XBRL in Government 2009 NSAA IT Conference September 30, 2009 Joe Kull Joe Kull...
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XBRL in GovernmentXBRL in Government2009 NSAA IT Conference2009 NSAA IT ConferenceSeptember 30, 2009September 30, 2009
Joe KullJoe Kull PricewaterhouseCoopersPricewaterhouseCoopers
PricewaterhouseCoopersMay 2009
Slide 2
We’ll cover…
What is XBRL?
Why its time has come
How it works, what it costs
Global adoption
XBRL in the US
PricewaterhouseCoopersMay 2009
Slide 3
PricewaterhouseCoopersMay 2009
Slide 4
PricewaterhouseCoopersMay 2009
Slide 5
PricewaterhouseCoopersMay 2009
Slide 6
So let’s ‘containerize’ data and transport it anywhere…..
PricewaterhouseCoopersMay 2009
Slide 7
So What Is XBRL?
• An XML dialect
• A free available open data standard
• Structure for quantitative or qualitative content
• ‘Structured’ data becomes interactive
• Built on collaboration and consensus
• Enables understanding across wide range of applications
• Makes data a commodity
PricewaterhouseCoopersMay 2009
Slide 8
Interactive data: user driven, not system confined
X Application & System Centric• Dependent on system Integrators,
developers, architects• Expensive interfaces and patches • Change is risky and expensive
Standards & Data Centric• Business rules are tied to data source• Semantic ‘consensus’• Open standards enable interoperability • Changes made to taxonomy
PricewaterhouseCoopersMay 2009
Slide 9
Impact of Standards• Industrial
• Transportation
• Construction
• Retail
• Medical
• Education
• Technology
IT IS TIME FOR DATA
PricewaterhouseCoopersMay 2009
Slide 10
XBRL Structure
Technical standards for composing XBRL taxonomies
Defines data ‘structure’ in a reporting regime
Output of structured data using taxonomy [ies]
Creates human usable documents
XBRL − Rendering
XBRL − Instance
XBRL − Taxonomy
XBRL − Specifications
PricewaterhouseCoopersMay 2009
Slide 11
Taxonomy document [or schema]
Balance sheet
Assets
Intragovernmental
PP&E ____
Total assets ====Liabilities
Intragovernmental liabilities
Loan guarantees _____
Total liabilities _____
Net equity position
Cumulative results ____Total net equity position ====
Total liabilities and net equity position ====
PricewaterhouseCoopersMay 2009
Slide 12
XBRL is More Than Just Tagging Business Information
From standard taxonomy
Custom taxonomy
Instance document
Key:
• Multi-dimensional business and financial data representations
• Flexibility of business reporting vocabularies (i.e. taxonomies)
• Mathematical relationships between concepts
• Flexibility about how to present information to users
CalculationsCash = Currency + Deposits
Formulas Cash ≥ 0
ReferencesGAAP I.2.(a)
CoA 1100
ContextsUS $X
FY2009Budgeted
XBRL<cash>“200”
LabelCash in Bank
PresentationCash & Cash Equivalents
Customized presentation
Custom calculation
Customized references
DefinitionsRelated to Liquid
Assets
Customized definition
Customized label
PricewaterhouseCoopersMay 2009
Slide 13
XBRL International
Consortium began in 1998
Currently 450 company members
Governance by an International Steering Committee
• Established Jurisdictions
• At Large Representatives
• Board of Advisors
• Standards Board
PricewaterhouseCoopersMay 2009
Slide 14
Standards BStandards Basedased Reporting and Analysis Reporting and Analysis
UKCA
ESUS
AU
NZ
IE
JPKR
BE
CO
BR
AR
SG
HK
NOSE
PL
IT
CN
IN
LB
CZ
UA
LUIASB
AE
NL
TR
GR
JAMCH
FR
SI
AT
Established Jurisdictions
Provisional Jurisdictions
Projects Ongoing
DE
DK
ZA
Focus in 2009
IL
Global Focus Jurisdictions
CHL URY
OCEG
RIXML
PricewaterhouseCoopersMay 2009
Slide 15
Countries with active projects
Australia Belgium Brazil Canada
China Chile Germany Netherlands
Ireland Spain France Italy
Luxembourg India Israel Japan
Korea Poland Singapore Switzerland
UAE United States United Kingdom South Africa
PricewaterhouseCoopersMay 2009
Slide 16
XBRL Regulatory Adoption
Government
Australian Tax Office
Committee of European Banking Supervisors (CEBS)/COREP
Chinese Securities Regulation Commission (CSRC) {sponsoring Shenzen and Shanghai exchanges}
Dutch Tax Authority
Dutch Water Authority
Spanish Stock Exchange Commission – 3000 companies
Statistics Dept of Ireland
Other
• Bank of Japan
• Bundesbank
• Eurostat
• Financial Service Agency of Japan
• The Irish Revenue
Commercial
Canadian Securities Regulators
KOSDAQ – Korea
Bank of Spain
National Bank of Belgium
National Tax Agency of Japan
New Zealand Exchange
U.S. Securities & Exchange Commission
Shanghai Stock Exchange s
Shenzhen Exchange
Tokyo Stock Exchange
UK Companies House
UK Inland Revenue/HMRC
US Federal Financial Institutions Examination Council (includes FDIC)
PricewaterhouseCoopersMay 2009
Slide 17
Standard Business Reporting [SBR]
• Effort to reduce reporting burden by 25% or more - Removing redundant government forms/information- Adopting common language and int’l standards- Utilizing business software to pre-fill gov’t forms- Providing electronic interface from company accounting systems- Identify reporting as a by-product of normal/natural business processes
• Emerging as a compliance best practice- Dutch Taxonomy Project- New Zealand SBR- Austrailian SBR- Singapore SBR- Ireland eGov policy- Ministry of Corporate Affairs - EC SBR projects in EU countries
PricewaterhouseCoopersMay 2009
Slide 18
Dutch Taxonomy Project –
http://www.xbrl-ntp.nl/english
“The Dutch government intends to reduce the administrative burden of businesses with 25 percent”
PricewaterhouseCoopersMay 2009
Slide 19
Australian SBR
“The benefits to business are ultimately estimated rise to $795M per year on an ongoing basis”
PricewaterhouseCoopersMay 2009
Slide 20
COREP/FINREP
Banking regulators in Europe move from 27 different ways to 1 way. BASL, IFRS, and XBRL.
