Transcript XBRL - Accounting Day

XBRL – The New
Language of Business
Laurie Ball, CPA
Swenson Advisors, LLP (Murrieta)
Audit Director
Accounting Day
May 12, 2008
What is XBRL?
XBRL: Officially
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eXtensible Business Reporting Language
Open specification for software that uses
XML data tags to describe financial
information
A standards-based method with which
users can prepare, publish in a variety of
formats, exchange and analyze financial
statements and the information they
contain
Free! (no licenses or royalties)
XBRL: In English
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New “language of choice” for electronic
communication of business and financial
data throughout the world
Allows for creation of interactive, intelligent
data
Digitizes business reports in accordance
with the rules of accounting in each
country or with other reporting regimes
such as banking regulation or performance
benchmarking
In Other Words…
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A customizable set of rules for attaching
identifying codes – or "tags“– to items of
financial information
Often referred to as bar-coding for
financial information
Provides links to other valuable
information
Biggest Supporters
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XBRL International
SEC Chairman Christopher Cox!!
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Chairman Cox recently credited XBRL for:
“…making business reporting easy,
transportable and transparent.”
17th XBRL International Conference
Eindhoven, Netherlands
May 7, 2008
History of XBRL
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“New” technology turning 10 years old
later this year!
Conceived by a CPA in Tacoma, WA
Idea for XBRL originally taken to AICPA
High Tech Task Force
AICPA funded prototype project in 1998
XBRL Steering Committee formed in 1999
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AIPCA, Big 4, Great Plains and Microsoft
among first members
History of XBRL
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XBRL International held first conference in
London in February 2001
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10 countries attended
Jurisdictions of XBRL International formed in
October of 2001
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Australia
Canada
Germany
IASB
Japan
Netherlands
UK
XBRL International
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Today, a nonprofit consortium of roughly
550 companies and agencies worldwide
working together to promote and support
XBRL
Comprised of over 20 local jurisdictions
(including XBRL United States)
Attendees from 37 different countries at
annual conference last week
XBRL US
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A nonprofit consortium of roughly
500 organizations including:
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Accounting firms
Software providers
Newswires
Financial printers and filing agents
Information services
XBRL US Members
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Member organizations a “who’s who” list:
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ADP
AICPA
Big 4 firms
CCH Tax and Accounting
Dun and Bradstreet
Financial Accounting Foundation
FDIC
IRS
Microsoft
Morgan Stanley
and the list goes on!
XBRL Vocabulary
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Based on XML
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xEtensible Markup Language
Resembles HTML as same group developed
both)
Tags
Taxonomies
Instance Files
Tags
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Must have unique name for all tags such as:
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Attributes can be added:
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Current assets
Inventory
Work-in-process inventory
Type of value (number vs. date)
Normally debit or credit
Arithmetic relationships can be established:
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Equity equals assets minus liabilities
Total assets equals total liabilities and equity
Tags
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Hierarchical relationships can be established:
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Work-in-process is a type of inventory
Inventory is a type of current asset
A current asset is a type of asset
Links to relevant accounting literature can be made
Translatable into other languages worldwide
Syntax includes opening and closing tags
A Simple Example
An element, such as a person's first,
middle and last name, is “sandwiched”
between and opening tag and a closing
element tag as follows:
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<firstName>John</firstName>
<middleName>Henry</middleName>
<lastName>Doe</lastName>
Taxonomy File
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A long list of tags:
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Includes various accounting concepts,
Information about the attributes of various elements in
the list
Databases with information about the external
references associated with the various elements
The relationships between the various elements
Concepts and relationships only; does not
include any values
More static (i.e., balance sheet)
Instance File
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Stores the tagged information for a set of
financial statements
Collection of facts only (captions,
amounts, dates)
Fluid; changes year to year
Filed as an exhibit along with the
Taxonomy File
Who Benefits from
XBRL?
Potential Users
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Public companies
Investors
Analysts
Regulators
Financial executives
Auditors
Uses of XBRL
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Aids in preparing, sharing and analyzing
financial statements
Can be “extended” to address the specific
reporting needs of companies, industry
groups and regulators
Works for non-financial information
(performance measures, loan applications,
regulatory reporting, statistics)
Primary Benefits
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Gives investors quick access to
information in a form they can easily use
Lets companies prepare their financial
data more quickly, more accurately and for
less cost
Makes the world's capital markets truly
global and interconnected
Is Anyone Using XBRL
Yet?
China Was First
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China first country in the world to mandate
XBRL reporting
Started in 2003 with 50 companies on
voluntary basis
Now required for all listed companies on
China Securities Regulatory Commission
and the Shanghai Stock Exchange
Program now includes more than 800
companies
Others Followed Suit
Countries who have also made XBRL
reporting mandatory:
China
 Singapore
 South Korea
 Israel
 Japan
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Others Are Preparing
Some of the world's largest economies
have made, or announced plans to make,
XBRL reporting mandatory:
Australia
 India
 United Kingdom
 Committee of European Securities
Regulators
 United States
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Current US Users
Over four dozen public reporting
companies now voluntarily participate in
the SEC’s pilot program including:
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Alcoa Inc.
Xerox Corp
Healthcare Realty Trust, Inc.
ICU Medical, Inc.
Coca Cola Enterprises, Inc.
Is XBRL Required in
the US?
Not Yet…but Soon!
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In May 2008 remarks, Chairman Cox said:
“As most of you know, the SEC will be discussing a rule
later this month that would set a firm schedule for using
interactive data in public company filings in the United
States.”
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Chairman Cox went on to say:
“With a complete set of data tags for U.S. generally
accepted accounting principles now in hand, we in the
United States are ready to "go live" with interactive data.
The preparer's guide is there, the software and vendor
communities are there, and even the viewers and investor
tools are there. Everything is in place.”
Resources & Tools
Tagging Software
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Reads the line item description and
“suggests” the tag or tags that are most
likely to be appropriate
Usually makes the right guess but can
“correct” as needed:
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Search list for a different tag
Go directly to the corresponding accounting
literature descriptions if uncertain
Accounting Software
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Tags “automatic” -- XBRL data tagging is
an integral part of the system
Less costly and easier to prepare financial
statements
Less risk of human error
Resources
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Major financial printers and filing agents
XBRL International websites:
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SEC website: Spotlight on Tagged Data and
XBRL Initiatives for EDGAR Filings
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www.xbrl.org
www.xbrl.us
(http://sec.gov/spotlight/xrbl.shtml)
Software vendors
Contact me at
[email protected]
Questions?