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The Next Technology Revolution XML XBRL

The Next Technology Revolution XML XBRL. Neal Hannon and Saeed Roohani XBRL Educational Resource Center At Bryant College XBRL Education Co-Chair E-Mail: xbrl@bryant.edu Phone: 401.232.6195. Rhode Island Society of Certified Public Accountants May 17, 2001. Defines Tags.

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The Next Technology Revolution XML XBRL

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  1. The Next Technology RevolutionXML XBRL Neal Hannon and Saeed Roohani XBRL Educational Resource Center At Bryant College XBRL Education Co-Chair E-Mail: xbrl@bryant.edu Phone: 401.232.6195 Rhode Island Society of Certified Public Accountants May 17, 2001

  2. Defines Tags

  3. XBRL International is gaining strength • XBRL activities occurring in— • United States • Canada • Australia • China & Hong Kong • Japan • Malaysia • New Zealand • Singapore • Taiwan • Germany • India • Ireland • Netherlands • Nordic Federation (Denmark, Norway, Sweden) • South Africa • Spain • Switzerland • United Kingdom • And on a global level through the— • International Accounting Standards Council • International Press Telecommunications Council • International Standards Organization

  4. On a Global level through the— International Accounting Standards Council International Press Telecommunications Council International Standards Organization On a Country Level: United States Canada Australia China & Hong Kong Japan Malaysia New Zealand Singapore Taiwan Germany India Ireland Netherlands Nordic Federation (Denmark, Norway, Sweden) South Africa Spain Switzerland United Kingdom XBRL International is gaining strength

  5. How we are organized – US Jurisdictional

  6. XBRL Impact "The explosive growth of the Internet is not only changing the way companies conduct their business, it also promises to forever alter the way they communicate business performance.” - CFO Magazine, February 2000

  7. XBRL Documents • XBRL for Financial Statements • XBRL for General Ledger • XBRL for Journal Entry Reporting • XBRL for Credit Reporting • XBRL for Performance Press Releases • XBRL for Risk Reporting • XBRL for Regulatory Filings • XBRL for Tax Filings • XBRL for Assurance Schedules • XBRL for Authoritative Literature • XBRL for “Business” Reporting

  8. XBRL Support “I would like to see you develop valuation models that result in consistent, comparable and fair values of assets and liabilities. I would like to see you hone specific, but plain English definitions for the types of information you believe should be included in public disclosure. I would like to see you take your XBRL project a step further, providing account classifications for companies in common industries. In short, I challenge you to turn all of this data into meaningful information for investors.” - Arthur Levitt, Chairman, U.S. Securities & Exchange Commission October 24, 2000, at the Fall Council of the AICPA (Las Vegas, Nevada)

  9. XML for Financial Reporting • Enables a dramatic improvement in the processing of financial reports • XBRL documents can be— • Prepared efficiently • Exchanged reliably • Published more easily • Analyzed quickly • Retrieved by investorssimplyto enable smarter investments

  10. Benefits • XBRL is: • NOT a new accounting standards but enhances the distribution and usability of existing financial statement information • Enabler and an extension for relational database functionality for all financial statement information

  11. Problems XBRL Addresses • Ineffective communication to investors • Inefficient aggregation and analysis • Inefficient creation of financial statements

  12. Why XBRL ? • Enable business reporting that leverages the Internet & XML • Effective access and analysis of business reports • Improve corporate communications with stakeholders

  13. Who benefits Process Benefits:Lowering Financial Reporting Cost Printed Financials • Today’s external reporting processes • Rework and delay • Ad hoc and non repeatable • No path forward Regulatory Filings Web Site Accounting System Tax Return Explanatory Text Third Party Information Trade Filings

  14. XBRL Documents Who benefits Process Benefits:Lowering Financial Reporting Cost Printed Financials • Common interchange format and storage is good information management practice • Reduces redundancies & discrepancies • Repeatable processes using tools • A platform for continuous reporting Regulatory Filings Web Site Accounting System Tax Return Explanatory Text Third Party Information Trade Filings

