Chapter 14 Accounting on the Internet

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Introduction XBRL – Financial Reporting on the Internet Electronic Commerce Privacy and Security on the Internet

The World Wide Web

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The multimedia portion of the Internet is called the World Wide Web or just web.” “the A web browser enables users to view the graphics files of the Internet.

Web pages are created in an editing language such as hypertext markup language (HTML) .

Display of HTML Code

XBRL – Financial Reporting on the Internet

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XBRL is a subset of eXtensible Markup Language (XML).

XML is similar to HTML and yet different because:

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Its tags are extensible (capable of being extended or user defined)

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The tags describe the data rather than just indicating how they are displayed eXtensible Business Reporting Language (XBRL)

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is a specialized markup language for financial reporting, first created in 1998 by Charles Hoffman, CPA from Olympia, WA!

XBRL is a global effort by the XBRL Steering Committee ( www.xbrl.org

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Charles Hoffman, CPA

XBRL – Financial Reporting

This is what XBRL Looks like in raw form Original data might look like this

Video, XBRL in Plain English https://www.youtube.com/watch?v=4uTrB1gQ-xM

XBRL – Financial Reporting for Public Corporations

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The primary repository of financial information on the internet is the SEC’s Interactive Data Electronic Application (IDEA) IDEA is replacing the older Electronic Data, Gathering and Retrieval System (EDGAR), starting in 2009.

IDEA will contain the financial report filings of 500,000 U.S. publicly held companies. See http://xbrl.sec.gov/ Go to view filings, RSS Feeds In Jan/09, the SEC mandated that financial stmts of public companies be submitted in XBRL format, beginning with the June/09 quarterly filings for the largest co.’s and within three years for all public co.’s. However, because of the challenge of getting smaller companies XBRL compliant, the SEC did not begin enforcing XBRL until 2014.

Most software programs now publish financials in XBRL (add-ons available in QuickBooks and Peachtree).

How Does XBRL Affect Accountants? - Slide 1

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Permits automatic and reliable exchange of financial information across different formats and technologies Does not require a change to existing accounting standards or disclosure requirements Is globally accepted ( not in S. America yet ?) across difference languages and acctg standards Eliminates the need to re-enter financial data for different users Reduces errors and is self-checking

How Does XBRL Affect Accountants? - Slide 2

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Lowers the cost of the preparation and distribution of financial statements Improves investor- and analyst- access to information (quick access, instant comparability, graphing and ratio analysis) Allows accountants to consolidate and scrutinize internal data for financial reporting purposes Allows CEOs and CFOs to deliver more transparent information

Electronic Commerce

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Electronic Commerce (EC) refers to conducting business with computers and data communications.

EC can be performed over the Internet or using proprietary lines.

General categories of EC include retail sales, E-payments and E-wallets, and electronic data interchange.

Retail Sales Advantages of Virtual Stores – Slide 1

1. Web pages are much cheaper than creating and mailing catalogs 2. Global customer access and distribution 3. Sales can occur around the clock 4. Customers can search for specific products or services electronically, either within a particular web site or as a “hit” from another site

Retail Sales Advantages of Virtual Stores – Slide 2

5. Businesses can easily outsource its web business to others, enabling it to focus on core processes 6. The web sites themselves can use automated tools to verify customer ID and credit card numbers 7. Businesses can send emails to confirm orders or advise customers about shipping dates

Retail Sales Advantages of Virtual Stores – Slide 3

8. Businesses can update product descriptions, sales prices, and information on merchandise availability immediately 9. Customers create their own sales orders online

Retail Sales Advantages of Virtual Stores – Slide 4

10. Customers can track their own orders, freeing business personnel for other tasks, and 11. The sales and customer relations personnel required for these virtual stores is minimal, thus reducing labor costs per dollar of sales.

Business-to-Business E-Commerce

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Most e-commerce is business-to-business (B2B).

A major part of B2B e-commerce concerns purchases of supplies and equipment electronically or electronic procurement.

Companies may manage their supply chain by linking e-commerce to internal enterprise resource planning (ERP) systems.

Electronic Data Interchange

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Electronic Data Interchange (EDI) allows organizations to transmit standard business documents over high-speed data communications channels.

EDI streamlines processes because 1) business partners exchange documents quickly and easily, 2) there are no postal delays, and 3) EDI eliminates most of the paperwork 4) Fewer errors

E-Payments

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With the use of credit cards over the Internet, identity fraud can be a problem.

Electronic payment (E-payment) desirable payment method.

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E.g. Paypal.

may be a more The most important advantage of E-payment is the ability to identify its users.

E-payment eliminates the need to transmit credit card numbers over the Internet.

E-Wallet

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E-wallets are software applications that store a consumer’s personal information, including credit card numbers, email addresses, and shipping addresses.

The advantage of an e-wallet is that you do not have to enter all your personal information every time you make an online purchase. E.g. http://www.mastercard.us/paypass.html

Privacy and Security on the Internet

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The Internet and WWW have the advantage of being very accessible. Accessibility can also mean “vulnerability.” Email, web pages, and computer files can be accessed by someone posing as an authorized user.

Privacy and Security

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An Internet presence for companies introduces unique privacy and security concerns.

These concerns call for specialized controls that limit data and information access to authorized users.

Authentication involves verifying that users are who they say they are.

Firewalls

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A firewall guards against unauthorized access to sensitive file information from external Internet users.

This is security software that a company installs on Internet computers and that limits file accesses to authorized users.

Firewall software examines packets of incoming messages using an access control list .

Firewalls cannot prevent spoofing , or masquerading as an authorized user.

Data Encryption

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Data Encryption transforms plaintext messages into unintelligible cyphertext ones using an encryption key .

Data encryption standard (DES) is an encryption scheme used by the U.S. government.

A single key is shared by communicating parties in secret key cryptography.

Public key encryption requires each party to use a pair of public/private encryption keys.

Simple Data Encryption

Digital Signatures

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A digital signature is used to authenticate business documents transmitted or received over the Internet.

In 1994, the digital signature standard (DSS) was adopted by the National Institute of Standards and Technology.

The presence of the digital signature authenticates a document.

Digital Certificate

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Another authentication technique is the digital certificate .

Digital certificates are verification of identity provided by an independent third party called a certificate authority .

These certificates are signed documents with sender names and public key information. http://www.thawte.com/

Digital Time Stamping

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Many important documents transmitted over the Internet are time sensitive.

Digital time-stamping services (DTSSs) digital time stamps to documents.

attach Time stamps enable businesses to overcome problems of downed file serves or power failures that delay transmission.

See https://www.digistamp.com/