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Transcript of 1 Credits Prepared by: Rajendra P. Srivastava Ernst & Young Professor University of Kansas Sponsored...
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CreditsPrepared by: Rajendra P. Srivastava Ernst & Young Professor University of Kansas
Sponsored by: Ernst & Young, LLP(August 2005)
XBRL ModulePart 1: Introduction to
XBRL
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Outline
Definition and Value of XBRL
Current and Future Reporting Process
Primary Use Cases
XBRL Information Chain and XBRL GL
XBRL Consortium and Evolution of XBRL
Current Usage and First Adopters of XBRL
Potential Usage of XBRL
Some Examples
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XBRL Definition* XBRL is the specification for the eXtensible Business
Reporting Language. XBRL allows software vendors, programmers and end users to enhance the creation, exchange, and comparison of business reporting information. Business reporting includes, but is not limited to, financial statements, financial information, non-financial information and regulatory filings such as annual and quarterly financial statements.
XBRL defines a syntax in which a fact can be reported as the value of a well defined reporting concept within a particular context. The syntax enables software to efficiently and reliably find, extract and interpret those facts. The XBRL framework splits business reporting information into two components: XBRL instances and taxonomies.
* The above definition is provided by XBRL.org in “Extensible Business Reporting Language (XBRL) 2.1 RECOMMENDATION - 2003-12-31 + Corrected Errata - 2005-04-25.”
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Value of XBRL
Video Clip
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Value of XBRL
Processing, analyzing, and disseminating information become much more efficient and effective
(Better, Faster & Cheaper)– Improves effectiveness by eliminating the need
for re-entering data for processing
– Improves efficiency by removing redundancies
– Saves costs through efficiency and effectiveness
– Disseminates information independent of platform
– Transparency of information
– Makes it easy to use automated analytical tools
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Browsing the Web (Content –without Context)
4,350 hits for IBM’s property plant and equipment
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Current Reporting Process
RegulatoryFilings
Web Site
Tax Return
Trade Filings
Printed Financials
Accounting System
Third Party Information
ExplanatoryText
• Rework and Delays• Ad hoc and non
repeatable Processes
InternalReports
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XBRL Reporting Process
RegulatoryFilings
Web Site
Tax Return
Trade Filings
Printed Financials
Accounting System
Third Party Information
ExplanatoryText
XBRLDocuments
Reduces redundancies & discrepancies
Repeatable processes using tools InternalReports
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Primary Use Cases
Accounting Corporate HQ
Operating Divisions
-External Auditors
Sharing
Information
Eas
ily
Specific Uses
Investors
Lenders
More
Regulators
-Data Intermediaries-Others Tagging
can occur
Regulator Filings
Financial Statements
Earnings Releases
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XBRL Information Chain
ExternalFinancialReporting
Business OperationInternal
FinancialReporting
Investmentand Lending
Analysis
Business Processes
ParticipantsParticipants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
XBRL forRegulatory Filings
XBRL for AuditSchedules
XBRL forTax Filings
Software Vendors
ManagementAccountants
Companies
XBRL GL and XBRL for Business Processes
XBRL for Financial Statements
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BUSINESS
Investors
Aggregators
Regulators Creditors LendersTax Website
ERP G/L Packages Other
•Orders•A/P•Delivery
Customer•Orders•A/R•Delivery
Business
2-way2-wayTransaction Creation
Oneway
Oneway
E-Commerce is anInteractive Supply Chain
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The XBRL Organization: XBRL Consortium (www.xbrl.org)
XBRL International
– A not-for-profit organization consisting of more than 300 members at the present time.
Organizational Structure– Comprised of local jurisdictions which
represent countries, regions or international bodies and focus on the progress of XBRL in their areas as well as contributing to international development.
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Evolution of XBRL: A Historical Perspective
April 1998: Charles Hoffman, CPA, investigated the use of eXtensible Markup Language (XML) for the electronic reporting of financial information in the USA for the first time.
October 1998: AICPA decided to fund a project aimed at creating a prototype set of financial statements in XML.
January 1999: Based on the prototype financial statements, the AICPA was convinced that XML was important to the accounting profession.
July 1999: The project to develop eXtensible Financial Reporting Markup Language (XFRML) was funded by The AICPA Board of Directors
– This marks the conception of XBRL – XFRML is a predecessor of XBRL– XFRML focused on just reporting of financial information, where as
XBRL focused on reporting all business relevant information
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Evolution of XBRL: A Historical Perspective
August 1999: 12 companies, (besides the AICPA), including ‘Big 5’ joined the project as members of the XFRML Steering Committee.
October 1999: First meeting of the XFRML Steering Committee.
April 2000: XFRML Steering Committee was officially changed to XBRL Steering Committee.
July 2000: First specification of the XBRL Taxonomy for Financial Statements for the commercial and industrial U.S. companies.
November 2001: The second specification of the XBRL was released for public comment (see at http://www.xbrl.org for details).
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Evolution of XBRL: A Historical Perspective
April 2002: International Accounting Standards Board (IASB) released a core taxonomy of XBRL for Financial Statements (IASC 2001).
December 2003: XBRL Specification 2.1 was approved and released by International Steering Committee of XBRL International.
April 2004: Revised XBRL Specification 2.1 was released by International Steering Committee of XBRL International.
April 2005: SEC XBRL Voluntary Financial Reporting Program (VFRP)
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XBRL First Adopters:‘Mega’ Users of Company Financial Data
Types of Entities Regulators (e.g. FDIC, APRA, CSSF,..) Global Financial Services
(e.g. Deutsche Bank, B of A)
Market Analysts (e.g. MS) Stock Exchanges (e.g. NASDAQ,Tokyo, ..) Data Intermediaries (e.g. EOL, Reuters, ..) Australian Prudential
Regulatory Authority (APRA)
Usage/MotivationInternal - Reduce Costs,
Improve EffectivenessInternal - Reduce Costs,
Improve EffectivenessInternal & External
External - Create/Expand Revenue Stream
External - Expand Revenue Stream
Collect financial statements from more than 12,000 Super Funds
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Potential Usage of XBRL
Managerial Reporting– Enhance internal reporting of financial and non-financial
production related information– XBRL can lead to effective and efficient management of
supply value chain– XBRL can provide timely feedback on personnel
performance Internal Auditing
– Efficient and effective evaluation of internal controls, and documentation of material weaknesses
– Effective compliance to Sarbanes-Oxley Act External Auditing
– Efficient and effective use of analytical tools for risk assessments, industry comparisons, benchmarking, trend analysis, etc. from remote locations
Others: Loan approval, Credit rating, Mergers & acquisitions, Investment Decisions, etc.
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Graph of Cash Flows for 3Mfor Ten Years
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Comparison of Cash Flows for Two Companies