Accounting and the Web
(XML and Web Services)
Stephen Burd
Associate Professor
Anderson Schools of Management
University of New Mexico
Prepared for the ALPFA 2003 Conference
October 4, 2003 – Albuquerque, New Mexico
Slides available online at http://averia.mgt.unm.edu
Objectives
Describe
Internet and Web standards with
particular attention to capabilities needed to
access and use accounting information.
¾Historical Internet/Web Standards – TCP/IP, HTTP, …
¾Representing data semantics (meaning)
¾The Internet as a platform for distributed accounting
applications.
Describe
current and future Web-based standards
for accounting information interchange.
¾XML and accounting-related standards based on XML
¾SOAP and accounting-related applications based on
SOAP
The Web - What Makes it Tick?
Ubiquitous
Telecommunication Connections
¾AOL, Comcast, AT&T – in all shapes and sizes for
everyone from homes to multinational corporations.
Common
Languages
¾Transport Control Protocol / Internet Protocol (TCP/IP)
‰
A general-purpose language for computers to talk to one
another.
¾HyperText Transport Protocol (HTTP):
‰
A language for reliable document transfer.
¾HyperText Markup Language (HTML):
‰
A language for describing document format and content.
What Makes The Web Tick - Continued
Common
Directories
¾Domain Naming System (DNS)
A directory of domains and computers
‰ For example, microsoft.com and www.mgt.unm.edu
‰
¾Uniform Resource Locator (URL)
A unique name for every Web document and application
‰ For example, http://averia.mgt.unm.edu/default.htm.
‰
Non-proprietary
Free/cheap
standards
software
¾Web browsers (for example Microsoft Internet Explorer)
¾Web server and application development software
The Internet and the Web
The
Internet is a global network of networks tied
together with TCP/IP, DNS, and a handful of other
standards.
The
Web is the set of documents and applications
that can be accessed and interpreted via Web
protocols such as HTML and HTTP.
The
Internet is the infrastructure over which Web
resources are accessed and delivered.
Web Usage Scenarios
End-user
information access
¾ For example,
viewing a document
(Web page) in a
browser and
navigating from
page to page using
hyperlinks.
¾ This is what the web
was originally
designed to do and
has been doing
since the early
1990s.
Web Usage Scenarios - Continued
End-user
access to application software via Web
pages
¾For example, buying goods online at a site such as
www.amazon.com.
¾This usage scenario developed in the late 1990s and is
now nearly ubiquitous.
¾Extensions and additions to the HTML/HTTP protocols
enabled this type of application (for example, HTML
forms, Javascript, CGI scripts, and Active Server
Pages).
Web Usage Scenarios - Continued
Web Usage Scenarios - Continued
Information access/exchange by applications
¾ For example, an indexing services such as Google that
automatically accesses many Web documents and “does
something useful” with the information it extracts.
¾ For example, a service that examines Web “price lists” to find the
lowest price for a particular product.
¾ This usage scenario began in the late 1990s, but has been
hampered by limitations of HTML.
Web Usage Scenarios - Continued
Applications
components
built from distributed Web software
¾For example, a brokerage application that combines
order entry software on the broker’s server, inventory
management software on vendor servers, credit
verification software stored on another server, and
delivery scheduling stored on a another server.
¾The application is little more than a shell (script) that
calls other Web-accessible applications to do most of
the actual work.
¾Early standards to address this usage scenario were
cumbersome and limited – newly developed Web
standards will help.
Web Usage Scenarios - Continued
Sample Transaction in an HTML Document
HTML Source – Page 1
<table border=0 cellpadding=3 cellspacing=0 bgcolor='#FFFFFF' width=600>
<tr bgcolor='#CCCCCC'>
<td width=10 class='btsb' nowrap>&nbsp;</td>
<td class='btsb' nowrap>Product</td>
<td class='btsb' nowrap align='right'>CDW</td>
<td class='btsb' nowrap align='right'>Qty</td>
<td class='btsb' nowrap align='right'>Price</td>
<td class='btsb' nowrap align='right'>Ext Price</td>
</tr>
<TR>
<td class='bts'>&nbsp;</td>
<TD class='bts' nowrap>
<a href='/shop/products/default.asp?EDC=488664'>US Robotics 56K PCI Faxmodem</a></TD>
<TD class='bts' nowrap align='right'>488664</TD>
<TD class='bts' nowrap align='right'>1</TD>
<TD class='num' nowrap align='right'>$23.60</TD>
<TD class='num' nowrap align='right'>$23.60</TD>
</TR>
<tr>
<td colspan=4 align='left'>
<img src='http://img.cdw.com/global/pixels/none.gif' height=1 width=1 alt=' ' border=0></td>
<td colspan=2 align='right'>
<img src='http://img.cdw.com/global/pixels/grey.gif' height=1 width='100%' alt=' ' border=0></td>
</tr>
HTML Source – Page 1
<TR>
<td rowspan=6 class='bts' valign='top'>&nbsp;</td>
<td colspan=3 rowspan=5 class='bts' valign='top'>Parcel Tracking # for Box 1
<a target=new
href='http://track.airborne.com/atrknav.asp?ShipmentNumber=78314872160'>78314872160</a><BR></
td>
<TD align='right' class='btsb'>Sub
- Total</TD>
<TD class='num' nowrap align='right'>$23.60</TD>
</TR>
<TR>
<TD align='right' class='btsb'>Freight</TD>
<TD class='num' nowrap align='right'>$10.99</TD>
</TR>
<TR><TD align='right' class='btsb'>Tax</TD>
<TD class='num' nowrap align='right'>$0.00</TD>
</TR>
<tr>
<td colspan=2 align='right'>
<img src='http://img.cdw.com/global/pixels/grey.gif' height=1 width='100%' alt=' ' border=0></td>
</tr>
<TR>
<TD align='right' class='btsbRed'>TOTAL</TD>
<TD class='numBoldRed' nowrap align='right'>$34.59</TD>
</TR>
</table>
HTML Formatting
HTML
is intended to format information in a
device-neutral way.
