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XBRL for Internal Reporting
XBRL International Conference BostonApril 27, 2005
Neal J. HannonDirector, XBRL Software Development Allocation Solutions, Inc.
Barney School of Business, University of Hartford
Internal ReportingExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investment,Lending,
RegulationProcesses Economic
Policymaking
Nature of Internal Reporting Purposes
Planning Control Decision making
More detailed More frequent More varied; less
standardized More difficult to justify up-
front costs of consistency More pressures now
Internal controls - SOx 404 PCAOB 3, Section 5.c
SOx 409
Credit: Eric Cohen
While many corporations have succeeded in addressing the reporting issue of the 1990s,
they must focus on the 21st century reporting issues. They need more leading indicators to enable them to anticipate challenges.
Robert Kugel, Ventana's VP & Research director, financial performance management
Building Blocks
Journal entries Account, amount, date, description
Parties/agents Customers, vendors, employees
Source documents Document number, dates, file location
Resources Inventory, services, fixed assets, KPI
Mappings to and between Accounts, Classifications, XBRL reporting
taxonomies
Data-Centric Model
Premise: Improvements in computer processing, storing and reporting power are now permitting a more direct look into the lifeblood of the enterprise, data.
Data in an XML-enabled environment is no longer constrained by computer platform or the functional software that created it.
Adding meta-data provides not only mobility for data, but provides the basis for continuous reporting and continuous data assurance.
Business DataVarious formats, Structures,Platforms
Governance
Application Integration Layer
XML, Web Services, X-link EII, XBRL-GL
Sarbanes-OxleyCompliance
Continuous Audit
ForensicAccounting
InternalAuditing
ExternalAuditing
Business Reporting
Scorecarding
KPI’s
Board AuditCommittee
SEC Reporting
Budgets
Monthlyreporting
Desk-topManagement
Data-Centric ApproachTo Enterprise Reporting
Real-Time Reporting
Exceptionreporting
BAM
Phases of Development: XBRL Reporting
Phase I - Today
Phase II
Phase III
Using XBRL for SEC filing; XBRL-GL for internal Data gathering (Wacoal); Data Analysis (Edgar-Online)Government reporting (APARA, FDIC, etc.)
Feeding XBRL-GL data to business Internal and external reporting, SEC filing, Sarbanes-Oxley compliance, KPI’s, Scorecards, internal audit
Open, Dynamic Real-Time Reporting,Continuous Auditing, Real Time Analysis from stakeholders both inside and outside
Phases of Development: XBRL Reporting
Phase I - Today
Using XBRL for SEC filing; XBRL-GL for internal Data gathering (Wacoal); Data Analysis (Edgar-Online)Government reporting (APARA, FDIC, etc.)
Wacoal: XBRL GL Auto Journalizing System
Copyright 2004 Hitachi
XiRUTE
From Edgar-Online:
Phases of Development: XBRL Reporting
Phase II
Feeding XBRL-GL data to business Internal reporting, SEC filing, Sarbanes-Oxley compliance, KPI’s, Scorecards, internal audit
Impact on Control Environment
1. Manual
2. Periodic
3. Physically connected to Internal data store
4. Segregated in each business unit/redundant costs
5. Reactive/untimely
6. Opaque/ deep in organizational processes
7. Less secure
1. Automated
2. Persistent
3. Embedded in data process flows - Optimized
4. Integrated within enterprise processes/cost effective
5. Proactive/timely
6. Visible/transparent
7. More Secure
Today Taxonomy Driven
The outcome is to move controls further up the quality curve.Credit: Walter Hamscher
XBRL-GL Can Help Here
And Here
Automated ControlMonitoring
Transaction data
Multiple departmental Excel spreadsheets
Senior Management
Consolidated spreadsheets for
management
2000 elements = 6500 spreadsheets (this is not a typo)
SQL
SQL
Current Management Reporting – Insurance example
ACORDXBRL GL
ACORDXBRL GL
ACORDXBRL GL
W. Hamscher
Transaction Data
Multiple Departmental Excel Spreadsheets
Senior Management
Consolidated spreadsheets for management
SQL
SQL
Current Management Reporting
ACORDXBRL GL
ACORDXBRL GL
ACORDXBRL GL
W. Hamscher
Subsidiary ERP’s
Senior Management
Supplemental information aggregation
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Control located with data or in supplemental manual processes
Current Management Reporting
Services architecture leveraging taxonomies
Transaction and or subsidiary
Data
Senior Management
Viewing and aggregation for department & management
XBRLWeb
Services
Controls
Controls
Controls
Controls
Controls
Controls
‘Wrap & Map’ACORDXBRL GL
ACORDXBRL GL
ACORDXBRL GL
W. Hamscher
Phases of Development:XBRL Reporting
Phase III
Open, Dynamic Real-Time Reporting,Continuous Auditing, Real Time Analysis from stakeholders both inside and outside
XML derivative transactions
Traditional data item
Explanatory labels (tags)
•Identity, units, source, etc.
• Control labels
• E-signatures, sequence numbers, invisible markers,
• Control signals
Financial-related Web Services in the future (the universal data bus)
Audit Servic
e
Accounting bots and services
SelectiveLayered
Reporting
Fraud detection Service
FinancialAnalyticServices
ERP
Other Assurance
Services
Stale, erroneous, and opaque information Ultimate drill down to the
transaction levels of all related parties !!!!
Business report a living thing dependent on intrinsic business process rhythms
In case of doubt give data not models or aggregates
Disclose the time-series bases of aggregates and estimates
Credit: Miklos Vasarhelyi
Neal J. HannonDirector of XBRL Software Development for
Allocation Solutions, Inc.
XBRL Editor: Strategic Finance Magazine
University of Hartford
Email: [email protected] [email protected]
Phone: 401-769-3802 or 860-768-5810
