearsbackground in global IT managed services outsourcing,global project management and strategic IT businessplanning with Hewlett Packard and Ericsson.Mr. OKelly is a past member of Council of CharteredAccountants Ireland. XBRL for Young CPAs April 2011