Transcript Slide 1

The Role of XBRL in Internal
Reporting: XBRL GL/XBRL FR
Conceptual Overview
Eric E. Cohen
[email protected]
11th XBRL International Conference
Boston
April 27th, 2005
XBRL GL & FR for Internal Reporting
XBRL is well known as a tool to standardize financial
statements, tax returns, and other publicly available or
external facing documents. XBRL is also an important tool
for more efficient, effective and accelerated internal
reporting. From XBRL GL, the generic representation of
transactional information that bridges the gap between
transactions and reporting, to the use of XBRL for
Financial Statements to represent common internal
reports that involve summarizations and calculations not
found in accounting systems, XBRL is a powerful tool for
internal use as well. From transaction to summaries,
XBRL meets the need.
Agenda
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Internal reporting
XBRL for internal reporting
Data in internal reporting
Information concepts in internal reporting
Working together
Internal Reporting: Three Tracks
Primarily for
internal use
only
Edit reports
Ad hoc reports
Posting reports
Daily cash/AR/AP
Performance
Preparation
for external
use
More detailed
versions of
external
reports
* Personally identifiable information
Financial
Tax
Segment
PII*
In General
 Internal Reporting is
 More detailed
 More frequent
 More varied (less
standardized)
 Fewer “EDI or Die” vendor
demands
 Change/up-front costs of
standardization without
pressure from third party
 But: more pressures now
 Internal controls - SOx
404
 PCAOB 3, Section 5.c
Types of Internal Reporting
 Operational and administrative
 Management
 Planning
 Control
 Decision making
 Internal reporting drives
 Procurement
 Staffing and scheduling
 Management and direction
 Cash management
 Preparation for external reporting …
Types of Internal Reporting
 Preparation for
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Financial
Statutory
Legal
Social
Environmental reporting
What Makes it Worse?
 Systems are Changing
 New sources
 Online accounting
 Disparate systems
 Traditional non-integrated
 Point of sale
 Job cost
 Branch systems
 Outsourced
 Payroll systems and providers
 New technologies
 Web services
 Requirements are changing
 SARBANES-OXLEY, PCAOB
We have seen a return to
third-party processing.
From ADP in the
seventies to ASPs in
2005, one business’s
data is being captured
on another businesses’
computer.
Old World of Electronic Data Exchange
NEW WORLD
Old World
BLT
ASB
AFT
TGI
FRY
ECP
HDL
SWG
DRW
MFP
WCP
QYD
SKD
DLY
DLY
XPS
WIU
KYF
XOI
ZIS
CUI
WKD
WHR
ASB
RMO
JIA
HCO
BST
VUH
KFC
AJT
FQA
DKE
GEX
New World
Service
Service
Service
Bus
Service
Service
Service
XBRL for Internal Reporting
 Benefits of XBRL for external purposes is obvious
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Shared meaning, different vocabulary
Standards and definitions
Global consumption
Machine to machine consistency
Public: From A to B to C
 Is internal different?
