Presentation on Limitations on current business reporting and XBRL.
Presented to an event organized by Nepal Chartered Accountant Students' Association (NCASA) about an XBRL solution proposed by me and my team in 2013 as a part of my Engineering's Final Project.
Credits :
Team :
Aayush Shrestha - aayush@nlocate.com
Ashok Basnet - mail@ashokbasnet.com.np
Umanga Bista - bistaumanga@gmail.com
Sarvagya Pant - sarvagya.pant@gmai.com
Supervisors :
Dr Aman Shakya - amanshakya@gmail.com
Er Sansar Jung Dewan - sansardewan@gmail.com
2. • Introduction
• Background
• Problem Statement and Motivation
• Introduction to XBRL
• Looking at an XBRL Document
• Benefits of adopting XBRL
• System developed for assisting adoption
• System Overview
• Demo of web based XBRL Generator
• Demo of Excel based XBRL Generator
• Information gained from XBRL documents
• What the future looks like
Overview
2
4. • XBRL Implementation Financial Reporting to Office Of
Company Registrar (OCR)
• Built a prototype of a system that covered Generation, Storage
and Analysis of XBRL documents
• Awarded Best Implemented Project Award by Institute of
Engineering, Tribhuwan University
Background
Introduction
4
5. • Everything of stacks of paper
• Digital but not computable
• Lack of a defined common standard
• Not readily available
• Redundancy and Inconsistency
• Valuable Data, Major concern for stakeholders
Motivation
Introduction
5
6. • eXtensible Business Reporting Language
• Dialect of XML for business and financial data
• Taxonomy & Instance documents
• Internationally accepted
• IFRS and GAAP
XBRL : A Global Standard
Introduction
6
13. • Manageable and always available.
• Machine Readable and Computable Information
• A common standard across the country
• No more redundant works.
• Prevent Frauds
• Valuable Information for stakeholders
Benefits
Introduction
13
18. Excel Based XBRL Generator
18
Macro Program on Excel
To generate XBRL
Creating Financial Documents
In Excel as usual
Manual mapping of IFRS
taxonomy
26. • Change policies and culture.
• Adapt to new technology.
• Impose new laws and requirements.
• A couple years at least.
What’s Needed?
Conclusion
26
27. • Lawmakers, Engineers, Chartered Accountants and
stakeholders working hand in hand.
• Localization of Taxonomy in accordance with NAS
• Imposing policies for requirement and maintenance
of reports in XBRL format by government
• Getting our taxonomy accepted by XBRL
International
How we get there?
Conclusion
27
In my final year of computer engineering, as our Final Major Project, we were working on a project called “XBRL Implementation for Financial Reporting to the Office of Company Registrar”
We were four people in the team and we were supervised by Dr Aman Shakya of IOE and Er Sansar Jung Dewan from OCR
Successfully built a prototype of a system that covered generation, storage and analysis of XBRL documents
Won Best Implemented Project Award in IOE
This project was initiated and conceptualized by Mr Sansar Jung Dewan of OCR.
When we first went to OCR for a field survey, he showed us stacks and stacks of papers that had financial reports. It was a mess.
Now there had been some efforts of digitizing the system. They had started receiving reports in PDF, Doc or Excel Formats.
This was digital but not computable.
The other problem that we saw was lack of a common defined standard.
It was hard to find data.
Now what we could clearly see was that all this data in front of us was valuable. Specially to stakeholders of companies.
XBRL stands for eXtensible Business Reporting Language
It is a dialect of XML specially designed for business and financial data representation.
By a show of hands… how many of you know what XML is?
For those who don’t know, XML is used to define syntax of a document.
Taxonomy contains definition, concepts and relationships of tags.
Instance Documents contain the actual data based on the taxonomy
International accepted across over 113 countries all over the world.
Two maor standard or principles. IFRS and GAAP
IFRS – International Financing Reporting Standard
GAAP – Generally Accepted Accounting Principles
This is what an XBRL Document looks like.
I know it looks intimidating. Lets break it down.
The header part of the document does nothing but defines that this is an XML and an XBRL document and links to the taxonomy that it follows.
On the second part, we define context for the document like the dates, the currency unit it follows, etc.
The last section consists of the facts. Facts are the actual data of a financial document. It consists the actual data of the document enclosed by XBRL tags defined by IFRS. These data are now completely readable by a computer and hence a program can read this document and make sense out of it.
The major reason is to take the system from a chaotic garbage collection to more manageable form where data can be computed, measured and analyzed.
Instance Creator : Two Types.
- Excel Macro
- Based on web forms
Repository
- used to archive xbrl filings
- admin panel to manage submissions, analytics engine and open data access
The web based generator is an easy to use XBRL generator
All you need to do is select the entity and enter the value and click on “Generate XBRL Document” button
This is limited to only creating Balance Sheet now.
Needs more work to make it complete and thorough
Excel based XBRL Generator is a little complex but can, in theory, generate any kind of XBRL document
An auditor would create a financial document in Excel as usual , but in the Excel file (or a copy of it) that we created.
This Excel file has a macro program inside of it that can generate the XBRL document from the data
An expert or a trained person with knowledge of IFRS Taxonomies would map each data in the financial document to appropriate IFRS taxonomy
Tedious to learn but flexible
We need to adapt a change in culture and policy
Be more open to new technology
New laws and regulations has to be imposed to ignite the change.
It would take at least a couple of years to fully adapt to this new technology.
People from different disciplines need to work hand in hand to make the adoption as quick and efficient as possible. Efforts from only one side would not suffice.
The adoption would occur in 3 Phases
First Phase : Localization of IFRS taxonomy in accordance to Nepalese standards.
Second phase: Imposing laws and requirements and development of management systems from the government side.
Third Phase : Getting our taxonomy accepted by XBRL International