Embed Size (px)
Citation preview
ACG 4401Introduction to XBRL
What is a Supply Chain?
Financial Reporting Supply Chain
Financial Reporting Supply Chain
• Who’s in the Supply Chain?
– all stages of the preparation, approval, audit,
analysis, and use of financial reports.
– Participants in the financial reporting supply chain
include:
• accountants working within organizations, company
management, boards of directors, audit committees,
outside auditors, standard setters, regulators,
investment bankers, lawyers, credit rating agencies,
investors, and others.
The International Federation of Accountants Financial Reporting Supply Chain Survey Results (2007)
• Financial Reports have become less useful– Complexity– Burdens of Compliance
• cause "the essence of the business" to be overlooked.
– Similar results were found in the 2008 follow-up survey
The International Federation of Accountants Financial Supply Chain Survey 2008
• “despite improvements to the financial reporting process, the usefulness of financial reports has not improved much. The reliability of financial reports has certainly increased and so has the relevance of the information that they provide, but not their understandability.”
• “Examples of improvements include easier access to financial information (due to progress in web-based information and in XBRL)…”
So what is XBRL?
• A tool to create efficiency in the Financial Reporting Supply Chain
• But First......
Networks and Connectivity
• What is the primary problem with networking/connectivity?– Software applications that do not
understand each other … therefore special interfaces must be designed & maintained, etc.
– And humans have different understandings and views of data and information produced by the applications
Electronic Data Interchange (EDI)
• Computer-Computer Exchange of Data
• Business Data• Direct processing• Standardized
– ANSI X12• US and Canada
– EDIFACT• International
EDI Components
XML in Business
• What if you need to move information from one business application to another within your organization?
• What if you have data in a number of different databases that you frequently need to integrate, compare, share internally?
• What if you need to share information with trading partners & others outside your organization?
• XML provides the necessary rules, syntax & structure to make it possible!
XML• How can you appropriately structure
information exchanges so that they can be seamless & efficient?– There are 2 parts to the solution:– 1) Metadata – adding data about the data …
data that gives the data more meaning• “Tags” give meaning to the Data
– 2) Taxonomies - a way to document agreement on the structure of the data being shared … an agreed upon vocabulary defining the rules the metadata must follow• Taxonomies create this structure• In addition, the solution must be general enough to
be able to be applied universally!
What is this – Untagged Data
801482196 Stipend Base 400 2008-03-18 02:56:32 SYSTEM 17601794144497 Object Sale GazeboGiver 200 2008-03-13 23:14:32 Jumphere Carver 17201789465371 Stipend Base 400 2008-03-11 02:54:20 SYSTEM 17001777563514 Stipend Base 400 2008-03-04 02:54:11 SYSTEM 16601766386092 Object Sale Multi Gadget Box 100 2008-02-26 11:20:26 Dedric Mauriac 16201765800506 Stipend Base 400 2008-02-26 02:48:28 SYSTEM 16301765596888 Group Liability 1 2008-02-26 01:28:32 ICT Library Wunderkind, Ltd. 15901765139833 Upload Charge 10 2008-02-25 18:30:04 SYSTEM 15902754215714 Upload Charge 10 2008-02-19 07:34:52 SYSTEM 15912753914769 Stipend Base 400 2008-02-19 02:47:52 SYSTEM 15922
What is this?
ID Type Description Debit Credit Time Resident/Group Ending Bal.801482196 Stipend Base 400 2008-03-18 02:56:32 SYSTEM 17601794144497 Object Sale GazeboGiver 200 2008-03-13 23:14:32 Jumphere Carver 17201789465371 Stipend Base 400 2008-03-11 02:54:20 SYSTEM 17001777563514 Stipend Base 400 2008-03-04 02:54:11 SYSTEM 16601766386092 Object Sale Multi Gadget Box 100 2008-02-26 11:20:26 Dedric Mauriac 16201765800506 Stipend Base 400 2008-02-26 02:48:28 SYSTEM 16301765596888 Group Liability 1 2008-02-26 01:28:32 ICT Library Wunderkind, Ltd. 15901765139833 Upload Charge 10 2008-02-25 18:30:04 SYSTEM 15902754215714 Upload Charge 10 2008-02-19 07:34:52 SYSTEM 15912753914769 Stipend Base 400 2008-02-19 02:47:52 SYSTEM 15922
How can we understand Untagged Data
Multi Gadget Box
4002008-02-26 01:28:32
Jumphere Carver
Tags give meaning to the Data
• <?xml version="1.0" ?>• <transactions>• <transaction_794144497>• <id>794144497</id>• <type>Object Sale</type>• <description>GazeboGiver</description>• <deposit>200</deposit>• <time>2008-03-13 23:14:32</time>• <resident>Jumphere Carver</resident>• <end_balance>17201</end_balance>• </transaction_794144497>• <transaction_789465371>• <id>789465371</id>• <type>Stipend Base</type>• <description></description>• <deposit>400</deposit>• <time>2008-03-11 02:54:20</time>• <resident>SYSTEM</resident>• <end_balance>17001</end_balance>• </transaction_789465371>
So how does XML Fit Into This?
