XBRL Implementation: XBRL Implementation:

A Field InvestigationA Field Investigation Diane Janvrin

Associate Professor

Won No Assistant Professor

Information Systems Mid-Year Meeting January 9, 2010

Motivation XBRL (eXtensible Business Reporting

Language) Method XBRL Implementation Process Findings Summary

AgendaAgenda

SEC mandate

Obtain understanding of how early mandate

participants are implementing XBRL

MotivationMotivation

XBRL(XML)XBRL(XML)XBRL(XML)XBRL(XML)

HTML HTML based based

financial financial statements statements reportingreporting

HTML HTML based based

financial financial statements statements reportingreporting

Paper Paper based based

financial financial statements statements reportingreporting

Paper Paper based based

financial financial statements statements reportingreporting

Web(HTML)Web(HTML)Web(HTML)Web(HTML)

Off LineOff LineOff LineOff Line LAN, Intranet, InternetLAN, Intranet, InternetLAN, Intranet, InternetLAN, Intranet, Internet

XBRL XBRL based based

financial financial statements statements reportingreporting

XBRL XBRL based based

financial financial statements statements reportingreporting

Provide a standard method for preparing, analyzing, and exchanging financial information.

IntroductionIntroductionFinancial Reporting SystemFinancial Reporting System

Limited accessibility

Not allow data exchange,

intelligent search, and

adaptive presentation

<B> Cash: 50000 </B>

<I> Debt: 10000 </I>

<Cash> 50000 </Cash>

<Debt> 10000 </Debt>

Cash { font-weight: bold }

Debt { font-style: italic }

Cash: 50000

Debt: 10000

Cash: 50000

Debt: 10000

Cash: 50000

Debt: 10000

Paper BasedPaper BasedPaper BasedPaper Based HTMLHTMLHTMLHTML XBRLXBRLXBRLXBRL

Presentation

ContentContent

ActualActual

IntroductionIntroductionFinancial Reporting SystemFinancial Reporting System

XBRL BasicsXBRL Basics Instance document

o XML file that contains business reporting information and represents a collection of financial facts and report-specific information using tags from one or more XBRL taxonomies

o Element A financial reporting concept, defined in XBRL

o ContextEntity and report-specific information (reporting period, segment information, and so forth) required by XBRL that allows tagged data to be understood in relation to other information

Taxonomy o Electronic dictionary of business reporting elements used to report

business informationo Standard taxonomy

Developed for U.S. companies by XBRL.USo Taxonomy extensions

Created by individual companies

XBRL BasicsXBRL Basics

FactsFacts Definition, Content, and PresentationDefinition, Content, and Presentation ReportingReporting

Cash and Cash

Equivalents

$35,000 <cust:CashCashEquivalents

decimals="0" contextRef="End2004" unitRef=“USD"> 35000 </cust:CashCashEquivalents>

XBRL InstanceXBRL InstanceXBRL XBRL TaxonomyTaxonomy<element

name="CashCashEquivalents" id="cust_CashCashEquivalents" type="xbrli:monetaryItemType" substitutionGroup="xbrli:item" nillable="true" xbrli:balance="debit" xbrli:periodType="instant"/>

<xsl:for-each select="//cust:CashCashEquivalents"> <xsl:if test="@contextRef[.='End2004']"> <xsl:value-of select="format-number(current(), '###,###')"/> </xsl:if></xsl:for-each>

XSLT Style SheetXSLT Style Sheet

Rendering (Presentati

on)

Data (Content)Machine readable

format

Human readable format

Dictionary

HTML or PDF FormatHTML or PDF FormatHTML or PDF FormatHTML or PDF Format XBRL FormatXBRL FormatXBRL FormatXBRL Format

With XBRL, each item of a company’s reported information is tagged with a unique

code identifier.

What Does XBRL Look Like?What Does XBRL Look Like?