  15. US GAAP Financial Statement In English US GAAP Financial Statement In Dutch XBRL US GAAP Financial Statement to the Web US GAAP Financial Statement to Print US GAAP Financial Statement to Cell Phone G/L Package XBRL: Interoperability & Multiple Uses ERP XBRL Custom Developed Systems Other Sources of Information XBRL Other Sources of Information Other Sources of Information

  16. US GAAP Financial Statement Investors & Creditors EDGAR Filing XBRL XBRL Tax Filing Government Bank Filing News Agencies And Others Press Release G/L Package XBRL: Interoperability & Multiple Uses ERP XBRL Custom Developed Systems Other Sources of Information XBRL Other Sources of Information Other Sources of Information

  17. IAS Financial Statement in German Investors & Creditors US GAAP Financial Statement In English XBRL XBRL French Tax Filing Government Canadian Banking Filing News Agencies And Others EDGAR 10k line item via Cell Phone G/L Package Once Every Event is tagged in XBRL… ERP XBRL Custom Developed Systems Other Sources of Information XBRL Other Sources of Information Other Sources of Information

  18. XBRL Working Model: Planned Specifications XBRL for G/L Journal Entry Reporting XBRL for Financial Statements XBRL for EDGAR Filings Business Operations Internal Financial Reporting External Financial Reporting Investment and Lending Analysis Processes XBRL for Business Event Reporting XBRL for Tax Filings Companies Financial Publishers and Data Aggregators Investors Participants Trading Partners Management Accountants Auditors Regulators Software Vendors

  19. What it is XBRL: not a Transaction Protocol • XBRL is merely a format to serialize complex, structured financial data: e.g., statements, G/Ls. • Therefore, it cannot replace OFX, ebXML, ANSI X.12 Trans Set 821, OMG G/L Spec, ... • Future message sets in those protocols could include XBRL tagged data if they need to send financial statements in the message body. • XBRL provides a framework and an AICPA approved vocabulary that can be extended to many other reporting frameworks.

  20. XBRL: not an accounting standard • Means of communicating • Current GAAP • Current practice • Flexible standard • Future standards • Future general practice

  21. XBRL Impact "Coming down the road are standards like XML and XBRL that take data handling a major step forward from HTML, the current web standard. With these new standards, plus those for accounting, it will be possible to scan a universe of corporate data across the web and extract, say, the chairman's report for all companies with a certain market cap, EBITDA, and gearing. …

  22. XBRL: A Fragment of a Raw Data • Raw Data in Spreadsheet… • Same Raw Data in XML (XBRL) Format <group> <group type="CurrentAssets.CashandCashEquivalents"> <item period="1999">$1,611 </item> <item period="1998">$1,648 </item> </group>

  23. What software ‘sees’ is the differentiator and drives benefits (here is an example)

  24. “ Importance of Reporting …[W]hat excites the CEO is the ability to know what the business is doing at any given point in time, react quickly to market shifts and competitive threats and remain in tight control while empowering employees to make informed decisions more quickly. ” Year End Earnings Release Call August 10, 1999 John Chambers Cisco CEO

  25. “ ” Best Practice The Virtual Close … has, in my opinion, just as much impact on a company’s future success or lack thereof as the well-published e-commerce area. John Chambers Cisco CEO Year End Earnings Release Call August 10, 1999

  26. XBRL Impact • “ … If Europe moves quickly to take up these standards, it could give them an attractive lead in the race to accessible and comparative key data that would stimulate investor interest. It would undoubtedly spawn a plethora of research tools that would be useful to both private and professional investors.” • - Investors Chronicle, August 9, 2000

  27. XBRL and the Emergence of ‘e-Standards’ • E-Standards are fundamental • HTML is the standard that enabled the web’s first ‘Big Step’ • XML is the web’s next ‘Big Step’ • Over 200 XML-Based Specifications and Protocols exist, including— • RosettaNet – computer company supply chain and trading webs • OBI - Open Buying on the Internet - retail e-commerce • FpML - Financial Products (Derivatives, Swaps, FX) • ACORD XML - Insurance industry information exchange standards derived from EDI. • UN/CEFAC = EBXML • XBRL is uniquely focused on financial reporting

