Tax Data Collection and Other Nightmares

XBRL GL, the Journal Taxonomy, Today

Internal Reporting Track, November 5, 20038th XBRL International Conference, Seattle, Washington, USA

Eric E. Cohen, eric.e.cohen@us.pwc.com

Taxpayer Accountant Agent AuditFollowing up with IRS

Results

Audit Process Today

I want to be able to access the underlying detail to prove what you have

reported!

I don’t want you to have that access –

but I want to be able to get that

information myself!

My life would be easier if the client’s detail automatically populated my write-

up software.

Individual Income

Sales

Total Taxes

Property

Employment

All Others

Corporate Income

Agencies Focus in on Tax Filing

But … Is Everything on the Level?

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

Holistic = Win-win-win? Format useful to tasks other than tax audit

Consolidation (drill down from tax audit) Movement to internal/external auditors Movement to budget/forecast Standard format for ASP marketplace

Dealing with Taxes Direct Indirect

Data Transfer File Needs to Serve ONE TOOL

Consolidation tool across systems Feeder for management systems Tool for internal and external auditors

Audit Tax

Electronic Audit Trail from source to final Paper source Electronic source

SIMPLE ENOUGH FOR ALL

Shared Needs for Direct and Indirect Taxes

People

Accounts DocumentsResources

Entries XBRL

Depreciation

Tax specific entries

Tax specific accounts

Standards: Benefits to Firms Small and Large Smaller firms

Internal integration – transparent, simple Integration with CPA tax systems

Large company Preparation

Consolidation Audit trail

Filing Format Transport

Integration with financial statement preparation Tax Note

Research, cross organization analysis of effects of changes

To Meet The Need: XBRL GL XBRL GL, the Journal taxonomy

Integrates accounting systems Provides detail later summarized in

Financial reporting Tax Performance

Represents almost anything categorized to "accounts“ Customer and vendor master file information Detail journals Information represented in US, Japanese or European

general ledger packages

Why is XBRL GL Needed?

Different Data Dictionaries: Field names, field order

System 1: AccountNo, Amount, Date

System 2: MonetaryAmount, PostDate, AccountNumber

System 3: PostingDate, Account#, Value

System 4: Date, Journal, Account, Amount

Similar Data

Account, Amount, Date

Different Representations for the same concepts in common data field

Journal: PJ, Payroll Journal, Payroll

Date: 12-31-03, 20031231, 12/31/03

Different

Data Formats

CSV

ASCII

WKS

XBRL GL Spans the GAP

Different Data Dictionaries: Field names, field order

System 1: AccountNo, Amount, Date

System 2: MonetaryAmount, PostDate, AccountNumber

System 3: PostingDate, Account#, Value

System 4: Date, Journal, Account, Amount

Similar Data

Account, Amount, Date

Different Representations for the same concepts in common data field

Journal: PJ, Payroll Journal, Payroll

Date: 12-31-03, 20031231, 12/31/03

Different

Data Formats

CSV

ASCII

WKS

XBRL GL provides platform for agreed-upon and well defined list of concepts –

make sure my “Account” and your “Account” means the same thing (not

bank account or customer account but GL account.)

Based on XML, XBRL GL is order independent; sharing element names

for import/export means that AccountNo, AccountNumberm

Account# and Account will all be express as one common name;

applications will know what to expect inpublishing and consuming data files.

So many external data formats; XML provides a popular and increasing

supported / demanded data format.

Once you have agreed on data field standardization, software applications require agreement on content in many cases. XBRL GL provides enumerated

values to supplement XML data standards to help in this area.

Proprietary Formats: XML Alone

qbxml

smbxml

Intacct xml

SAP

Peoplesoftxml

qbxml

smbxml

Intacct xml

SAP

Peoplesoftxml

Oracle

Standards-based Data Interchange

XB

RL

GL

qbxml

smbxml

Intacct xml

SAP

Peoplesoftxml

qbxml

smbxml

Intacct xml

SAP

Peoplesoftxml

OracleIndustry transactional XML

XBRL GL Can Represent The chart of accounts, representing both posting accounts and

customers, vendors, or other items that may be assigned an account in an international sense of the word;

Journal entries, both from subsystems and within the General Ledger or financial reporter;

Document summaries, with generic representations of the information that is presented on standardized business documents;

Descriptions of customers, vendors, employees and banks, either in connection with the chart of accounts (European style) or independently (US style);

Descriptions of inventory items, performance metrics or other quantifiable items;

Status documents, including listings of receivables still owing, payables yet owed, inventory in stock, as well as

Standard accounting summaries such as trial balances, “general ledger”, source journals and other accounting-oriented summaries.

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, EDIFACT, XML INITIATIVES

XBRL GLJournal Taxonomy

DetailAccountingrecognition/classification

Intra system Detail to summary

From Bar Coded Transactions through … Transactions (eCommerce) Accounting entries and adjustments

Estimates, allocations, eliminations Management, accountant entries

I N V O I C E May 2, 2003Invoice #: 10037

Item Description Qty Extension

1078 Blue Widget 200 2,803.781083 Cyan Widget 100 1,402.93

Sub-total: 47,592.33Freight:Total: 47,592.33

<documentType>invoice</documentType>

<documentNumber>10037</document Number>

<documentDate>2003-05-02</documentDate>

Uses Of XBRL GL

AccountingSystem

Budget

AccountingSystem

A

AccountingSystem

B

Chart of Accounts

Customers, Vendors, Employees

Open AR, AP, Inventory Status

Journal Entries, Ledger History

AccountingSystem

CPA

Trial Balance

Adjustments

One Vocabulary

One Framework

Concluding One format From initial entry through the information supply

chain Facilitating audit Reducing compliance burden With international agreement and usage Facilitating a universal audit trail Facilitating write all, black box, audit trail report Providing integration for management and

beyond

After the Audit

Questions? Eric E. Cohen

PricewaterhouseCoopers eric.e.cohen@us.pwc.com (585) 271-4070

Find out more www.xbrl.org www.pwcglobal.com/xbrl

<xbrl>

Eric E. Coheneric.e.cohen@us.pwc.com