How XBRL WorksHow XBRL Works

01/1997 12/1997 12/1998 12/1999 12/2000 12/2001 12/2002 12/2003 12/2004 12/2005 12/2006 12/2007 12/2008

July 2000

First First specification of specification of

the XBRL the XBRL Taxonomy for Taxonomy for

Financial Financial Statements for Statements for the commercial the commercial and industrial and industrial

U.S. companies.U.S. companies.

1997

Charlie Charlie Hoffman Hoffman

introduces introduces the potential the potential use of XML use of XML for financial for financial reporting.reporting.

April 2000

XFRML XFRML Steering Steering

Committee Committee was officially was officially changed to changed to

XBRL XBRL Steering Steering

Committee.Committee.

October

1999

First First meeting of meeting of the XFRML the XFRML

Steering Steering Committee.Committee.

August 1999

12 companies, 12 companies, (besides the (besides the

AICPA), AICPA), including ‘Big including ‘Big 5’ joined the 5’ joined the

project as project as members of members of the XFRML the XFRML

Steering Steering Committee.Committee.

April 2005SEC XBRL SEC XBRL Voluntary Voluntary Financial Financial Reporting Reporting Program Program (VFRP)(VFRP)

December 17, 2008

SEC adopts SEC adopts XBRL XBRL

mandate.mandate.

May 30, 2008

XBRL XBRL proposed proposed

mandating mandating companies companies

furnish furnish statements in statements in XBRL format.XBRL format.

January 2006

SEC SEC announces announces expedited expedited

reviews for reviews for XBRL filers.XBRL filers.

April 2002

International International Accounting Accounting Standards Standards

Board (IASB) Board (IASB) released a core released a core

taxonomy of taxonomy of XBRL for XBRL for Financial Financial

StatementsStatements(IASC 2001).(IASC 2001).

April 2004

Revised XBRL Revised XBRL Specification Specification

2.1 was 2.1 was released by released by

International International Steering Steering

Committee of Committee of XBRL XBRL

International.International.

December 2003

XBRL XBRL Specification Specification

2.1 was 2.1 was approved and approved and released by released by

International International Steering Steering

Committee of Committee of XBRL XBRL

International.International.

November 2001

The second The second specification specification of the XBRL of the XBRL was released was released

for public for public comment (see comment (see

at at http://www.xbrhttp://www.xbr

l.org for l.org for details).details).

September

2007XBRL US XBRL US project team project team completes completes

tagging of US tagging of US GAAP GAAP

(XBRL US (XBRL US GAAP GAAP

Taxonomies Taxonomies 1.0).1.0).

EVOLUTION OF XBRL:EVOLUTION OF XBRL:A Historical PerspectiveA Historical Perspective

Mandate BasicsMandate Basics SEC rule proposal May 30, 2008 Adopted by SEC on December 17, 2008 Basics of the rule: Required primary financial statements (PFS) and footnotes for all

issuers using US GAAP/IFRS for periods ending June 15, 2009 or later

Year 1 – all large accelerated filers (worldwide equity float above $5 billion)

Year 2 – all other accelerated filers Year 3 – all others First year PFS plus block tag footnotes 2nd year include detailed tag footnotes 30 day grace period for first filing of PFS and detailed footnotes

MethodMethod Examine actual implementation process for early filers

Qualitative technique using structured interview guide

Interviewed nine accountants in five companies in

diverse industries

Examined initial XBRL furnishings under the SEC

mandate

XBRL Implementation ProcessXBRL Implementation Process

Plan implementation

Tag financial items and create taxonomy extensions

Validate, review, and render instance document and taxonomy extensions

Audit and issue XBRL-related documents

XBRL Implementation ProcessXBRL Implementation Process

Findings regarding Plan ImplementationFindings regarding Plan Implementation

Main objective of XBRL implementation was regulatory compliance

Most respondents supported XBRL but one questioned its value

Implementation team included both accounting and information technology personnel

Three companies purchased bolt-on software; two used third party service providers

Respondents selected XBRL software based on ease-of-use, cost, and technical support

Respondents found many XBRL software packages difficult and time consuming to use

Respondents who purchased bolt-on software had technology infrastructure issues

One respondent who used third party service provider has one year contract for XBRL services and three year contract for SEC filing services.

