XBRL: Will it Revolutionize Financial Reporting?

UAA – ACCT 316 Accounting Information Systems Dr. Fred Barbee

AICPA Top Ten Technologies - 2003

Top Ten Technologies 2003

1. Information Security

2. Business Information Management

3. Application Integration

4. Web Services

5. Disaster Recovery Planning

Top Ten Technologies 2003

6. Wireless Technologies

7. Intrusion Detection

8. Remote Connectivity

9. Customer Relations Management

10.Privacy

AICPA Top Ten Technologies - 2002

Top Ten Technologies 2002

1. Business and Financial Reporting Applications

2. Training and Technology Competency

3. Information Security and Controls

4. Quality of Service

Top Ten Technologies 2002

5. Disaster Recovery (includes business continuation and contingency planning).

6. Communications Technologies – Bandwidth

7. Remote Connectivity Tools

Top Ten Technologies 2002

8. Web-based and Web-enabled Applications (Internet)

9. Qualified IT Personnel

10.Messaging Applications (e-mail, faxing, voicemail, instant messaging).

Top Ten Technologies 2002

Business and Financial Reporting Applications

Training and Technology Competency

Information Security and Controls

Quality of Service

What is XBRL?

eXtensible . . .

Capable of being extended or protruded.

Of or relating to a programming language or a system that can be modified by changing or adding features.

eXtensible = Flexible

XBRL

XBRL is an XML-based framework that provides a standards-based method to prepare,

publish in a variety of formats,

reliably extract and

automatically exchange financial statements of both public and private companies and the information contained within.

XBRL (From xbrl.org)

Provides an XML-based framework that the global business information supply chain can use to create, exchange, and analyze financial reporting information including, but not limited to . . .

XBRL . . .

Regulatory filings such as annual and quarterly financial statements.

General ledger information, and

Audit schedules.

XBRL . . .

XBRL is freely licensed and facilitates the automatic exchange and reliable extraction of financial information among various software applications anywhere in the world.

What is XML?

eXtensible Markup Language

XML

“If HTML is the fire-engine red paint and supple leather interior of a sports car . . .

Michael Morrison. Teach Yourself XML in 24 Hours

XML is the turbocharged engine and sport suspension.”

XML

eXtensible Markup Language

……is a meta markup language the

considers a universal standard for describing both structured data and the behavior of applications that process the language.

VPML – Virtual Pet Markup Language

<pets>

<pet name=“Maximillian” type =“pot bellied pig” age=“3”>

<friend name=“Augustus”/>

<friend name=“Nigel”/>

</pet>

<pet name=“Augustus” type=“goat” age=“2”>

<friend name=“Maximillian”/>

</pet>

<pet name=“Nigel” type=“chipmunk” age=“2”>

<friend name=“Maximillian”/>

</pet>

</pets>

HTML – XML ComparisonSample HTML Coding

<H3>Sale Price: $24.95</H3> <I>(Suggested retail: $39.95)</I><B>Shipping cost: $4.00 UPS Ground</B>

Sample XML Coding

<PRICE type=“sale” unit=“US Dollar”>24.95 </PRICE> <PRICE type=“retail” unit=“US Dollar”>39.95</PRICE><SHIPPING type=“UPS Ground” unit=“US Dollar”>4.00</SHIPPING>

What Is XML?

“XML is a

platform-independent,

self-describing,

expandable,

standard data exchange format.”

XML is Platform Independent

Windows

Unix

Macintosh

Mainframe

Linux

XML is Self-Describing

Example:

<DATE>July 26, 1998</DATE>

Describes the information, not the presentation

Format neutral

XML is Expandable

Whereas HTML has a fixed set of tags <H1>, <B>, <PRE>

XML lets you create your own tags <sugary-substance>

<Shakespearean-character>

<cash-equivalent>

The key focus is on content, not presentation

XBRL

XML and XMLenabling technologies

X-Link, X-Schema

SGMLStandard Generalized Markup Language

XBRL Builds on XML and SGML

Industry Developed,Supported

W3C Supported

2001

1998

1986

ISO Standard

How does it work?

XML gives meaning to information through the use of tags

<Customer> <Name>Bob Smith</Name> <Company>XYZ Corporation</Company> <Title>CEO</Title> <Age>49</Age></Customer>

How XML Works

Improves the way companies -- and applications -- share information Enjoys strong industry and vendor support

What XML is Not!!

XML is Not

A religion.

The solution to all world problems.

A solution for all electronic commerce problems.