  28. Standard .orgs (reporting vs ‘e’) Accounting / Auditing Reporting ‘e-Business’ • ASB • IASC • FASB • IFAC • SEC • Territory Institutes • W3C • OASIS;UN/CEFACT (ebxml) • xml.org • RosettaNet • ACORD What about these? CPAs participate / lead in these

  29. The range of what is under development today………... “Horizontals” (Infrastructure) there are others….. HR CRM XBRL is uniquely focused on business reporting Etc. CHEMX ACORD FpML ANX RosettaNet “Verticals” (Industry Supply Chains) there are others…….

  30. Tax Regulators Investors Creditors Lenders Website Aggregators One way One way ERP G/L Packages CRM Transaction Creation 2-way 2-way • Orders • A/P • Delivery • Orders • A/R • Delivery XBRL Adds Reporting to E-Commerce BUSINESS Suppliers Customers

  31. Tax Regulators Investors Creditors Lenders Website Aggregators One way One way XBRL BUSINESS REPORTING BUSINESS ERP G/L Packages CRM Transaction Creation 2-way 2-way (e-)Commerce OTHER XML INITIATIVES Suppliers Customers • Orders • A/P • Delivery • Orders • A/R • Delivery XBRL Adds Reporting to E-Commerce

  32. XBRL - What Key XBRL Components • XBRL / XML Specification (XBRL.org) • Global architecture/technology • XBRL hierarchical vocabulary (jurisdiction/industry) • Dictionary of terms by jurisdiction/industry sector • Style Sheets (preparer) • XBRL enabled tools (market)

  33. Key to our Success • Market driven model • Start simple, be inclusive • Broad supply chain participation • Members support XBRL • Members do not compete on the “framework” • Build structure & systems to support open community & market development

  34. Steps in Technology Acceptance Acceptance Simplification/Tools Taxonomy Visionaries

  35. XBRL Working Model: Supply Chain & Beneficiaries Today XBRL for Financial Statements Internal External Investment Business Processes Processes Financial Financial and Lending Operations Reporting Reporting Analysis Financial Publishers Companies Investors Participants Participants and Data Aggregators Trading Management Auditors Regulators Partners Accountants Software Vendors

  36. Benefits to Today's Users • 1. Reduce cost of analyzing and reporting financial information • 2. Increase speed and efficiency of business decisions • Enhance the distribution and access of existing financial statement information • More readily exchanged • Increase and enhance analysis

  37. App to fin rep XBRL Taxonomies Under Development • Commercial and Industrial Companies, US GAAP - Published • Federal Departments, US • Mutual Funds, US • Financial Institutions, US • Commercial and Industrial, IASC • Commercial and Industrial, German GAAP • Bank Call Reports - FDIC

  38. How Do You Get There? Needs Assessment Design Solution/Business Plan Training & Education Implementation

  39. XML Shortcomings? Not a replacement for integration and middleware tools Lots of Hype, not a solution for everything There are many different standards among industries Standards still evolving But, you can’t wait while the standards evolve….

  40. XBRL Development & Adoption

  41. Additional Education Sources • www.xbrl.org - Student Competition • web.bryant.edu/xbrl • www.ebxml.org • www.w3.org; www.xml.org • www.rosettanet.org • www.ibm.com/developer/xml • www.microsoft.com/industry/biztalk

  42. Change is not what it used to be….. Change has become a process; it’s become a permanent part of the external environment Final Thought……..

  43. Summary • FASTER • BETTER • CHEAPER • Our profession will have to follow technology and record business activity in an real-time mode.

  44. Concluding Remarks….. Embrace Change or Die!

  45. To download slides………. http://web.bryant.edu/~xbrl/riscpa.ppt

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