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XBRL Adoption by Tax Administrations
Eric E. Cohen
Chair, XBRL US; Co-founder, XBRL; Chief Architect, XBRL GL
What is XBRL?
XBRL
XMLfor business reports
A transfer syntax
An archival format
A standardised way to design XML Standards(Not a specific XML standard)
Specification: syntax and semantics of taxonomies and instances
Optimized for Business Reporting
Supply chains working to develop
A consortium
XBRL GL Fills the GAPS between GAAPS
BUSINESS
Investors
Aggregators
Regulators Creditors LendersTax Website
Transaction Creation
ERP G/L Packages CRM
•Orders•A/P•Delivery
Customers•Orders•A/R•Delivery
2-way2-way
Suppliers
Oneway
Oneway
XBRLBUSINESS REPORTING
(e-)BusinessX12, UN/CEFACT Forum, UBL, HR-XML, ACORD, MISMO,
and other XML INITIATIVES
XBRL GLJournal Taxonomy
DetailAccountingrecognition/classification
Intra system Detail to summary
Why are Tax Authorities Looking at XBRL? EFiling, eGovernment and other efforts
Representing current eFiling in friendlier face
Financial statements and information Same payload useful for many purposes, comparable Note: different jurisdictions and the “books”
Universal audit trail From transactions through the business reporting
supply chain
Other business information XBRL: Summarized, aggregated, filtered, (sorted) XBRL GL: Underlying detail
XML and Other Reusable FormatsAttributes of “standard” formats
XML HTML ASCII Fixed CSV Excel DBF EDI
Variable length fields Yes Yes No Yes Yes Yes No
No field size limitations Yes Yes Yes Yes No No Yes
Extensible Yes * No No * * No
Includes context or field names (“rip and read”)
Yes No No No Yes Yes No
Cross-platform, non-proprietary, “universal”
Yes Yes Yes Yes No No Yes
Validation of files Yes No No No * * No
Groups collaborating on definition and interoperability
Yes No No No No No Yes
Selective digital signatures Yes * No No No No No
Selective encryption Yes * No No No No No
Standard Office import/export Yes Yes Yes Yes Yes Yes No
Not verbose, smaller file sizes * * * * * * *
weakness strengthworkaround
Note: PDF is a very popular document exchange format, but is primarily designed for human, and not computer, consumption. Likewise, TIF, GIF, JPG, BMP and other binary graphics formats.
Note 2: UNICODE is an “update” to ASCII more useful in the international context.
One Framework One format Optimized for business reporting information
Attributes of business reporting information Needs of business reporting information
Lowering preparation/compliance burden Smoother collection of data of all kinds Reduction of things published to reconcile and track More common adoption by software developers
Web Services
XBRL Internationally Developed Royalty-free Optimized for business reporting Entirely XML-family based
XML, XML Namespaces, XML Schema, XLink
Holistic One family, one framework, collaborative, compromise
for greater common good Interoperability - validation, comparison across data
sources
Oxymoron: Customizable Standards
Standardized Customization X - Extensibility
Greater community gets commonality Local community gets flexibility, customization A new world that brings customization and compromise
together Standards Standardized customization “Bread trail” from customization to standards
XBRL Post processed reporting
Financial statements US IFRS German Japan Many other countries
Bank call reports, tax forms, other formats
Detail (XBRL GL) Entries, agents, resources, documents Universal audit trail Who is using the same version of the same accounting system as
1999?
Operations
Database
Ledger
Reporting
Operations
Database
Ledger
Reporting
Operations
Database
Ledger
Reporting
Operations
Database
Ledger
Reporting
Operations
Database
Ledger
Reporting
Operations
Database
Ledger
Reporting
ConsolidatedManagement
GAAPStatutory
Regulator
RegulationsNewsInstructionsFiling formatsReference
Service
CLIENTCLIENT
filing format
Regulator Service Extranet 3rd Parties Regulator
Software developers
Organizer
GuidanceChecklistsPractitioner Aids
TradingPartners
OtherRegulators
TheMarket
Lenders
IntegratedNon-integratedOutsourcesASP
Supp InfoForms
Supp InfoForms
Supp InfoData
Submits
Receives
Division Level
Extract
MergeData
Group LevelDepartment LevelParticipants
Processes
MaintainDefinitions
CollectData
DistributesSupp Info
Forms
Supp InfoData
Dept Detail
ReceivesSend
RequestsPrepareReport
Submits
Query
FindSources
CongressTreasuryTax Policy Analysts
Australian Tax Office ATO recently joined the XBRL Consortium Considering XBRL 2.1 as the standard for
electronic filings Phased implementation: Activity Statements (12 M filings
annually) Phase I scheduled for the end of 2003 Anticipated benefits: Time and cost savings Enhanced information processing
Canada Revenue Agency Active member of XBRL Canada Presentation to follow (Slide from last meeting attached - was CCRA)
Corp. T
ax T
2
VA
T
GS
T
Em
ployersT
ax
Excise
Individ.Tax
T4
XML Exchange/Transformation
CCRASTF
OtherGov’ts
Other Levels of Gov’ts
OtherGov’t Depts
XM
L E
xcha
nge/
Tra
nsfo
rmat
ion
XM
L E
xcha
nge/
Tra
nsfo
rmat
ion
CCRA Taxonomies
TBD
TBD
CCRA XBRL Taxonomy
XBRL Chart of Accounts
(GAAP)Instance Document
snapshot
T2 BenefitsGST Others
BI/DS
Externally Internally Externally
New and Legacy Systems
Canadian Value Proposition
German Tax Agency (Oberfinanzdirektion München)
Workgroup "XBRL Taxonomie Steuern" (Taxonomy for Tax Filing) XBRL Deutschland e.V. workgroup establishing XBRL as a standard
for electronic tax filing in Germany. The workgroup's agenda comprises:
Development of a taxonomy (or expansion of the existing taxonomy GermanAP) in order to render all pertinent data
Processing and operating (data delivery workflow, assurance, certifying data quality)
Information exchange with international workgroups and other jurisdictions focusing on this issue
Back end processing still an issue Staffing
Staffed by Oberfinanzdirektion München (tax authority), DATEV, and software providers.
