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XBRL: Major Developments in the US Public and Private Sector
Daniel RobertsNational Director of Assurance Innovation
May 2007
2
Accountancy Age, 11 May 2007
Investors in the US are set to benefit from the securities regulator formalising a rule which will allow instantaneous information and company reports through XBRL.
This follows an announcement yesterday from Securities and Exchange Commission chairman, Christopher Cox, who said the rule would require all companies to report financial information in the 'extensible business reporting language' known as XBRL.
Investors will now be able to receive information on stocks, bonds and mutual funds with the data itself being interactive, making it possible for investors to go online and compare information filed, the FT reported.
Cox said the formalising of the rule was part of the SEC's 'war on complexity and said the new format would 'enable investors to find what they need quickly and reliable, without having to pore through pages and pages of documents.'
'I've been fighting against legalese and gobbledygook for years,' he said.
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Agenda
• What is XML
• What is XBRL
• Who is XBRL, and Why does XBRL matter
• XBRL for Internal Reporting and Internal Controls
• What is the FDIC/FFIEC’s Call Report Modernization Program?
• What is the SEC’s Test Program / Voluntary Filing Program?
5
Agenda
• What is XML
• What is XBRL
• Who is XBRL, and Why does XBRL matter
• XBRL for Internal Reporting and Internal Controls
• What is the FDIC/FFIEC’s Call Report Modernization Program?
• What is the SEC’s Test Program / Voluntary Filing Program?
6
What Is XML?
W3C (World Wide Web Consortium) recommendation, 1998.Better documents
– Uses tags to give context and structure to content– Provides a means to separate data from style (so a
single source can be output for multiple uses)Better data
– Provides a common way for disparate systems to exchange specific information (application integration)
– Separates data from logic of applications (so that it can be reused for multiple purposes).
Introducing “docu-data”
e-business
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How XML Compares with Other Reusable Formats
Attributes of “standard”formats
XML HTML DBF
Variable length fields YesYes
*No
Yes
NoNo
**
Yes*
No field size limitationsYesNo*
Yes
No
*No
NoSelective encryption Yes No No No No NoStandard Office import/export Yes Yes Yes Yes Yes No
ExtensibleIncludes context or field names (“rip and read”)Cross-platform, non-proprietary, “universal”Validation of filesGroups collaborating on definition and interoperabilitySelective digital signatures
Not verbose, smaller file sizes *
ASCII Fixed CSV Excel EDI
Yes No Yes Yes NoYes Yes Yes No YesYes No No * NoYes No No Yes No
Yes Yes Yes No Yes
Yes No No * NoYes No No No Yes
Yes No No No No
* * * * *
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.
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XML: What Does It Look Like?
•Daniel J. Roberts•324 Willow Lane•Menash•Wisconsin 54952 •USA•1 773 991 8679•Birthdate: ##/##/##
•<presenter>•<name> Daniel J. Roberts</name>•<address>• <number>324</number>• <street>Willow Lane</street>• <city>Menasha</city>• <state>Wisconsin</state>• <country>USA</country>• <postcode> 54952</postcode>•</address>•<telephone>1 773 991 8679 </telephone>•<birthdate>##/##/####</birthdate>•</presenter>
Metadata: information about informationMetadata: information about information
Metadata
Just plain, ordinary informationJust plain, ordinary information
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Agenda
• What is XML
• What is XBRL
• Who is XBRL, and Why does XBRL matter
• XBRL for Internal Reporting and Internal Controls
• What is the FDIC/FFIEC’s Call Report Modernization Program?
• What is the SEC’s Test Program / Voluntary Filing Program?
10
What is XBRL
XBRL is to the printed annual report, what the internet is to the printed
Yellow PagesYellow Pages.
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The Business Information Supply Chain
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investment,Lending,
RegulationProcesses
Participants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies
Economic Policymaking
XBRLXBRL-FRXBRL-GL XBRL
CentralBanks
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Specification
• XBRL 2.1, Specification– Our solid foundation for building taxonomies
and instances– Can build taxonomies of many types from it
• Financial reporting• Tax• Ledgers
13
Taxonomies: Agree on Many Things
XBRL adds to XML:Multi dimensional financial data representations
Financial reporting vocabularies (taxonomies)
Aliases and other definition relationships
Mathematical relationships between concepts
Flexibility about how to present items to users
Structure for authoritative policies and guidance
Building blocks (“discoverable taxonomy sets”).