Proprietary Formats: XML Alone
qbxml
qbxml
smbxml
smbxml
Intacct xml
Intacct xml
SAP
SAP
Peoplesoft
xml
Peoplesoft
xml
Oracle
Enter Extensible Business Reporting Language
qbxml
qbxml
smbxml
SAP
Peoplesoft
xml
XBRL
Intacct xml
smbxml
Intacct xml
SAP
Peoplesoft
xml
Tax
Reporting
 XBRL is
 An international consortium
of the business reporting
supply chain
 An agreement on the use
of technology to build
common user dictionaries
and express business
information
 Dictionaries
 Summarized reports
 Detailed information
 MORE THAN
DICTIONARIES
Standards-based Data Interchange
qbxml
smbxml
XBRL GL
•XBRL FR – Views of Data
qbxml
•A fact
•At a time or for a duration
•In a unit of measure
smbxml
•For an entity
•Under a scenario
•XBRL GL – Data
Intacct xml
•A framework
•Based on journal history
SAP
•Standardizing representations
•Documents
•Entries
Peoplesoft
•Parties
xml
•Resources
•Links
•Tax
•and more
Industry transactional XML
Intacct xml
SAP
Peoplesoft
xml
Oracle
Fills the GAPS between GAAPS
Tax
Regulators Investors
Creditors
Lenders Website
Aggregators
One
way
One
way
XBRL
BUSINESS
BUSINESS
REPORTING
Intra system
2-way
ERP
Detail
Suppliers
G/L Packages
XBRL GL
Journal
Taxonomy
Transaction
Creation
(e-)Business
CRM
Accounting
recognition/
classification
Customers
•Orders
•Orders
•A/P
•A/R
X12, UBL,
CEFACT FORUM,
Other XML
•Delivery
•Delivery
INITIATIVES
Detail to summary
2-way
Scope and role of XBRL
Processes
Business
Operations
XBRL
GL, the External
Internal
Journal
FinanciTaxonomy
Financia
al
Reporti
ng
l
Reportin
g
Investme
nt,
Lending,
Regulatio
XBRL n
Economic
Policymak
ing
Financial Statements
Financial
Publishers
and Data
Aggregators
Companies
Participants
Trading
Partners
Management
Accountants
Auditors
Software Vendors
Investors
Regulators
Central
Banks
Data in Internal Reporting
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Consolidations
Data migration
Archival
Data transfer
Audit Trail
Basic Challenge: Similar Data, But …
XBRL GL provides platform for agreedupon and well defined list of concepts –
Similar Data
make sure my “Account” and your
“Account” means the same thing (not bank
Account, Amount, Date account or customer account but GL
account.)
Based on XML, XBRL GL is order
Different Data Dictionaries:
Field names,
field names
order
independent;
sharing element
for import/export means that
System 1: AccountNo, Amount,
Date AccountNumberm
AccountNo,
Account# and Account will all be
System 2: MonetaryAmount,express
PostDate,
as oneAccountNumber
common name;
Different
applications will know what to expect
System 3: PostingDate, Account#,
Value
inpublishing and consuming data files.
Data Formats
System 4: Date, Journal, Account, Amount
CSV
So many external data formats; XML
provides a popular and increasing
supported / demanded
Representations
for thedata format.
Different
same concepts in common data field
Journal: PJ, Payroll Journal, Payroll
Date: 12-31-03, 20031231, 12/31/03
ASCII
WKS
Once you have agreed on data field
standardization, software applications
require agreement on content in many
cases. XBRL GL provides enumerated
values to supplement XML data standards
to help in this area.
XBRL GL Challenges Local Concepts of
“General Ledger,” Holds More
Internal Data Exchange
AP
Outsourced Travel and Expense
AR
GL
Non-integrated point of sale
IM
External payroll provider
Subsidiary with separate system
PR
From Initial Transaction
Invoice #: 10037
INVOICE
May 2, 2003
Item
Description
Qty
Extension
1078
1083
Blue Widget
Cyan Widget
200
100
2,803.78
1,402.93
Sub-total:
Freight:
Total:
47,592.33
47,592.33
<documentType>invoice</documentType>
<documentNumber>10037</document Number>
<documentDate>2003-05-02</documentDate>
Through ERP System Actual/Virtual
purchase orders
PO
sales orders
AP, IM
OE
AR, IM
items
IM
bomp
employees
PR
customers
AR
vendors
AP
GENERAL LEDGER
REPORTING
assets
FA
Facilitating Web Services, Assurance
Mapping 1
Spell Check
Shipping Rate Check
Credit Check
Logistics Check
Rules and Journalization
Audit and monitoring tool
Mapping 2
Every System as XBRL
System 1
XBRL GL
System 2
XBRL GL
System 3
XBRL GL
Account#
accountMainID
Account Number
accountMainID
Identificador de la Cuenta
accountMainID
Description
accountMainDescription
Account Description
accountMainDescription
Amount
amount
Entry Amount
amount
PostDate
postingDate
Posting Date
postingDate
Descripción Principal de la Cuenta
accountMainDescription
Monto Monetario
amount
Fecha de Asignación/Ingreso
postingDate
Data and Views
Report Writer
Select information from