¾Content is interspersed with formatting commands
called tags.
‰
For example, <table>, <tr>, and <td> are table formatting tags.
¾The display device (usually a Web browser) interprets
the tags and makes decisions on how to display the
information, for example:
Is the window/screen wide enough for the table? If not, should
the content be shrunk or scrolled?
‰ Are the requested colors available on this display? If not, what
colors or grey shades should be substituted?
‰ What is a “large font” given the display capabilities and current
user preferences?
‰
HTML Capabilities and Limitations
HTML
has achieved its primary goal – it’s made
data accessible from and viewable on virtually any
computer in the world.
HTML
has also achieved secondary goals
including linking huge amounts of data on the
Internet via hypertext references, or links.
HTML’s
primary limitation is what it doesn’t provide
(and what it was never intended to provide!) –
information about the semantics, or meaning, of
formatted data.
Extracting Semantic Information
Assume
that the previous Web page was the
source document for a journal entry.
How
would you:
¾determine the amounts to be recorded?
¾determine the currency unit(s)?
¾determine the transaction date?
¾determine the account to be debited?
Now
assume that you want to program a computer
to make the same journal entry.
How
will the program find the information it needs?
Human Semantic Data Extraction
A
human can extract the information needed to
make the appropriate journal entry via:
¾Key symbols, words, and phrases, such as “$”, “Tax”,
and “Ext Price”.
¾Visual cues including the placement of key symbols and
phrases to the left or right of key numbers
For example, the word “Total” appears immediately to the left
of the currency amount “$34.59”.
‰ For example, the word “Price” appears immediately above the
currency amount $23.60.
‰
¾Experience with the language and interpreting printed
or displayed documents.
‰
For example, what are possible synonyms of “total” and where
does a total usually appear on an invoice?
Automated Semantic Data Extraction
It
is very difficult to program a computer to perform
semantic data extraction using “human” methods.
¾Large dictionaries of key symbols/words/phrases are
required (what about spelling errors and coffee spills on
the page?).
¾Computers are notoriously poor at visual recognition,
including character/symbol recognition and interpreting
“placement cues”.
Any
program that performs the task will generally
have an unacceptable error rate.
¾For example, consider the error rate of most OCR
programs when working with mixed content documents.
XML
The
World Wide Web Consortium (W3C)
considered these problems in the 1990s and
began an effort to address them.
They developed a new data representation
language that address both format and semantics.
The new language is called eXtensible Markup
Language (XML)
XML is an extension of HTML and XML documents
are transmitted via HTTP.
XML is designed to be extended by language
users .
XML and Data Semantics
XML
enables users to define new tags to describe
whatever they want, including the meaning of data
embedded within XML documents.
For example, rather than guessing that a particular
number in a document is an invoice total based on
nearby key words or visual position, data meaning
can be made explicit with a tag:
¾For example, <invoice-total>34.59</invoice-total> and
<price-per-unit>23.60</price-per-unit>
The
tags are ignored by browsers and application
software that aren’t specifically programmed to
recognize them.
XML and Data Users
The
W3C defined XML, which essentially threw the
problem of data semantics back to data users.
¾Users of data must develop and agree upon tags that
are meaningful within their particular problem domain.
¾Users must develop software applications that
“understand” the tags and manipulate tagged data in
useful ways.
Many
industry-specific groups have been created
to develop XML tag standards.
The
organizations that develop the standards
aren’t affiliated with or sanctioned by the W3C.
Accounting-Related XML Standards
Extensible
Business Reporting Language (XBRL)
¾Formerly known as XFRML
Financial
Information Exchange (FIX) protocol
¾Real-time electronic exchange of securities transactions
Mortgage
Industry Standards Maintenance
Organization (MIMSO)
¾electronic commerce standards for the mortgage
industry
See
www.xml.org for other standards and
organizations.
XBRL
XBRL
was developed by a large consortium of
accounting-related companies and governmental
organizations, sponsored by the AICPA.
XBRL
has two current standards:
¾XBRL Financial Statements
¾XBRL General Ledger
XBRL
financial statements was developed first and
pilot projects have already been implemented.