PricewaterhouseCoopersMay 2009
Slide 21
Harvard Business Review
“Wacoal, a Kyoto-based maker of lingerie, has use XBRL to enhance its ability to aggregrate operating information from the 24 proprietary IT systems used by its
businesses in 23 countries. Wacoal needed six months and $50 million to implement the system-a sixth of the time and a third of the money that would
have been required for a traditional ERP solution it had considered.’ [Harvard Business Review, February 2007, Breakthrough Ideas for 2007]
PricewaterhouseCoopersMay 2009
Slide 22
FDIC Call Reports
• More accurate data –100% data received met mathematical requirements vs. 70%
• Faster data inflow – less than one day after quarter end vs. weeks after quarter end
• Increased productivity – 550 to 600 banks/analyst vs. 450 to 500
• Faster data access – within 1 day of receipt vs. several days
• Greater efficiency – workload complete 41 days after calendar quarter vs. 48 days
PricewaterhouseCoopersMay 2009
Slide 23
U.S. Securities and Exchange Commission
• Formally adopted XBRL for annual, quarterly, and registration statements
• Three year phased adoption starting with 500 largest, for y/e on or after 6/15/09
- Eventually will require note disclosures be structured in detail, increasing disclosures from ~300 to over 3,000
- GAAP taxonomy [FASB standards] exceeds 15,000 disclosure items
- Filing companies moving toward embedded filing seeing efficiencies
• SEC also mandating mutual fund risk and return reporting in 2011
• Other taxonomies under development underway include Morgagae backed securities, proxy disclosures, corporate actions, governance risk and compliance, risk reporting et al.
PricewaterhouseCoopersMay 2009
Slide 24
United Technologies Voluntary SEC Filings
• Initial investment of $300
• 80 hours on first filing, now down to 4
• Total investment of $40k and 600 hours
• Commercial tools used
• Most work done in house by existing resources
• No new information is being required
• Technical knowledge of XML not a requirement
• Focus moves from format to content
PricewaterhouseCoopersMay 2009
Slide 25
XBRL and Public Sector Financial Reporting:Standardized Business Reporting: Oregon CAFR Project
• Association of Government Accountants [AGA] research project to consider feasibility of developing and using an XBRL taxonomy to tag data to create a CAFR
• Various contributors including state of Oregon, GASB, FAF, NASACT, AGA, Allocation Solutions Inc., JustSystems, and PricewaterhouseCoopers.
• Plan: develop GAAP taxonomy for 156 data elements, 96 from the Statement of Net Assets and 60 from the Statement of Activities
• Many lessons learned, and opportunities. It can be done BUT it won’t be easy, cheap or fast
• Major obstacle: no regulatory driver such as the SEC
• Real question: would state/local SBR enable more attractive capital opportunties-
PricewaterhouseCoopersMay 2009
Slide 26
The Nevada pilot: XBRL a way out spreadsheet ‘hell’
• Use XBRL for grants reporting with expansion to a business portal
• Worked with 60 grants in Nevada Dept of Agriculture
• Current process is time consuming and error prone
- Takes two weeks to generate a monthly report
- Errors caused by manual manipulation, cutting and pasting of data
• Solution was to use an XBRL GL Adapter to tag GL entries using downloaded CSV data and populating a Web-based XForms report that processes XML.
• Report generation time cut to about an hour
• Looking next to apply XBRL to debt collection documents [taxes]
• Eventually would like to have XBRL tie together state portal for businesses applying for grants and licenses
PricewaterhouseCoopersMay 2009
Slide 27
Creating an Interactive Single Audit Act Database [A-133 Project]
• An AGA Corporate Research Project- Partners include HHS, NASACT, Marklogic, Allocation Solutions, FAC
• Attempt to access details in full A-133 report- individual findings as recorded in the auditor’s finding- management response in the finding- corrective action plan- summary schedule of prior audit findings
• Develop taxonomy to look at findings - for a program across entities [- across all programs within an entity- between entities
• First tests were successful: one click access from SF-SAC to detailed finding- But not with XBRL……
PricewaterhouseCoopersMay 2009
Slide 28
XBRL benefits
One source for external reporting
Internal consistency across all locations
Benchmarking, peer comparisons, research
Enhances control
Reduces manual handling of data
Facilitates ad hoc data requests
Small investment, documented efficiencies
Leverages legacy systems
PricewaterhouseCoopersMay 2009
Slide 29
Why now? Reporting will/is changing…
THEN NOW
Focus Shareholder Stakeholder
Medium Paper Web
Format Standard Custom
Frequency Periodic Real-time
Indicators Financial Statements Various Metrics
Data Emphasis Historical Projected
Costing Historical Cost Value-based info
Validation Audit Accounts Assure Processes
Environment Consistent Dynamic
Compliance Self policing Stifling
PricewaterhouseCoopersMay 2009
Slide 30
Why now?• Organizational economics
• Transparency
• Globalization
• ‘Bad behaviour’
• Because we can
© 2009 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context requires, other member firms of PricewaterhouseCoopers International Ltd., each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP.
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