10 Things A Young Cpa Should Know About Xbrl

10 Things a Young CPA Should know about XBRL Conor O’Kelly BComm, FCA, M.Sc Vice Chair, XBRL International Dublin, Ireland 25th Feb 2010 XBRL for Young CPAs February 2010

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. Technology Best Practices and the Annual Report 7. Finance 3.0 and Mobile Computing 8. Developments in UK and Ireland 9. Key Readiness Challenges 10.How do I join the conversation? XBRL for Young CPAs February 2010

1. What is XBRL?  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 February 2010

1. What does it mean for me? All stakeholders in the financial reporting supply chain are now engaged in the discussion on XBRL including governments, regulators, preparers and consumers of business information. CPAs awareness in the Americas, Europe and Asia is increasing amongst the preparer community who must now develop engagement strategies. 4 XBRL for Young CPAs February 2010

2. What are the benefits of XBRL?.. 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 February 2010

2. What does it mean for me? • 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 Compliance Peter 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 February 2010

3. XBRL Adoption Drivers  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 February 2010

3. XBRL Adoption Drivers- Basel II Banking Supervision The Basel Committee on Banking Supervision provides regular cooperation on banking supervisory matters designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices. Ensuring capital allocation is more risk sensitive; Separating operational risk from credit risk, and quantifying both; align economic and regulatory capital 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 the framework for harmonised supervisory reporting by 2012, in conjunction with CEIOPS. Priority activities includes developments to both the COREP (COMmon REPorting) and FINREP (FINancial REPorting) taxonomies. •Oct2008 Reserve Bank of India launch XBRL Basel II reporting for Indian Banking Sector . •Emerging Basel II XBRL projects in South America, Chile, Brazil, Argentina, Colombia, Mexico and Asia XBRL for Young CPAs February 2010

3. XBRL Adoption Drivers- Europe: Reducing Administrative Burden January 2007: Commission presents Action Programme (AP) for reducing administrative burdens on businesses in the EU by 25% in 2012. It is part of its Better Regulation strategy. AP is endorsed by the European Council which agreed to a 25% reduction target for burdens originating in EU law and invited Member States to “set national targets of comparable ambition.” The EU reduction target covers Community legislation and related national transposition measures. A 25% reduction of AB in the EU could yield € 150 bn in the medium term (an increase of EU GDP of 1.4%). The project will take 18 months. The project started in Sept 2007. The results reviewed by the European Council March 2009. EU Action Programme for Reducing Administrative Burden http://ec.europa.eu/enterprise/regulation/better_regulation/docs/gjk_actionprog_170108.pdf XBRL for Young CPAs February 2010

3. XBRL Adoption Drivers- Europe, Market Regulation Oct2008- EU President Barroso appointed High Level Group on Financial Supervision in EU aiming to promote e-gov and identify best practices in IT use in order to enable the EU to contribute to international and multi-national initiatives. The group are encouraging the Commission (and Member States) to consider a ‘pull model – once only’; European Parliament (EP) resolution of 21 May 2008 – a call for the EC to encourage Member States to harmonise the classification of financial information and promote the use of new technology, such as XBRL; Council meeting of 7 November 2008 – aiming to promote common standards between financial centres, more transparency and comprehensive information systems, and reformed multilateral surveillance. 26 January 2009 - EC announced plans to revise the operational framework and decision-making processes of the Committee of European Securities Regulators (CESR), Banking Supervisors (CEBS) and Insurance & Occupational Pensions Supervisors (CEIOPS ). Seeking to safeguard financial stability by improving supervisory co-operation, the decision also proposes provide direct funding to those committees and to key international financial reporting and auditing standard-setting bodies, namely the IASC Foundation, the European Financial Reporting Advisory Group (EFRAG) and the Public Interest Oversight Body (PIOB). The proposal is 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 2 rules” 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 February 2010 http://ec.europa.eu/internal_market/finances/docs/de_larosiere_report_en.pdf