Date of last update: May 27, 2003 - see http://www.ofd.bayern.de/ofdmuenchen/
Japan - National Tax Agency
What: Portion of Electronic Tax Filing, i.e. Financial Statements Crucial Project for XBRL Japan NTA will nominate/endorse any XML-based FS submission if it proves to work Currently only XBRL is on NTA’s radar screen. Large Scale Project
Impact on virtually all companies
When: NTA plans to make tools available in November 2003, to go live in March, 2004 (corporate tax filing for the year 2003).
How: Based on the latest XBRL Specification Based on XBRL Japan’s “sample” Taxonomy
Effect: XBRL-enabled accounting software products emerging. When actually started, it will accelerate adoption at large scale.
Updated news as of Dec-03 as follows:
Their “e-tax” project is positioned as a part of implementation of e-government plan (“e-Japan”) using digital signature. Adoption of XBRL is admitted as a one of acceptable formats for the financial statements attached to filing information.
The financial statements received in XBRL format are to be printed in paper to validate the contents. Direct linking to the agency’s internal system is considered difficult at this point.
This system is giving clear priorities on interface to taxpayers. Implementation of STP in NTA is left unfulfilled.
Filers create tax returns in XML format in this system, and adoption of XBRL is admitted for some documents in accompanying materials (corporate financial statements, business summary report, etc.)
Verification of numerical consistency and accuracy, between tax returns in XML and attached financial statements in XBRL, is not available yet in a systematic way. The NTA should perform those procedures in manual fashion in the meanwhile.
The reason of selecting Nagoya as the first jurisdiction to launch e-tax system: 1) it has 10% of the nation wide tax revenue and 2) it has well-assorted kinds of taxpayers.
NTA has a system to perform complex validation, analysis and statistical work, called “KSK system” (a back office system).
Software application for creating tax return will be distributed to taxpayers in a CD-ROM. NTA can issue certificates of tax payment (electronic certificate of tax payment) to taxpayers, however NTA
cannot show those certificates to a third party since law prohibits it. Certificates are only seeable within local government agency.
When a taxpayer presents a tax return to the NTA, he also prepares a copy of the return. The NTA affixes a reception stamp on the copy for the taxpayer; however, it only proves that the NTA has received his/her return, not that the copy is identical to the submitted return. On the e-tax system, the NTA returns e-mail that says they received a return.
< Upcoming schedule > February 2, 2004 – e-tax filing for income tax and consumption tax filing (for personal business) will be
available for the taxpayers in the jurisdiction of Nagoya Regional Taxation Bureau (including the prefecture of Gifu, Shizuoka, Aichi and Mie).
March 22, 2004 – other than the tax filing listed above, e-tax filing for corporate tax, consumption tax (corporate), tax payment for all tax items and some of the submission process for tax applications and notifications will be available for the taxpayers in the jurisdiction of Nagoya Regional Taxation Bureau.
June 1, 2004 – all e-tax procedures started in Nagoya jurisdiction will be available throughout the country. From September 2004 – e-tax filings for other submission processes for tax applications and notifications will
be available for the taxpayers nationwide.