Capacity to create your own sets of relationships (data owner etc) Plus…. Ubiquitous Extensions
CalculationsCash = Currency + Deposits
CalculationsCash = Currency + Deposits
PresentationCash & Cash Equivalents
PresentationCash & Cash Equivalents
FormulasCash ≥ 0
FormulasCash ≥ 0
ReferencesGAAP I.2.(a)
CoA 1100
ReferencesGAAP I.2.(a)
CoA 1100
DefinitionsRelated to Liquid Assets
DefinitionsRelated to Liquid Assets
ContextsUK $£
FY2003Budgeted
ContextsUK $£
FY2003Budgeted
XBRL<cash>“200”
XBRL<cash>“200”
LabelCash in Bank
LabelCash in Bank
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Taxonomies
• By Jurisdiction – http://www.xbrl.org/FRTaxonomyIndex/
• By purpose– Financial statements– Bank call reports– Tax returns– Accounting detail and summaries
• Focus on Financial Reporting– FRTA provides additional guidance to Spec.
17
Agenda
• What is XML
• What is XBRL
• Who is XBRL, and Why does XBRL matter
• XBRL for Internal Reporting and Internal Controls
• What is the FDIC/FFIEC’s Call Report Modernization Program?
• What is the SEC’s Test Program / Voluntary Filing Program?
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US
CA
SP
IE
UK
SEDK
FI
JP
NZ
KR
SA
NL
IASB
BR
CO
AR
DE CH
CN
RU
PT
IT
NO
SG
BE
FR
AU
IN
XBRL Jurisdictions
HK
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An Analogy for Standards in Business IntegrationCargo Containerization: Data Encapsulation
• Up until the 1960’s– Shipping individual pieces of cargo– Loaded, packed, arranged and
unloaded separately– Significant breakage and pilferage
• Today, Containerization– 90% of world trade moves in
containers– Shipping costs reduced by 70%– More reliable and efficient end-to-end
transport– Enhanced controls
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XBRL Taxonomy Growth
2000 2001 2002 2003 2004 2005 2006Time
Public Taxonomies
June, 2001General Ledger
January, 2004UK GAAP 2.0Canada GAAP
June, 2004IFRS GAAPNZ GAAPUK GAAP
February, 2005US GAAP C&IUS GAAP BankUS GAAP InsSEC CertificationMgmt ReportAccountants ReportMD&A
July, 2005China FrameworkIFRS GAAP US GAAP Invest Mgt
Nov, 2005General Ledger
This does not include any private taxonomies such asthose prepared for statutorypurposes.
2006 - 2007US GAAP
22
XBRL Tools Growth(Representative Listing)
2000 2001 2002 2003 2004 2005 2006Time
Tools
CasewareCreative Solutions
DynAccSys Xabra
Fujitsu XWand
J2R Batavia Data Driver
Hitachi CBRP
Metapraxis
Microsoft Business Solutions
Rivet Software
UBMatrix Automator ProDecisionSoft True North
Allocation SolutionsEdgar-Online IMetrix
Hitachi XimbaHitachi XiRute
IBS Open Digital ReportingIpedo EIIOracle XBI Software
UBMatrix Tool KitUBMatrix Converter
Software AG Hyperion
Navision
XBRL SolutionsIBMatrix
FujitsuSAP
Snappy Reports
High Ridge Technologies
FR Solutions
Covarity
SavaNet
FDIC VendorsDBI Financial Systems, Inc.FinArchFRS Global Financial Reporting & AnalyticsIDOM, Inc.Information Technology, Inc.Fidelity Regulatory SolutionsJack Henry & Associates Inc.
Adobe
Core FilingsSemansys IntegratorSemansys Analyzer
Semansys Deployment Manager
Semansys Composer
Carthesis
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Agenda
• What is XML
• What is XBRL
• Who is XBRL, and Why does XBRL matter
• XBRL for Internal Reporting and Internal Controls
• What is the FDIC/FFIEC’s Call Report Modernization Program?
• What is the SEC’s Test Program / Voluntary Filing Program?
24
Imagine a Agency (or a Company)
• With 8200 reporting units.
• Quarterly reporting.
• 6 – 8 weeks to produce the reports that can be shared.
25
How would they measure success
• Received data sooner• Publish data earlier• Improved data quality• All validity edits are met• Staff work decreased• Financial Analysts finish assignments faster
26
XBRL for Internal Reporting: SOX & Assurance today
SubsidiarySubsidiaryERPERP
CRMCRM
CRMCRM
SBUSBU
ERPERP
ConsolidationConsolidation
Supplemental information
Controls documented Controls documented and built into:and built into:•• individual systemsindividual systems•• manual processesmanual processes
ManagementManagementReportingReporting
ControlControl
ControlControlControlControl
ControlControl
ControlControl
ControlControl
Control ?Control ?