database(s), including
joins
Report
Formulas create new
data fields
Filter the record set
Concentration:
Data Fields
Add headers/footers,
conditionals with record
groupings, derived totals
based on sorts
Provide visual formatting
rules, like cross-tab
Concentration:
Information Concepts
Scope and role of XBRL
Consolidation
Transactional
Representations
Processes
Business
Operations
Internal
Financi
al
Reporti
ngXBRL
External
Financia
l
Reportin
g
GL
Trading
Partners
Management
Accountants
Economic
Policymak
ing
FR
Financial
Publishers
and Data
Aggregators
Companies
Participants
Investme
nt,
Lending,
Regulatio
XBRL n
Auditors
Software Vendors
Investors
Regulators
Central
Banks
Information Concepts in Internal
Reporting
 When you are working on internal versions of
external reports
 When your internal report rely on derived fields,
totals
 Aged receivables
 30, 60, 90, 90+, other “buckets”
 Combination of XBRL FR for agreed upon
derived fields and totals and XBRL GL for
necessary detail
Broad Spectrum of XBRL Uses
External recipients
Views of data
Concepts
Related recipients
Bank, accountant, regulators
Data fields
Fields of data
Internal recipients
XBRL GL Works With XBRL FR
US
IAS
XBRL GL
Internal
Tax
Benefits of XBRL for Internal Reporting
 Improves internal management
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Speed
Detail
Cost of abilities of applications
Learn from mistakes, evaluate changes from plans
early
 Taxonomy - better communication from on top
Benefits of XBRL for Internal Reporting
 Improves assurance
 Details agreeing or reconciling to reporting
 Internal auditing
 External auditing
Benefits of XBRL for External Users of
Internal Reporting
 Improves sharing data with banks
 Asset based lending
 Listing of open accounts from customers
 Listing of inventory
 Improves sharing data with acquirers
 Improves sharing data with partners
Today’s Internal … Tomorrow’s External?
 How about
 The same information from its source in greater detail which may be tomorrow's external reporting?
 Bringing together internal groups to speak the same
language?
 Drill down support from external today
 Possible (partial or total) replacement for forms
tomorrow
Tomorrow’s Control Environment
“in plain English,
which may include
trend and
qualitative
information and
graphic
presentations”
Deliver real-time
XML data stream;
On demand Webservices available
data
using secure and
not-so-secure links
Bring together
information from
various sources with
all version control,
security, etc.
Beyond Tomorrow: Entering New
Dimensions with XBRL
Triggers
Documents
After-the-fact
Processes
Promises
Prospects
Projections
Predictive
Periodic
Real-time
X: When assurance is delivered
Y: When tests are performed
Z: “Hardness” of data – later reassurance?
Newer assurance on this item is available:
click here
Questions?
 Eric E. Cohen
 PricewaterhouseCoopers
 [email protected]
 (585) 271-4070
 Find out more
 www.xbrl.org
 www.pwc.com/xbrl
<xbrl>
Eric E. Cohen
[email protected]
Now’s the Time for Real-time
“[W]e need to move toward a dynamic model of current
disclosure of unquestionably material information.”
Harvey Pitt, Pre-”E”
http://www.sec.gov/news/speech/spch523.htm
 SEC. 409. REAL TIME ISSUER DISCLOSURES
 Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m), as amended
by this Act, is amended by adding at the end the following:
 ‘‘(l) REAL TIME ISSUER DISCLOSURES.—Each issuer reporting
under section 13(a) or 15(d) shall disclose to the public on a rapid and
current basis such additional information concerning material changes
in the financial condition or operations of the issuer, in plain English,
which may include trend and qualitative information and graphic
presentations, as the Commission determines, by rule, is necessary
or useful for the protection of investors and in the public interest.’’
Do You Remember?
 From “Highlights” of Initial XFRML Steering
Committee, 10/14/99
 [We] should have an initial calibration on the initial
picture framework – getting different products (financial
statements, etc. others along the supply chain) working
together. We need to develop a schematic of the value
streams and use cases along with objectives and a
timeline and a concept statement.
 [XFRML] should have its roots in the "Audit Supply
Chain." XFRML as technical standard for seamless
process of exchange across all audit processes.
 Our opportunity is to address things internationally at
the level below the financial reporting level since there
is more commonality at that level.