3. XBRL Adoption Drivers- US Securities and Exchange Commission Requires submission of XBRL-formatted financial statements and financial statement schedules via an ‘XBRL Exhibit’ for annual, quarterly filings and registration statements (and via posting XBRL Exhibit on corporate website) ‘Disclosure neutral’ Phase-in, however early adoption is permitted: Domestic and foreign large accelerated fliers using US GAAP with a worldwide public float of greater than $5 billion (at Q2 of most recent completed fiscal year) - beginning with a periodic report on Form 10- Q, Form 20-F or Form 40-F containing financial statements for a fiscal periods ending on or after June 15, 2009. Remaining large accelerated filers using US GAAP – beginning with a periodic report on Form 10-Q, Form 20-F or Form 40-F containing financial statements for a fiscal period ending on or after June 15, 2010. All remaining smaller domestic filers as well as foreign private issuers using IFRS – beginning with a periodic report on Form 10-Q, Form 20- F or Form 40-F containing financial statements for a fiscal period ending on or after June 15, 2011. http://WhiteHouse.gov http://USA.gov http://Recovery.gov XBRL for Young CPAs February 2010

3. XBRL Adoption Drivers – Standard Business Reporting (SBR) Multi-agency program to reduce the reporting burden by 25% or more by: •removing unnecessary/duplicated information from govt forms •adopting a common reporting language, based on international standards and best practice providing business with a single secure online sign-on to the agencies involved •utilising business software to automatically pre-fill government forms •providing an electronic interface to enable business to report to government agencies directly from their accounting software, which will provide validation and confirm receipt of reports -making financial reporting to government a by-product of natural 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 EU countries- Belgium, Denmark, Ireland, UK, Estonia, Lux, Poland, Italy XBRL for Young CPAs February 2010

3. What does it mean for me? By 2011 every listed company in China, Japan and the US will have to report to its securities regulator using XBRL. A very significant number of financial institutions in EU member states must report in XBRL for supervisory purposes. Every company in Spain, Belgium, Singapore and Denmark either produces its annual accounts in XBRL or will do so by 2011. Within the next 12 months, every business in Australia and the Netherlands will be able to file its tax, statistics, and accounting returns in XBRL. In 2011, every UK company will file its financial statements to the tax regulator using Inline XBRL. The IASCF has made XBRL taxonomies available for the accounting standards that are approved for use in 110-120 countries. 13 XBRL for Young CPAs February 2010

4. XBRL and IFRS NO SE FI NL DE CZ IAS DK LU PL RU B HU CA SI UK AT UA IE BE RO TR US ES IT CN FR PT LB JP KR CH IN MT Established XBRL VZ HK Jurisdictions AE CO SG MY Provisional XBRL Jurisdictions BR XBRL Projects Ongoing AU ZA NZ AR Countries that require or permit IFRSs Countries seeking convergence with the IASB on pursuing adoption of IFRSs XBRL for Young CPAs February 2010

4. XBRL and IFRS Sept2009: published for public comment an exposure draft of the IFRS for SMEs Taxonomy. The Taxonomy is a complete translation of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) into XBRL (eXtensible Business Reporting Language). Sept2009: Release of IFRS Taxonomy 2009 labels in Dutch Aug2009: Release of IFRS Taxonomy 2009 labels in Italian July 2009: Release of IFRS Taxonomy 2009 labels in French Jan2009 the IASC Foundation released the near final version of 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 Chinese translation of the complete label linkbase for the IFRS Taxonomy 2008, Jun2009: released new support materials for the IFRS Taxonomy 2009 and Arabic and Spanish translations XBRL for Young CPAs February 2010

4. What does it mean for me? 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. 16 XBRL for Young CPAs February 2010

5. The Evolution of the Web and Its Impact on Business Reporting XBRL for Young CPAs February 2010

..how we consume business data is changing with technology and consumer media trends XBRL for Young CPAs February 2010

..Web2.0 reduces time to market lead time for financial reporting XBRL for Young CPAs February 2010

Web2.0 and Social Media are widely used in business networking, sharing information and building business relationship…but it lacks semantic intelligence XBRL for Young CPAs February 2010

Web 1.0 XBRL for Young CPAs February 2010

XBRL for Young CPAs February 2010

Transparency accountants XML XSLT adoption emerging nations align analysis analysts assurance auditors audit- committee benefits semantic-web G20 codification committee AJAX company complex contact copyright CFO corporate data XSB download dynamic IFRS enterprise exchange Finance 3.0 executives extensible fasb filings financial forms-free GAAP SOA hosts http iasb ima improves india industry information stylesheet interactive international XII internet investors ireland webservices mobile language licence global 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 February 2010

