Transcript XBRL GL for Wholesale/Distribution

XBRL: What’s In It For Internal Auditors
Gianluca Garbellotto, Iphix
June 25, 2009
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Why should internal auditors care
Where – and how – XBRL is used
Intro to XBRL Global Ledger
XBRL for internal use
What does it all mean for internal audit
Resources
Q&A
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XBRL is here … or coming fast
The primary concentration: regulatory filings
Drivers for adoption include
◦ Process efficiencies
◦ Information transparency
◦ Significant cost savings in data integration, dissemination
and analysis
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XBRL is more than filings, financials and
compliance
The benefits above increase the deeper XBRL/data
standardization is embedded
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Role in external filings
◦ Under a bolt-on approach
◦ Under an embedded approach
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Internal transparency and efficiencies – today and
tomorrow
◦ Statistical vs. 100% testing
◦ Centralized, consistent and application-independent
validation, processing and visualization of data
◦ New collaboration model with external auditors
◦ M&A
◦ The spectre of “real time”
Country
Organization
Program
US
SEC
Phased-in mandatory filing
Japan
Tokyo Stock Exchange
National Tax Agency
Bank of Japan
Japan Financial Services Agency
Registrant Financial Report Filing
eTax National Tax Return Filing
Filing of Financial Reports
EDINET – Electronic Disclosures for
Investors Network
UK
Companies House
HM Revenue and Customs
Account Filings
Company Tax Filings
China
China Securities Regulatory
Commission
Interactive Data Filing for Financial
Statements
Korea
Financial Supervisory Service
Mandatory Filing
Singapore
Accounting and Corporate
Regulatory Authority - ACRA
Mandatory Filing
Israel, Spain, Italy and many more …
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On the basis of reduced compliance burden
Cross-government, business-to-government projects
Established in The Netherlands and Australia, official
declarations of interest in New Zealand and UK, closely
watched in many other countries
Based on long-term partnerships between Government
and businesses – not on mandates
Not only - or even mainly - about financial statements
Significant cost savings for both sides
If your systems and processes are integrated, you may not
have to report … until needed
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Quarterly data collection from US banks, started in
2005
Key point: validation at the source of data rather
then at the consumption point
Substantial impact on processes, resources and
costs
◦ Errors in data received 68% => 5%
◦ Processing time 45/60 days => 2 days
◦ Human resources 1,000 => 200
Business Reporting Supply Chain
Processes
Business
Operations
Accounting
Software
ERP systems
UBL
Rosettanet
ACORD
MISMO
FPML
Others
Internal
Business
Reporting
External
Business
Reporting
SCOA/Trial balance
AP/AR Ledgers
General Ledger
Fixed Assets, Inventory
Documents/Entries
Parties, entities
KPIs – financial and not
Others
Investment,
Lending,
Regulation
Economic
Policymaking
US GAAP
IFRS
SBR
GRI G3
Statutory
MD&A
Crating the seamless
interface
Financial
Publishers
and Data
Aggregators
Companies
Participants
Trading
Partners
Management
Accountants
Internal
Auditors
External
Auditors
Investors
Central
Banks
Regulators and Administrators
Software Vendors and Service Providers
Similar Data
Account, Amount, Date
Different Data Dictionaries: Field names, field order
System 1: AccountNo, Amount, Date
System 2: MonetaryAmount, PostDate, AccountNumber
System 3: PostingDate, Account#, Value
Different
System 4: Date, Journal, Account, Amount
Data Formats
CSV
Different Representations for the
same concepts in common data field
Journal: PJ, Payroll Journal, Payroll
Date: 12-31-03, 20031231, 12/31/03
ASCII
WKS
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System 1: AccountNo, Amount, Date
System 2: MonetaryAmount, PostDate, AccountNumber
System 3: PostingDate, Account#, Value
System 4: Date, Journal, Account, Amount
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XBRL GL says:
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accountMainID
amount
postingDate
sourceJournalID
(and 400+ other data fields)
qbxml
qbxml
smbxml
smbxml
Intacct xml
Intacct xml
SAP
SAP
Peoplesoft
xml
Peoplesoft
xml
Oracle
qbxml
qbxml
smbxml
smbxml
SAP
Peoplesoft
xml
Industry transactional XML
XBRL GL
Intacct xml
Intacct xml
SAP
Peoplesoft
xml
Oracle
Accounting
System
Trial Balance
Adjustments
CPA
Accounting
System
Budget
Chart of Accounts
Accounting
System A
Customers, Vendors, Employees
Open AR, AP, Inventory Status
Journal Entries, Ledger History
Accounting
System B
External
Systems
Operational formats
Operational
Systems
Tax information
Tax representation
format
Forensic
representation
format
Consolidation
Systems
Public Books
Management
Reporting
Link to other standards
Leverage other standards
Harmonize other standards
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Facilitate the automated and seamless audit trail
Provide new transparency across systems
Designed especially to help capture reconciliations
◦ Book to tax (permanent, timing)
◦ US GAAP, local, IFRS
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Systems integration
Data access, assembly and overview
Data quality
◦ Validation at the “source”
◦ Consistency in data validation rules and
analysis/visualization of data
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Redefinition of spreadsheets as user interfaces not
data storage/transformation facilities
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In all these areas, opportunities come from
◦ Elimination of one-way interfaces between systems
◦ Elimination of manual reconciliation processes at all levels
of data integration/summarization
◦ Seamless traceability of any information to its source
◦ Reusability of consistent templates for visualization,
validation, and analysis across applications/business units
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No tight coupling between data, key processes
related to data such as validation, reconciliation and
analysis, and applications where the data is stored
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Migration from manual to automated processes in
key activities
Ability to more efficiently access and integrate
entity-wide data
Abstraction of business rules and controls that can
be applied across a wide range of software
applications
Lower cost operating environment
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Broader set of monitoring controls and assessments
– ultimately enabling continuous auditing and
monitoring
Connect resources to specific data concepts
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Relationships
Labels
References to authoritative guidance and internal policies
Libraries of business rules, entities, assertions, risks, and
controls
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Improving report review and assembly
Reducing spreadsheet proliferation
Reducing/eliminating manual controls
Eliminating manual data access across disparate
information sources
Rationalizing disparate and redundant controls that
are application-specific rather than purposespecific
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Taxonomy related
◦ Use of an appropriate taxonomy
◦ Use of the appropriate version
◦ Corporate extensions
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Data mapping related
◦ Consistency and completeness of the mapping process
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Compliance with the XBRL Specification and with
relevant best practices
◦ Taxonomy
◦ Instance documents
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Awareness and education on the real scope of XBRL
Evaluation of internal audit implications of the mandate
and of other related reporting processes – for entities
subject to the SEC or other mandate
Identify and prioritize areas that are logical candidates for
the application of a standards-based approach
◦ Manual control processes where automation would bring the most
significant benefits.
◦ Areas of priority for the application of rules-based compliance
testing.
◦ Automation of persistent control assessments across disparate
systems (e.g., payables controls)
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THEIIA white paper http://www.theiia.org/recent-iianews/?search=xbrl&C=801&I=9119
XBRL International website
http://xbrl.org/GLFiles
GaLaPaGoS – Global Ledger Practices Guide for Study
http://gl.iphix.net
XBRL members resources [INT-GL]
Public XBRL GL mailing list
http://groups.yahoo.com/group/xbrl-gl-public
Monthly XBRL column in IMA’s Strategic Finance magazine
http://glg.iphix.net/?page_id=11
Gianluca Garbellotto
President/CEO, Iphix
XBRL Global Ledger WG Chair
Email: [email protected]
Blog: http://glg.iphix.net