Transcript IMA XBRL Tucson October 19, 2001
XBRL In the Classroom The Time is Now
Presented by Neal Hannon
What is the business problem ?
Is XBRL right for the classroom today ?
YES IF XBRL will soon become a dominant method of handling business reporting Other areas of business are also moving to XML enabled information.
The crux of the problem is to develop a comprehensive system that is • All inclusive and • Transparent to the user
The Case for XML and XBRL
XML - a computer markup language that is extensible (flexible … can be added to) XML is actually a bare-bones set of syntax rules to markup any kind of text and data XML is used to supply the structure of the text or data XML is used to tell both a human & computer software what the text or data is … not how to display it XML has become the fastest growing technology for information transportation and exchange the world of computing has ever seen.
Business Integrator Magazine says that nearly nine out of every ten enterprises claim that XML will be and important technology for their IT strategies over the next year
The Case for XBRL
The purpose of XBRL is “to enhance the flow of financial information through the creation of a globally useful language in which to describe financial facts and concepts.” David vun Kannon XBRL is uniquely positioned to Provide mobility and transportability to financial and business facts. Students in AIS, Advanced Accounting,Auditing, Consolidations, Mergers, Tax, Not-for-Profit will all be affected by XBRL
The Case for XBRL
Arthur Levitt, Former chair, SEC I would like to see you take your
XBRL project
a step further , providing account classifications for companies in common industries. In short, I challenge you to turn all of this data into
meaningful
information for investors
The Case for XBRL
Students will need to collect, interpret and report data in many different XML dialects XBRL provides a bridge not only to financial statements, but to all business reporting.
XBRL Business Uses
Internal Uses include:
Account analysis Balanced Scorecard Automated exception reporting Wireless, PDA Cell Phone The internal use of XBRL is just Beginning to be explored, brought on by XBRL for General Ledger in public beta. New XBRL releases are compliant with the latest version of W3C’s XML Schema
XBRL Business Uses
External Uses include:
SEC Filings IRS and State Tax Filing Annual Reports Creditor Reports Wireless, PDA Cell Phone Externally, XBRL focuses on the production of GAAP financial statements for the business financial reporting supply chain. The external focus of XBRL is evident by the heavy participation in XBRL.org by the AICPA and Big 5 Accounting firms
XBRL International
International Accounting Standards and Major Countries are changing the way Accounting is conducted world-wide Hot spots of development include Australia, Singapore, Germany, Japan, followed by Canada, the Netherlands, Spain, South Africa, Hong Kong, Great Britain, and the Scandinavian countries.
“ “
Stig Enevoldsen
single world-wide accounting language.”
Sir David Tweedie (current IASB Chairman) The mission of the newly-created IASB …is to increase the transparency of financial reporting by achieving a single, global method of accounting for transactions -- whether in Stuttgart, Sydney, Seattle or Singapore.
IAS Philosophy Implications Need to define One Accounting Language One Transaction Methodology Within the IAS Financial Reporting Framework To achieve the objectives of High Quality Transparent Comparable Financial Statements
Challenge of Change
Getting consensus / agreement Managing Change Implementation Within Organizations Between Organizations Between Countries Politics is a Problem XBRL IAS can play a large part especially via the Big 5
The Vision To produce High quality, Transparent, Comparable, General Purpose Financial Reporting to International Accounting Standards Using one accounting language One transaction methodology Which are useful for making economic decisions.
The Vision for XBRL is no different!
Just do it Electronically in a binary environment With the Seamless Transfer Of Financial Information In a known state Without Human Intervention
Accounting Specification & Design One accounting language One transaction methodology One presentation methodology to define all the facts required on an inclusive exclude basis for a binary environment for the seamless transfer of Financial Information in a known state without Human Intervention
The One Accounting Language Challenge
Language System of words & rules of a particular community Objective Unambiguous globally understandable classifications Accounting classifications By nature and class Scientifically extensible A place for everything and everything in its place To classify items as yet unknown Absolute precision Binary environment no room for judgment Fact definition increases exponentially as judgment is eliminated
Mountain Zebra Hartmans Zebra
ZEBRAS
Plains Zebra Quagga
Bergzebra Pyjama Donkey Steppenzebra
ZEBRAS
Kwagga
Zebra Grevy’s Zebra
(Equus Zebra Zebra) (Equus Zebra H artmannae ) (Equus Grevyi
)
(Equus Quagga) (Equus Quagga Quagga)
Many Human Presentations One Fact
in XBRL one fact with many labels For example profit / non profit organizations
One Accounting Language Lessons Learned
Scientific language of accounting defines a conceptual structure for the language accounting facts within conceptual structure Names facts for information content Enterprise Information Value information Qualitative information Spoken language or Skins – same fact different labels economic - profit / non profit gaap languages - public entity vs private enterprise - different countries - dialects Establish facts then resolve labels Request fact clarification from IAS where ambiguous or undefined Manage fact convergence and label convergence separately
One Transaction Methodology Lessons Learned
Transactions in a known state are information The enterprise is the source of its information Financial statements are a specific view of transactions Many views can be sourced from the same information Enterprise vs document centric Bigger now less later Classify it once use it many times Transactions by nature that are the same are the basis for XBRL convergence
Exclusive Include
All things exclusively identified are included If it wasn’t exclusively identified by definition it doesn’t exist
Inclusive Exclude
Only that which we choose to exclude is out otherwise its in (e.g. banks ) Definition of business event transaction lifecycle scenarios Application of class by nature
Financial Data tagged in XBRL
The XBRL Vision
Style sheets IRS Financial Analysts Annual Report SEC 10Q Management Team
No Direct Connection with Details
Financial System Transaction Details XBRL-enabled Financial Statements
Note:
Without XBRL-GL, the connection from XBRL-enabled financial statements to transactional data stops at the financial system
Do You Need to Teach XML?
Yes • Basics of XML are needed to understand business events • XML basics can be self-taught or self directed over the Web • XBRL follows the rules of XML
No
• This is Accounting, not computer science • I don’t have the time to teach XML, I’m barely comfortable with it myself • XBRL will soon go “under the covers” so I can ignore how it works.
Books, Articles, Videos
• XBRL Essentials, Hoffman and Strand, June 2001 • Introducing XBRL, Hannon and Coffin, January 2002.
• AICPA E-business Update Video and Workbook, Spring 2001.
• IMA National Conference Video fvc • Over 170 Articles, Special Section in Strategic Finance Magazine (June 2001) • SoftwareAG XML video
www.softwareag.com
XBRL Tools
• Taxonomy Builders
– Required to map a financial fact to XBRL • See
xbrl.org/tools.htm
for details
• XML Validators
– XML Spy 3.5