ControlControl
ControlControl
27
XBRL for Internal Reporting: SOX & Assurance today
SubsidiarySubsidiaryERPERP
SBUSBU
ERPERPCRMCRM
CRMCRM
ConsolidationConsolidation
Supplemental information
Controls located with Controls located with data or supplemental, data or supplemental,
manual processesmanual processes
ManagementManagementReportingReporting
ControlControl
InternalInternalControl DocsControl Docs
TaxonomyTaxonomy
ControlControl
XBRL
XBRL
XBRL
XBRL
XBRL
XBRL
XBRL
XBRL
XB
RL
28
Agenda
• What is XML
• What is XBRL
• Who is XBRL, and Why does XBRL matter
• XBRL for Internal Reporting and Internal Controls
• What is the FDIC/FFIEC’s Call Report Modernization Program?
• What is the SEC’s Test Program / Voluntary Filing Program?
30
FDIC / FFIEC / OCC
How Does FDIC Measure Success?
• Improved data quality– Legacy: 66% clean coming in– CDR: 95% of data ‘clean’, some accepted with explanations - banks
include written explanations with submitted to explain data nuances– Result: Expectations of data are documented, required, and met
• All validity edits are met– Legacy: 70%– CDR: 100%– Result: All data adds up accurately
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Agenda
• What is XML
• What is XBRL
• Who is XBRL, and Why does XBRL matter
• XBRL for Internal Reporting and Internal Controls
• What is the FDIC/FFIEC’s Call Report Modernization Program?
• What is the SEC’s Test Program / Voluntary Filing Program?
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Washington, D.C., Feb. 3, 2005 - The U.S. Securities and Exchange Commission today issued a release adopting amendments to establish a voluntary program related to eXtensible Business Reporting Language (XBRL).November 7th, 2005
“In my tenure as Chairman of the Securities and Exchange Commission, I intend to bring our system of corporate disclosure and financial reporting into the 21st century. And while I must tell you that the views I express here are my own, and do not necessarily represent those of the Commission or its staff, you should know that every appointment I make as Chairman willbe consistent with this vision of tapping the possibilities of interactive data.”
January 18th, 2006“During the next 12 months, the SEC will move beyond the EDGAR concept of electronic filing of paper-based forms, to an interactive data concept in which investors can have instant access to data that's ready to use in myriad software applications on their desktops .”
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The 24 Participants in the VFP, as announced on March 29th:
• 3M Company • Altria Group, Inc. • Automatic Data Processing, Inc. • Banco Itaú Holding Financeira S.A. • Brazilian Petroleum Corporation• Bristol-Myers Squibb Company • Crystal International Travel Group, Inc. • The Dow Chemical Company • Ford Motor Company • Ford Motor Credit Company • General Electric Company • Gol Intelligent Airlines, Inc.
• Infosys Technologies Limited • Microsoft Corporation • Net Servicos De Comunicacao SA • Old Mutual Capital, Inc. • PepsiCo, Inc. • Pfizer, Inc. • R.R. Donnelley & Sons Company • Radyne Corporation • South Financial Group, Inc. • United Technologies Corporation • Xerox Corporation • XM Satellite Radio Holdings, Inc.
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The SEC makes its move
• RFP awarded to replace the EDGAR system
• RFPs awarded to provide XBRL rendering software
• Contract with XBRL US, Inc to develop the XBRL US GAAP Taxonomies
• Objective: to enable filers to provide reports to the SEC in XBRL only by early 2008.
36
Modernize and Maintain the EDGAR Database to Use Interactive Data — $48 million
The Commission today announced it has awarded a $48 million contract to Keane Federal Systems, Inc., a McLean, Virginia-based subsidiary of NYSE-listed Keane, Inc., to modernize and maintain the Commission’s EDGAR database. As part of its SEC contract, Keane will partner with other technology firms, including Bearingpoint, Microsoft, Rivet Software, EMC, and Akamai, to address the needs of the SEC and investors.
37
Complete XBRL Code Writing for U.S. GAAP Financial Statements — $5.5 million
The Commission is announcing its commitment of $5.5 million to complete the writing of XBRL “taxonomies,” or computer labels, so that companies in all industries can file their financial reports. The SEC is contracting with XBRL US, Inc., which is responsible for development of the computer standard in America. It is anticipated that the work will be completed in less than a year.
38
Interactive Data Tools for Investors — $500,000
The Commission announced today that it has awarded two separate contracts to provide a new generation of “interactive” investor tools on the SEC’s website.
Using the new features, investors will be able not only to view but to analyze companies’ financials that are filed in XBRL.
The software tools the Commission is purchasing will be available to the public free of charge. With this step, the Commission hopes to accelerate the development of ever-more sophisticated software applications to unleash the power of interactive data.
39
Agenda
• What is XML
• What is XBRL
• Who is XBRL, and Why does XBRL matter
• XBRL for Internal Reporting and Internal Controls
• What is the FDIC/FFIEC’s Call Report Modernization Program?
• What is the SEC’s Test Program / Voluntary Filing Program?