Other
XBRL standards are in progress in areas
such as tax filings and credit reporting.
XBRL Financial Statement in Excel
XBRL Example – XML Source
- <ci:statements.incomeStatement>
- <!--
INCOME
-->
<ci:netIncomeAvailableToCommon.netIncome numericContext="C0103">
-
436215000
</ci:netIncomeAvailableToCommon.netIncome>
<ci:netIncomeAvailableToCommon.netIncome numericContext="C0104">
48625000
</ci:netIncomeAvailableToCommon.netIncome>
<ci:netIncomeAvailableToCommon.netIncome numericContext="C0105">
17133000
</ci:netIncomeAvailableToCommon.netIncome>
<ci:incomeFromContinuingOperations.incomeTaxes numericContext="C0103">
-
1081000
</ci:incomeFromContinuingOperations.incomeTaxes>
<ci:incomeFromContinuingOperations.incomeTaxes numericContext="C0104">
25367000
</ci:incomeFromContinuingOperations.incomeTaxes>
<ci:incomeFromContinuingOperations.incomeTaxes numericContext="C0105">
10233000
</ci:incomeFromContinuingOperations.incomeTaxes>
Current XBRL Limitations
XBRL
is well-developed for financial reporting of
results
¾Income statement
¾Balance sheet
¾Cash flow
XBRL
or a companion protocol needs further work
to address ongoing operations
¾Transactions and journal entries
¾Auditing and compliance
Accounting-Related XML Applications
Submission
and automated analysis of SEC and
related financial statements
¾For example, export SEC filings as XBRL documents.
¾For example, analyze competitor financial results via
automated analysis of their SEC filings.
Data
migration among accounting software from
different vendors and software packages
¾For example, migrate an entire general ledger from
PeachTree to QuickBooks or Oracle Small Business.
What’s Next? - SOAP
Simple
Object-Oriented Access Protocol (SOAP)
enables objects (program methods or subroutines)
to call and execute one another via the Internet.
SOAP and XML
SOAP
messages are XML documents.
SOAP
messages are transmitted by HTTP – same
as “ordinary web pages”.
XML
documents can contain other XML
documents, so the call to a method or subroutine
can pass a document as a parameter.
¾For example, a financial statement or general ledger.
SOAP Security
SOAP
security standards are currently in flux.
SOAP
messages can be encrypted through virtual
private networks (VPNs) like any other Internet
message type (e.g., email).
Digital
signatures and certificates need to be better
integrated into SOAP.
SOAP and Application Software
SOAP
is the “glue” that will bind software
distributed around the Internet into larger
applications.
¾What SOAP does isn’t new, but the way it does it
simplifies building distributed Internet applications (note
the word “simple” in the acronym).
SOAP
is currently supported by many vendors
who are building software tools to write and host
SOAP programs.
¾For example, Microsoft .NET
¾For example, SOAP-enabled Web servers to host
SOAP programs, subroutines, and methods.
SOAP-Based Accounting Software
Solomon
(Microsoft)
SOAP-Based Accounting Software
ObjAcct
What is an XML or XBRL SDK
A
software development kit (SDK) is a library of
programs functions that are designed to be built
into application software (e.g., an accounts
receivable system).
SDKs
are intended for software developers who
want to incorporate specific functions into their
products without having to write programs to
perform those functions.
SDKs
are irrelevant to end users unless they use
software developed in-house.
Future SOAP Applications
Automated
audit review of financial transactions
and statements.
¾Periodic transmission of all transaction records and
statements to external auditors and governmental
agencies.
¾Continuous export of general ledger data to external
auditors and financial markets.
Outsourcing
of one or more accounting-related
business functions with direct data transfer back to
the general ledger.
¾For example, receivables collection
SOAP and XML Interactions
Conclusions
XML-based accounting standards such as XBRL have
already changed the nature of financial reporting. They’ll
continue to advance in areas such as banking and
taxation.
New XML-based standards are emerging to address realtime capture of transaction data. These developments will
enable simple accounting data transfer among users and
software.
SOAP and related standards will enable parts of an
accounting information system to be distributed across the
Internet. They’ll also enable outsourcing of entire
accounting functions and integration of external service
providers into internal accounting systems.
Linkography
Financial Information Exchange (FIX) Protocol (www.fixprotocol.org) - Real-time
electronic exchange of securities transactions
NASDAQ/Microsoft Excel Investor’s Assistant (www.nasdaq.com/xbrl) – Demo of
financial statement analysis in Excel using XBRL financial statements
ObjAcct Business Systems (www.objacct.com) - SOAP-Based accounting
software
Organization for the Advancement of Structured Information Systems
(www.xml.org) - A clearinghouse for information about XML-related standards and
organizations.
Solomon Software (www.microsoft.com/BusinessSolutions/Solomon/default.mspx
World Wide Web Consortium (www.w3c.org) - The source of many Web standards
including XML
XBRL International (www.xbrl.org) - Developers of the Extensible Business
Reporting Language standard.