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XBRL In the Classroom
The Time is Now
Presented by Neal Hannon
What is the business problem ?
Is XBRL right for the classroom today ?
The crux of the problem is to develop a comprehensive system that is
• All inclusive and • Transparent to the user
YES IF
XBRL will soon become a dominant method of handling business reporting
Other areas of business are also moving to XML enabled information.
The Case for XML and XBRL
XML - a computer markup language that is extensible (flexible XML - a computer markup language that is extensible (flexible … can be added to)… can be added to)
XML is actually a bare-bones set of syntax rules to markup XML is actually a bare-bones set of syntax rules to markup any kind of text and dataany kind of text and data
XML is used to supply the structure of the text or dataXML is used to supply the structure of the text or data XML is used to tell both a human & computer software XML is used to tell both a human & computer software
what the text or data is … not how to display itwhat the text or data is … not how to display it
XML has become the fastest growing technology for information transportation and exchange the world of computing has ever seen.
Business Integrator Magazine says that nearly nine out of every ten enterprises claim that XML will be and important technology for their IT strategies over the next year
The Case for XBRL
The purpose of XBRL is “to enhance the flow of financial information through the creation of a globally useful language in which to describe financial facts and concepts.” David vun Kannon
XBRL is uniquely positioned to Provide mobility and transportability
to financial and business facts.
Students in AIS, Advanced Accounting,Auditing, Consolidations,
Mergers, Tax, Not-for-Profit will all be affected by XBRL
The Case for XBRL
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, Former chair, SEC
The Case for XBRL
Students will need to collect, interpret andreport data in many different XML dialects
XBRL provides a bridge not only to financial statements, but to all business reporting.
XBRL Business Uses
The internal use of XBRL is just Beginning to be explored, broughton by XBRL for General Ledger in
public beta. New XBRL releases are compliant with the latest version
of W3C’s XML Schema
Internal Uses include:Account analysisBalanced Scorecard
Automated exception reporting
Wireless, PDACell Phone
XBRL Business Uses
External Uses include:SEC FilingsIRS and State Tax Filing
Annual Reports Creditor Reports
Wireless, PDACell Phone
Externally, XBRL focuses on theproduction of GAAP financial statements for the business financial reporting supply chain. The externalfocus of XBRL is evident by theheavy participation in XBRL.org bythe AICPA and Big 5 Accountingfirms
XBRL International
International Accounting Standards and Major Countries arechanging the way Accounting is conducted world-wide
Hot spots of development include Australia, Singapore, Germany, Japan, followed by Canada, the Netherlands, Spain, South Africa,Hong Kong, Great Britain, and theScandinavian countries.
Stig Enevoldsen
(Chairman IASC) September 1998
“The fact is that we not only speak different accounting languages but
also give different interpretations of the same events and transactions……
“I believe that the best way forward in accounting is to converge towards one
single world-wide accounting language.”
Sir David Tweedie (current IASB Chairman)
The mission of the newly-created IASB The mission of the newly-created IASB
……isis to increase the transparency of financial reporting byto increase the transparency of financial reporting by achieving a achieving a single, global method of accounting for transactions -- whether in single, global method of accounting for transactions -- whether in Stuttgart, Sydney, Seattle or Singapore.Stuttgart, Sydney, Seattle or Singapore.
Need to define
One Accounting Language
One Transaction Methodology
Within the IAS Financial Reporting Framework
To achieve the objectives of High Quality Transparent Comparable
Financial Statements
IAS Philosophy Implications
Getting consensus / agreement
Managing Change
Implementation
Within Organizations
Between Organizations
Between Countries
Politics is a Problem
XBRL IAS can play a large part especially via the Big 5
Challenge of Change
The Vision
To produce
High quality, Transparent, Comparable,General Purpose Financial Reporting
to
International Accounting StandardsUsing one accounting languageOne transaction methodology
Which are useful for making economic decisions.
The Vision for XBRL is no different!
Just do it
Electronically
in a binary environment
With the Seamless Transfer
Of Financial Information
In a known state
Without
Human Intervention
Accounting
Specification & Design
One accounting language One transaction methodology
One presentation methodology
to define all the facts required
on an inclusive exclude basis
for a binary environment for the seamless transfer of Financial Information in a known state
without Human Intervention
The One Accounting Language Challenge
Language System of words & rules of a particular community
ObjectiveUnambiguous globally understandable classifications
Accounting classificationsBy nature and class
Scientifically extensibleA place for everything and everything in its placeTo classify items as yet unknown
Absolute precisionBinary environment no room for judgmentFact definition increases exponentially as judgment is eliminated
Mountain Zebra Hartmans Zebra
ZEBRAS
Plains Zebra Quagga
Bergzebra Pyjama Donkey
ZEBRAS
Steppenzebra Kwagga
Zebra
(Equus Zebra Zebra) (Equus Zebra Hartmannae )
(Equus Quagga) (Equus Quagga Quagga)
Grevy’s Zebra
(Equus Grevyi )
Many Human Presentations One Fact in XBRL one fact with many labels For example profit / non profit organizations
One Accounting Language Lessons Learned
Scientific language of accounting definesa conceptual structure for the language accounting facts within conceptual structure
Names facts for information contentEnterprise InformationValue informationQualitative information
Spoken language or Skins – same fact different labelseconomic - profit / non profit
- public entity vs private enterprisegaap - different countrieslanguages - dialects
Establish facts then resolve labelsRequest fact clarification from IAS where ambiguous or undefinedManage fact convergence and label convergence separately
One Transaction Methodology Lessons Learned
Transactions in a known state are information
The enterprise is the source of its information
Financial statements are a specific view of transactions
Many views can be sourced from the same information
Enterprise vs document centricBigger now less laterClassify it once use it many times
Transactions by nature that are the same are the basis for XBRL convergence
Exclusive Include
All things exclusively identified are included
If it wasn’t exclusively identified by definition it doesn’t exist
Inclusive Exclude
Only that which we choose to exclude is out otherwise its in (e.g. banks )
Definition of business event transaction lifecycle scenarios
Application of class by nature
The XBRL Vision
Financial Data tagged in XBRL
IRS
Annual Report
SEC 10Q
FinancialAnalysts
ManagementTeam
Style sheets
Transaction Details
Financial System
No Direct Connectionwith Details XBRL-enabled
Financial Statements
Note: Without XBRL-GL, the connection from XBRL-enabled financial statements to transactional data stops at the financial system
Do You Need to Teach XML?
Yes No
• Basics of XML are needed to understand business events
• XML basics can be self-taught or self-directed over the Web
• XBRL follows the rules of XML
• This is Accounting, not computer science
• I don’t have the time to teach XML, I’m barely comfortable with it myself
• XBRL will soon go “under the covers” so I can ignore how it works.
Books, Articles, Videos
• XBRL Essentials, Hoffman and Strand, June 2001• Introducing XBRL, Hannon and Coffin, January
2002.• AICPA E-business Update Video and Workbook,
Spring 2001.• IMA National Conference Video fvc• Over 170 Articles, Special Section in Strategic
Finance Magazine (June 2001)• SoftwareAG XML video www.softwareag.com
XBRL Tools
• Taxonomy Builders– Required to map a financial fact to XBRL
• See xbrl.org/tools.htm for details
• XML Validators– XML Spy 3.5