Findings from Tag Financial Items and Findings from Tag Financial Items and Create Taxonomy Extensions PhaseCreate Taxonomy Extensions PhaseFindings from Tag Financial Items and Findings from Tag Financial Items and Create Taxonomy Extensions PhaseCreate Taxonomy Extensions Phase

Tag Financial Items

All respondents used bolt-on rather than integrated approach to

tag financial items.

All respondents initially tagged statements using 2008 taxonomy

and then re-tagged statements once 2009 taxonomy was

available.

All respondents chose to block tag footnotes for 2009.

Two respondents indicated serious concerns with ability to detail

tag financial statement footnotes. One strongly argued that given

current state of software and lack of SEC direction, SEC should

delay detailed footnote tagging requirements.

Findings from Tag Financial Items and Findings from Tag Financial Items and Create Taxonomy Extensions PhaseCreate Taxonomy Extensions PhaseFindings from Tag Financial Items and Findings from Tag Financial Items and Create Taxonomy Extensions PhaseCreate Taxonomy Extensions Phase

Create Taxonomy Extensions

Most respondents tended to minimize number of taxonomy extensions used due to either desire to match with existing standard taxonomy or perceptions regarding difficulty of creating taxonomy extensions.

Two companies who purchased XBRL software asked software consultants to create taxonomy extensions.

Several respondents indicated that they found technical aspects of creating taxonomy extensions challenging.

Two respondent companies created several extension elements that were not used in their XBRL-related documents.

Findings from Validate, Review, and Findings from Validate, Review, and Render Instance Document and Taxonomy Render Instance Document and Taxonomy Extensions PhaseExtensions Phase

Findings from Validate, Review, and Findings from Validate, Review, and Render Instance Document and Taxonomy Render Instance Document and Taxonomy Extensions PhaseExtensions PhaseValidate Instance Document and Taxonomy Extensions

Several respondents noted validation process was frustrating and error messages generated were difficult to understand

Inconsistencies in validation error messages between software products

Software products did not use error messages suggested by SEC

Review Instance Document and Taxonomy Extensions

All companies reviewed instance document internally

Two companies also asked financial printer to review instance document

Findings from Validate, Review, and Render Instance Document and Taxonomy Extensions Phase

Findings from Validate, Review, and Render Instance Document and Taxonomy Extensions Phase

Render Instance Document and Taxonomy Extensions

Although not required, all respondents viewed documents using

rendering software to protect company reputation

Two respondents reported frustrations with rendering views used

by XBRL software

Respondents reported frustrations with SEC delays in updating

its rendering software to reflect 2009 taxonomy

Findings from Audit and Issue XBRL-Related Documents PhaseFindings from Audit and Issue XBRL-Related Documents Phase

Audit XBRL-Related Documents

Auditors were not interested in auditing XBRL-related documents

Only one respondent suggested that audit procedures may differ since with XBRL tags, materiality may be based on values in individual financial items rather than entire statement

Issue XBRL-Related Documents

Most companies worked with financial printers to issue XBRL-related documents

Financial printers use their own software rather than software used by financial preparer to produce XBRL-related documents provided to SEC and placed on company websites

Challenges AheadChallenges Ahead

Challenges Ahead

Tagging and taxonomy extension process is very time consuming

Software needs to be improved and service providers need additional XBRL knowledge

Delays in taxonomy updates are frustrating and system needs to be developed to ‘instantly’ update software with new taxonomies

Respondents are concerned that XBRL may cause delays in SEC filings

Software needs to be improved before detailed footnote tagging can occur

SummarySummary

Examining XBRL implementation process is important and timely due to SEC mandate.

Significant hurdles exist to XBRL implementation including

– Software issues

– Delays in taxonomy updates

– Complex taxonomy extension process

– Upcoming detailed tagging of footnotes

Compliance is main XBRL implementation motivation

Currently, no integration into supply-chain reporting systems

Lack of internal controls

Validation process is difficult due to inconsistent error messages

Companies are concerned about rendering due to company reputation concerns