Netherlands Dutch Tax and Customs Administration
Mandate for eFiling by 1/2005 Corporate tax: >90% in XML Portal access for 100% of corporate tax users
Today Corporate tax: 1% today in XML Personal tax, based on simple XML: 90% Customs: 80% using an EDI model
Options Offline filing based on standard eMedia Jul-2004 Online web-based forms starting Feb-2004
Considering XBRL Government initiative to reduce compliance burden XBRL can be catalyst for reducing costs
UK Inland Revenue Electronic filing processes Persuasive business case Office of e-envoy 2004 optional filings All compliance software vendors in place
Also evaluating role within audit and VAT
Other XBRL International Members Irish Revenue Inland Revenue Authority of Singapore Inland Revenue Department of New Zealand
Encouraging development and adoption Collaborating on financial statement and other
taxonomy development Collaborating on common issues regarding
security, audit and other issues - WIN-WIN-WIN
Information
TAX FORMTAX INSTRUCTIONS
FINANCIAL STATEMENT
Corporate Data feedsdirect access or extractsPaper
Support
Operational Data
Streamlined Processing
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investmentand Lending
AnalysisProcessesProcesses
ParticipantsParticipants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators/Stock exchanges
XBRL G/LCommon Audit Trail XBRL for
Regulatory Filings
XBRL for Financial Statements
XBRL for AuditSchedules
XBRL forTax Filings
XBRL for BusinessEvent Reporting
Software Vendors
CFO’s
Companies
The architecture of XBRL
Entity Segment Scenario
PeriodUnit Precision
Context
CWA
Labels
Reference
Definition
Presentation
Calculation
Taxonomy
InstanceDocument
Fact
Formulae
Concept
Why XBRL?
XBRL adds to XML: Multi dimensional data
contexts
Mathematical relationships between concepts
Flexibility about how to present items to users
Aliases and other definition relationships
Links to authoritative literature and guidance
Financial reporting vocabularies (taxonomies)
Reporting apps need these even when using XML.
XBRLItem
XBRLItem
CalculationsCash = Currency + Deposits
CalculationsCash = Currency + Deposits
PresentationCash & Cash Equivalents
PresentationCash & Cash Equivalents
FormulasCash ≥ 0
FormulasCash ≥ 0
ReferencesGAAS I.2.(a)
USSGL 1100.00
ReferencesGAAS I.2.(a)
USSGL 1100.00
DefinitionsAKA Liquid Assets
DefinitionsAKA Liquid Assets
ContextsUSD
FY2003Budgeted
ContextsUSD
FY2003Budgeted
How XBRL Compares to Proprietary XMLAttributes of formats XBRL Proprietary
XML
Uses W3C standards for XML and related technologies
Yes Yes
Holistic framework (can, of course, have non-XBRL framework)
Yes *
Documented and proven agreement on syntax and semantics of schema design and instance design
Yes No
Groups collaborating on definition and interoperability
Yes No
Agreed upon tools for extensibility Yes *
Software vendor community developing tools that help with specifics of syntax
Yes *
Reuse of IP Yes *
weakness strengthworkaround
Why XBRL Linkbases Over “Standard” XML SchemaAttributes of formats XBRL Schema
alone
A single hierarchy using complexTypes makes it easy to see that hierarchy with standard tools like XML Spy
* Yes
Human readable labels provided in various languages and for specific purposes as part of deliverable
Yes No
Guidance on hierarchy and presentation order for applications
Yes No
Guidance on hierarchy and (sub-)totals for applications Yes No
Standardized rules for extensibility of all of the hierarchies Yes No
Standard tools for identifying relationships across taxonomies, such as “Same-as” relationships
Yes No
Standard tools for relating concepts to underlying authoritative literature and explanatory guidance
Yes No
Prescribes and limits XML Schema for business reporting Yes No
weakness strengthworkaround
Why XBRL for XML Reporting Standard? Community developed concepts with communication of
meaning, support, requirements
Advantages to development community, users
Greater picture
More than just efficiencies as point-to-point, single use filing
Greater integration with internal systems
Filing Definition, validation (PRE-validation)
Extensibility
Internal and then external sharing
… is just SYNTAX But how “self-defining” is this?
To a computer (XML parser), they are the same.
The tags (element names) provide no semantic knowledge to the program.
NEED TO COMMUNICATE MEANING - across languages - enter XBRL!
Some Options Ignore/disallow XBRL altogether XBRL as an option for filers
Required statutory accounts in local XBRL format as payload XBRL based standards for one or more tax filings
Mandate that XBRL be used for some or all reporting XBRL as an INTERNAL efficiency tool
Compliance, audit, reporting to outsiders share common language, tools
Cooperate and collaborate for more global XBRL adoption and usage
Reduce everyone’s costs
Representative XBRL-enabled Products Shipping
Oracle FSG PeopleSoft SAP mySAP financials Hyperion Microsoft Business Solutions Navision, Axapta Creative Solutions (et al.)
Caseware
About to ship Microsoft Office 2003 Add-in
XBRL Outreach XBRL in general
Interoperability pledge Other efforts
XBRL GL XBRL GL and audit/continuous audit community XBRL GL and electronic efforts
XBRL and Tax XML
We have common needs, interests and all fit in the Business Reporting Supply Chain Not just technical needs Future development issues - including security/DigiSig