• Extensible Markup Language• Markup?
– Data being exchanged• Sent from computer-to-computer (intra and inter-
organizationally)– Defining the data
• Enclosing the data with descriptions of what the data is
– <> Tags used to enclose data
• Used to create Vocabularies– Standardized sets of tags (kind of like EDI)– XBRL is one such vocabulary– UBL is another
XBRL
XBRL: What is it?
XBRL (Extensible Business Reporting Language) is a royalty-
free, open specification for software that uses XML data
tags to describe financial information for public and private
companies and other organizations. XBRL benefits all
members of the financial information supply chain by
utilizing a standards-based method with which users can
prepare, publish in a variety of formats, exchange and
analyze financial statements and the information they
contain. The world's leading accounting, financial,
government and software organizations are involved in the
adoption and use of XBRL in the U.S.
Financial Information supply chain
XBRL Defined
• A Vocabulary• Adds Meaning and Context to:
– Accounting– Financial– Business Performance
• Turns data into Information– Understandable
• Humans and Computer applications– Reusable
Interactive Data
• XBRL– Liberates financial data from financial
documents– How do we validate the data?
• Huge opportunity for CPA’s
XBRL:
• adds meaning and context to accounting, financial, and other business performance data, making it understandable, reusable, and precisely interpretable by computer applications.
• is used to tag each piece of data in a standard way so that it becomes a piece of information that can be validated, stored, and processed by computerized applications.
• is an XML-based tool box to make computerized accounting and financial and business reporting more effective and efficient.
• enhances the value of accounting and financial reporting by specifying a standard way to tag “facts” reported by a specific entity, at a specific time, in a specific currency, and under identifiable accounting guidelines (e.g. US GAAP, IFRS).
• facts can be identified, addressed individually, analyzed in relation to other facts, and reused for other purposes.
XBRL
• X– eXtensible
• Beyond original intended use• Extended by End User• Tags extend use
• B– Business
• Financial Statement Reporting• R
– Reporting• Using US GAAP
• L– Language
• XML
• Vocabulary based on XML– Extensible Markup Language– Rules for describing data
XBRL Specification 2.1 (November 2005)
• Defines rules and syntax for XBRL documents– Taxonomies
• Dictionaries of standard tags– Instance
• Contain “facts” and meta-data
Instances and Taxonomies
• Instance Document– An instance of a companies financial
reporting• What company• What period• What currency• What purpose• What information
• Taxonomy– Dictionary of what tags can be used to
mark-up data
XBRL Information
• Once in tagged format does NOT need to be re-entered– So HTML statement for SEC– Glossy Printed Annual report for
investors– HTML for investor section of web page
• ALL CAN BE DONE WITH ONE UNDERYLYING DATA SET, XBRL!
• Eliminate human error
Who is behind XBRL
• Securities Exchange Commission– Interactive Data!
• AICPA– Efficiencies to the accounting profession– Re-use of data without manual re-entering
• XBRL International– Non-profit Organization– Creates Standards
• FASB– Charged with maintaining US GAAP taxonomy
XBRL Mandated Filing Dates
Company Type
Financial Statements
Block Footnotes
Detailed Footnotes
> 500 Million in outstanding stock ~ 55 companies
12-15-2009 12-15-2009 12-15-2010
Large Companies
12-15-2010 12-15-2010 12-15-2011
Small and IFRS reporting companies
12-15-2011 12-15-2011 12-15-2012
The XBRL Structure
• Tags– Description of what data is
• <Assets>1000</Assets>• Meta-data converts data to information
• Attributes– Meta-data (data describing data)
• <Assets bType = “debit”>1000</Assets>• Relationships
– Is something described as <Inventory> related to <Assets> ?
XBRL – Lets put it all together
• Instance Document– Contain tags describing data– ICU Medical
• Schema– Contains the definition of the tags
• LinkBases– Contains relationships between tags
• Taxonomy– Combination of Schemas (defining elements)
and LinkBases (relating elements)– XBRL US
Types of LinkBases
• Presentation– How to organize output
• E.g. what tags make up Current Assets• Calculation
– How related tags are summed (+ or -)• Definition
– Different tag names are related for the same thing• Inventory and Merchandise Inventory
• Label– Machine Readable to Human Readable
• CashAndCashEquivalents = Cash and Cash Equivalents
So How is This XBRL thing Working?
Columbia Business School’s Center for Excellence in Accounting and Security Analysis
• “An Evaluation of the current state and future of XBRL and interactive data for investors and analysts” (Dec. 2012)
• Interviews and surveys with:– preparers; regulators; analysts; investors; XBRL developers; data
aggregators; XBRL filing and consumption tool developers
• Findings:– “In our view, XBRL has succeeded in so far as the objective of
providing users with free, interactively-available numerical data from portions of published financial statements and footnotes, as soon as they are filed with the SEC. Most of the analysts and investors we spoke with are interested in and tried to use the footnote data that are XBRL-tagged.”
– “We have no doubt that analysis of companies will continue to be based off increasing amounts of data that are structured and delivered to users in an interactive format.”
– “However …”