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. The current generation of web based financial reporting is being replaced by XBRL-enabled semantic web 24 XBRL for Young CPAs February 2010

6. Technology Best Practices and the Annual Report XBRL for Young CPAs February 2010

6. What does it mean for me? XBRL tagged data will underpin the financial statements, be context rich, interactive and offer enhanced user experience along with reduced cost to produce. Internal XBRL taxonomies developed by Internal Audit will drive analytics-driven business intelligence and telemetry , incorporating calculation and disclosure rules, materiality thresholds and corporate governance requirements. This will provide a toolset for continuous control measurement and real-time auditing which is embedded into the rest of the enterprises business reporting model. In this way XBRL will lower audit (internal & external) costs by providing the CFO with a risk model incorporating corporate governance, operational controls, regulatory compliance and GAAP based financial reporting 28 XBRL for Young CPAs February 2010

7. Finance 3.0 and Mobile Computing XBRL for Young CPAs February 2010

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. 37 24 February 2010 XBRL for Young CPAs February 2010

8. Developments in UK and Ireland Éire United Kingdom Irish Government endorses adoption of From April 2011, all companies are required to mandatory electronic filing along with XBRL make a Company Tax Return will have to: financial statements. - file their company tax returns online for all Companies Registration Office (CRO) and returns delivered after 31 March 2011 for Revenue Commissioners to work closely accounting periods ending after 31 March 2010, together and to engage with accountancy bodies using a specified XBRL data standard for accounts to produce a cross-agency result which can be and computations and pay their Corporation Tax replicated by other Government agencies. electronically. The High-level Group also suggests that -any returns filed online with accounts and companies file accounts once through XBRL computations sent as Portable Document Format (PDF) attachments – all returns delivered after 31 DETE believes that by introducing a March 2011 for accounting periods ending after 31 simultaneous return date to CRO and Revenue, March 2010, must be filed using a specified XBRL by phasing in mandatory e-filing, including (iXBRL) data standard for accounts and accounting data in XBRL-format, and by computations. ensuring that agencies can cross-access data, the burden on Irish business will be The filing and electronic payment requirements are considerably reduced. defined in the draft regulations and directions, which provide further detail on a number of areas within the regulations, on the HMRC website. https://online.hmrc.gov.uk/information/faqs/corporationTax?faqid =eng.faq.largecompanies.faq.faqct068&affinitygroup= XBRL for Young CPAs February 2010

8. What does it mean for me? HM Revenue & Customs (HMRC) is implementing Lord Carter's recommendations to increase online filing which were accepted by Government at Budget 2006. The recommendations include compulsory requirements for businesses to file their Company Tax Returns online and to make Corporation Tax payments electronically. These regulations amend the Income and Corporation Taxes (Electronic Communications) Regulations 2003 (S.I. 2003/282, amended by S.I. 2005/3338). These amendments will provide new compulsory rules for Corporation Tax as follows: •online filing of Company Tax Returns using XBRL standard for all returns delivered after 31 March 2011 for accounting periods ending after 31 March 2010 •electronic payment of all Corporation Tax liabilities after 31 March 2011 39 XBRL for Young CPAs February 2010

9. Key Readiness Challenges.  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 February 2010

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 technology 41 XBRL for Young CPAs February 2010

10. How do I join the conversation? XBRL for Young CPAs February 2010

About the Author Conor O'Kelly is 1st Vice Chairman of XBRL International, the non-profit consortium of over 600 members developing the XBRL Standard and a member of the XBRL International Board of Directors. He is the past Chairman of XBRL Europe, the consortium of European XBRL Members , past Chair of XBRL Ireland and represents Ireland on the International Steering Committee of XBRL International. He is a Fellow of Chartered Accountants Ireland with an MSc in IT Management . He has twelve years background in global IT managed services outsourcing, global project management and strategic IT business planning with Hewlett Packard and Ericsson. Mr. O'Kelly is a past member of Council of Chartered Accountants Ireland. XBRL for Young CPAs February 2010

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10 Things A Young Cpa Should Know About Xbrl

by Conor O'Kelly on Feb 25, 2010

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