XBRL Update Dealing with Mandatory Reporting
Radisson SAS Royal Hotel21 October 2009
Mike Willis, Chair, XBRL International
Richard Day, Conor O’Kelly, Harry Goddard
XBRL – what it is … what it is not
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XBRL is a data standard that simply provides a mechanism for standardising company-specific terminology in to root business reporting concepts, allowing comparison of essentially similar information across multiple financial statements and across multiple companies
… it is not a replacement accounting guide or disclosure checklist, and does not check the accuracy of financial statements for compliance with accounting standards compliance with regulator reporting requirements.
It can provide more timely and efficient access to and analysis of financial data internally and across companies, expand usability of externally reported financial information, and improve performance management and overall business decision-making …
… it is not a substitute for existing governance structures, controls, procedures and related managerial oversight required for preparing financial statements and reports.
It provides a standard mechanism for transmitting financial information in a way that leverages information technology
… but in itself it is not a solution for issues relating to electronic information exchange such as security and data privacy.
XBRL is the de-facto global standard for electronic communication of financial and business data, providing increased functionality for users of financial statements by encoding statement information in to a
standard, re-usable, computer-readable format.
2009 © Deloitte & Touche
Making the business case for XBRL
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Reduced administrative burden … through a standardised, automated and more efficient reporting environment
Enhanced availability of financial information to regulators, investors and analysts … support for cross border harmonisation of reporting and compliance requirements
Improved filing accuracy and transparency … reduced erroneous data through automated exchange and validation, removal of manual re-keying of data … structured and consistent format for transparency of calculations and data inputs
Reduction in processing time … freeing up personnel time to move from data manipulation to more value-add data analysis activities
Increased reporting capacity for more frequent and timely production of business reports … once the taxonomy is mapped to a company’s information system reports can be generated on demand
Better search and comparability capabilities … enables easier search and retrieval of financial data … format ready for query and analysis
Promotes efficiencies and cost savings … the main driver for XBRL adoption across other jurisdictions is to reduce the overall burden of regulatory and statutory reporting … as an open standard it provides the cornerstone for a more efficient and low cost reporting environment
XBRL benefits all stakeholders of the financial and business reporting supply chain that includes public and private companies, governments, regulators, analysts, investors and banks.
2009 © Deloitte & Touche
Key challenges & lessons learned
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Business Case for Businesses as well as Government
‒ Business case with clearly defined benefits that are measurable - tangible benefits for businesses as well as government must exist as the incentive for participation and adoption
Political Will and Taxonomy Ownership
‒ Ownership and investment for development and maintenance of taxonomy … for statutory and regulatory reporting depends on investment from government’s responsible authority … responsible for updating to keep in line with international accounting standards and company law requirements
‒ Standardisation of (local) base taxonomy by relevant stakeholders (e.g. Revenue, CRO, CSO) … sets out a common dictionary of terms that each stakeholder must then extend for own unique requirements
Legislation
‒ Review source of information obligations and rationalise during taxonomy development … don’t just XBRL’ise current document-based reports … Netherlands identified companies filing more information than was legally required and also combined the Company House and Taxation Office returns into one
‒ Standardising information obligations and reporting procedures may require legislative changes to achieve significant reduction in administrative burden
XBRL Taxonomy Learning Curve
‒ Taxonomy development and their subsequent interpretation and mapping configuration depends on financial domain expertise; XBRL taxonomies must be supported by clear preparer guidelines
‒ Clear guidelines for, and traceability of, the mapping of company data to the reporting elements in the taxonomy are key for success and subsequent re-use and efficiency
Support for Extensions
‒ Supporting company specific extensions allows greater flexibility for the filer on what information is contained in their instance document
‒ Not supporting company specific extensions maintains tighter standardisation and ultimately allows for greater re-use and comparison of information … rendering solution is also easier 2009 © Deloitte & Touche
Steps to reporting via XBRL
52009 © Deloitte & Touche
Deloitte’s new approach to preparing financial reportsMap client statements
Import data & generate report
Publish report Lodge ReviewCalculate and validate data
Map client statements to
the Taxonomy to produce a first run instance
Validate instance,
compute missing fact values and store revised
instance
Import instance document into report template
Add missing fact values such as
Director details, select notes and
publish specification
Submit for review and
finalise for client sign off
Lodge instance to regulator
Characteristics of Pilot Company - FBD
Large listed group
Insurance and hotel sector
Multi-national/multi-business
IFRS reporter
Highly regulated
XBRL Conversion Process
IFRS taxonomy used as base
Extended with elements of Irish GAAP
Taxonomy covered approx 30% of account line items
Project Assessment
Taxonomy – development required, current status leads to significant manual customisation
Tools – support from software vendors/tools readily available, varied options for different business type and size
Business Case – business incentive needed
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CRO Pilot - FBD Experience
2009 © Deloitte & Touche
FBD Accounts
Upload to Dragon Tag
Primary instance documentExtensions for calculation, presentation and labelsXSD file with full taxonomy definition
Produce instance and other documents
Perform validation
Submit to CRO
Receive Validation report
IFRS Taxonomy
Next steps – planning for a successful project
82009 © Deloitte & Touche
Establish team
Undertake training, education and awareness
Consider software options
Review preparer guidelines of relevant regulatory body
Undertake initial mapping exercise against IFRS/GAAP
Consider other reporting requirements
Undertake tagging exercise as a ‘dry run’
Consider business case