A solution to all legal-technology problems.

What is ‘XML’?

XML is a Tool

XML is a Really Cool (Powerful) Tool!

Like all tools, XML can be used wisely and unwisely.

Why is XML so Important?

Vendor neutral

Readable data format

More flexible and easier to use than EDI

Why is XML so Important?

All major software products are becoming “XML” enabled

Defacto standard for data exchange

Enabling new levels of interoperability

XML

Widely expected to reduce cost of publishing to the Net by as much as 50%.

Gartner Group prediction

70% of all B2B transactions executed on the Web will be done using XML.

And by next year

Who defines the tags?

Tags are defined by industry consortiums

Each industry’s standard tags are commonly referred to as a taxonomy

XBRL Taxonomies

Commercial and Industrial Companies, US GAAP - Published

Federal Departments, US

Mutual Funds, US

Financial Institutions, US

Commercial and Industrial, IASC

XBRL Taxonomies

Commercial and Industrial, German GAAP

Bank Call Reports - FDIC

Who’s Building Taxonomies?

Accounting Advertising Architecture

Automotive Banking Communication

Economics Education E-Commerce

EDI ERP Financial

Healthcare HR Insurance

Legal Music News

Publishing Real Estate Retail

Science Software Supply Chain

Astronomy

Aerospace

Music

Publishing or Mythology

Chemical

Auto Industry

<RECORD- LABEL>

<PROGRAM>

<PLANET>

<GOD>

<SYMBOL>

<CAR-MODEL>

Industry Specific Context

HTML, XML, and XBRL?

How do they differ?

HTML

In simple terms, HTML is a system of marking up a document so it can be published on the WWW.

Documents prepared in HTML contain reference graphics and formatting tags.

HTML

HTML is a series of pre-defined tags that primarily focus on describing how content appears on the Internet.

HTML describes what font, font size, and color the text of this paragraph should be when viewed via a web browser.

HTML

With HTML you have a lot of content but no real context.

That is where XML comes in.

eXtensible Markup Language

XML is the universal format for data on the web that uses tags to give context and structure to content.

XML is a standards language ratified in February 1998 and maintained by the World Wide Web Consortium (W3C).

eXtensible Markup Language

XML does not replace HTML – it is a complimentary format that is platform independent, allowing XML data to be rendered on any device, such as a computer, cell phone, PDA or tablet device.

eXtensible Markup Language

XML allows developers to easily describe and deliver rich, structured data from any application in a standard, consistent way.

eXtensible Markup Language

Whereas HTML offers a fixed/pre-defined number of tags . . .

XML neither defines nor limits tags.

XML provides a framework for defining tags (taxonomy) and the relationship between them (i.e., schema).

XBRL is an XML-based schema that focuses specifically on business reporting.

XBRL is a complement to XML, allowing accountants and regulatory bodies to identify items that are unique to the business reporting environment

XBRL’s schema defines how to create XBRL documents and XBRL taxonomies (i.e., GAAP, IAS),

Providing a set of business information tags that allows users to identify business information in a consistent format.

XBRL is also extensible in that users are able to create their own XBRL taxonomies that define and describe tags unique to a given environment.

XBRL: How It Can Improve Today’s Business Environment

XBRL Benefits

Case 1: Consolidating Subsidiaries

Case 2: Issuing Financial Statements

Case 3: Analyzing Financial Information

Case 4: Following Government Regulations

What are the problems solved by XBRL?

XBRL . . .

XBRL is freely licensed and facilitates the automatic exchange and reliable extraction of financial information among various software applications anywhere in the world.

What is XBRL Used For?

What is XBRL Used For?

XBRL, at least at first, will be used to publish digitally companies’ financial statements for external users.

An XBRL-based F/S is a digitally enhanced version of paper-based F/S which includes the complete “set” of F/’S including the accountant’s report.

Potential XBRL Applications

Potential XBRL Applications

Financial Statements

Taxes

Regulatory Filings

Accounting and Business Reports

Authoritative Literature.

What are the benefits of XBRL for Financial Statements?

XBRL Benefits

Preparing a financial statement for

Printing

A Web Site

Regulatory filing

Means potentially entering information three times.

XBRL Benefits

With XBRL, information will be entered once and the same information will be “rendered”

As a printed Financial Statement

As an HTML document for a Web Site

As an EDGAR filing

As a raw XML file

As some specialized reporting format

Transaction Details

Financial System

XBRL-enabled Financial Statements

DrillDown