XBRL for Internal Reporting
XBRL International Conference Boston
April 27, 2005
Neal J. Hannon
Director, XBRL Software Development Allocation Solutions, Inc.
Barney School of Business, University of Hartford
Internal Reporting
Processes
Business
Operations
Interna
l
Financi
al
Report
ing
Externa
l
Financi
al
Reporti
ng
Investme
nt,
Lending,
Regulati
on
Economic
Policyma
king
Nature of Internal Reporting
 Purposes
 Planning
 Control
 Decision making
 More detailed
 More frequent
 More varied; less
standardized
 More difficult to justify upfront costs of consistency
 More pressures now
 Internal controls - SOx 404
 PCAOB 3, Section 5.c
SOx 409
Credit: Eric Cohen
While many corporations have succeeded in
addressing the reporting issue of the 1990s,
they must focus on the 21st century reporting
issues. They need more leading indicators to
enable them to anticipate challenges.
Robert Kugel, Ventana's VP & Research director,
financial performance management
Building Blocks
 Journal entries
 Account, amount, date, description
 Parties/agents
 Customers, vendors, employees
 Source documents
 Document number, dates, file location
 Resources
 Inventory, services, fixed assets, KPI
 Mappings to and between
 Accounts, Classifications, XBRL reporting
taxonomies
Data-Centric Model
 Premise: Improvements in computer
processing, storing and reporting
power are now permitting a more
direct look into the lifeblood of the
enterprise, data.
 Data in an XML-enabled environment
is no longer constrained by computer
platform or the functional software
that created it.
 Adding meta-data provides not only
mobility for data, but provides the
basis for continuous reporting and
continuous data assurance.
Data-Centric Approach
To Enterprise Reporting
Business Reporting
Governance
Monthly
reporting
BAM
External
Auditing
Exception
reporting
Sarbanes-Oxley
Compliance
KPI’s
Application Integration
Layer
Business Data
Internal
Auditing
Various formats,
Structures,
Platforms
Budgets
Scorecarding
XML, Web Services, X-link
EII, XBRL-GL
Forensic
Accounting
SEC Reporting
Continuous Audit
Desk-top
Management
Board Audit
Committee
Real-Time Reporting
Phases of Development:
XBRL Reporting
Phase III
Open, Dynamic Real-Time Reporting,
Continuous Auditing, Real Time Analysis
from stakeholders both inside and outside
Phase II
Feeding XBRL-GL data to business Internal
and external reporting, SEC filing, Sarbanes-Oxley
compliance, KPI’s, Scorecards, internal audit
Phase I - Today
Using XBRL for SEC filing; XBRL-GL for internal
Data gathering (Wacoal); Data Analysis (Edgar-Online)
Government reporting (APARA, FDIC, etc.)
Phases of Development:
XBRL Reporting
Phase I - Today
Using XBRL for SEC filing; XBRL-GL for internal
Data gathering (Wacoal); Data Analysis (Edgar-Online)
Government reporting (APARA, FDIC, etc.)
Wacoal:
XBRL GL Auto Journalizing System
XiRUTE
Copyright 2004 Hitachi
From Edgar-Online:
Phases of Development:
XBRL Reporting
Phase II
Feeding XBRL-GL data to business
Internal reporting, SEC filing, Sarbanes-Oxley
compliance, KPI’s, Scorecards, internal audit
Impact on Control Environment
Today
Taxonomy Driven
1. Automated
1. Manual
2. Persistent
2. Periodic
3. Embedded in data process
3. Physically connected to
flows - Optimized
Internal data store
4. Integrated within enterprise
4. Segregated in each business
processes/cost effective
unit/redundant costs
5. Proactive/timely
5. Reactive/untimely
6. Visible/transparent
6. Opaque/ deep in
organizational processes
7. More Secure
7. Less secure
The outcome is to move controls further up the quality curve.
Credit: Walter Hamscher
XBRL-GL Can
Help Here
And Here
Automated Control
Monitoring
Current Management Reporting – Insurance example
Transaction
data
Multiple departmental
Excel spreadsheets
Consolidated
spreadsheets for
management
ACORD
XBRL GL
SQL
Senior
Management
ACORD
XBRL GL
SQL
ACORD
XBRL GL
2000 elements
=
6500 spreadsheets (this is not a typo)
W. Hamscher
Current Management Reporting
Transaction
Data
Multiple Departmental
Excel Spreadsheets
Consolidated spreadsheets for
management
ACORD
XBRL GL
SQL
Senior
Management
ACORD
XBRL GL
SQL
ACORD
XBRL GL
W. Hamscher
Current Management Reporting
trols
Subsidiary ERP’s
Controls
trols
Controls
Control located with data or in
supplemental manual processes
Controls
Controls
trols
Controls
Controls
rols
Controls
Senior
Management
Controls
Controls
Controls
Supplemental information aggregation
Services architecture leveraging taxonomies
Transaction and
or subsidiary
Data
Controls
‘Wrap & Map’
Viewing and aggregation for
department & management
ACORD
XBRL GL
Controls
ACORD
XBRL GL
Controls
ACORD
XBRL GL
XBRL
Web
Services
Senior
Management
Controls
Controls
Controls
W. Hamscher
Phases of Development:
XBRL Reporting
Phase III
Open, Dynamic Real-Time Reporting,
Continuous Auditing, Real Time Analysis
from stakeholders both inside and outside
XML derivative transactions
Traditional data item
Explanatory labels (tags)
•Identity, units, source, etc.
• Control labels
• E-signatures, sequence
numbers, invisible markers,
• Control signals
Financial-related Web Services in the future (the universal data
bus)
Accounting
bots and
services
ERP
Other
Assurance
Services
Selective
Layered
Reporting
Financial
Analytic
Services
Audit
Servic
e
Fraud
detection
Service
Stale, erroneous, and opaque information
 Ultimate drill down to the
transaction levels of all related 
parties !!!!
 Business report a living thing
dependent on intrinsic business
process rhythms
 In case of doubt give data not
models or aggregates
 Disclose the time-series bases of
aggregates and estimates
Credit: Miklos Vasarhelyi
Neal J. Hannon
Director of XBRL Software Development for
Allocation Solutions, Inc.
XBRL Editor: Strategic Finance Magazine
University of Hartford
Email: neal.hannon@allocationsolutions.com
Hannon@hartford.edu
Phone: 401-769-3802 or 860-768-5810