ACG 4401
Introduction to XBRL
What is a Supply Chain?
Financial Reporting Supply Chain
Financial Reporting Supply
Chain
• Who’s in the Supply Chain?
– all stages of the preparation, approval, audit, analysis,
and use of financial reports.
– Participants in the financial reporting supply chain
include:
• accountants working within organizations, company
management, boards of directors, audit committees, outside
auditors, standard setters, regulators, investment bankers,
lawyers, credit rating agencies, investors, and others.
The International Federation of Accountants Financial Reporting Supply
Chain Survey Results (2007)
• Financial Reports have become less useful
– Complexity
– Burdens of Compliance
• cause "the essence of the business" to be overlooked.
– Similar results were found in the 2008 follow-up
survey
The International Federation of Accountants Financial Supply Chain Survey
2008
• “despite improvements to the financial
reporting process, the usefulness of financial
reports has not improved much. The reliability
of financial reports has certainly increased and
so has the relevance of the information that
they provide, but not their understandability.”
• “Examples of improvements include easier
access to financial information (due to
progress in web-based information and in
XBRL5)…”
So what is XBRL?
• A tool to create efficiency in the Financial
Reporting Supply Chain
• But First......
Networks and Connectivity
• What is the primary problem with
networking/connectivity?
– Software applications that do not understand
each other … therefore special interfaces
must be designed & maintained, etc.
– And humans have different understandings
and views of data and information produced
by the applications
Electronic Data Interchange
(EDI)
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•
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Computer-Computer Exchange of Data
Business Data
Direct processing
Standardized
– ANSI X12
• US and Canada
– EDIFACT
• International
EDI Components
Electronic Data Interchange Set
EDI Service Bureau
XML in Business
• What if you need to move information from
one business application to another within
your organization?
• What if you have data in a number of different
databases that you frequently need to
integrate, compare, share internally?
• What if you need to share information with
trading partners & others outside your
organization?
• XML provides the necessary rules, syntax &
structure to make it possible!
XML
• How can you appropriately structure information
exchanges so that they can be seamless &
efficient?
– There are 2 parts to the solution:
– 1) Metadata – adding data about the data … data
that gives the data more meaning
• Tags that give meaning to the Data
– 2) Agreement on structure of the data being shared
… an agreed upon vocabulary defining the rules the
metadata must follow
• Taxonomies create this structure
• In addition, the solution must be general enough to be able
to be applied universally!
Metadata – Data about data Flickr
• Flickr
What is this – Untagged Data
801482196
794144497
789465371
777563514
766386092
765800506
765596888
765139833
754215714
753914769
Stipend Base
Object Sale
GazeboGiver
Stipend Base
Stipend Base
Object Sale
Multi Gadget Box
Stipend Base
Group Liability
Upload Charge
Upload Charge
Stipend Base
400
200
400
400
100
1
10
10
2008-03-18 02:56:32
2008-03-13 23:14:32
2008-03-11 02:54:20
2008-03-04 02:54:11
2008-02-26 11:20:26
400 2008-02-26 02:48:28
2008-02-26 01:28:32
2008-02-25 18:30:04
2008-02-19 07:34:52
400 2008-02-19 02:47:52
SYSTEM
Jumphere Carver
SYSTEM
SYSTEM
Dedric Mauriac
SYSTEM
ICT Library Wunderkind, Ltd.
SYSTEM
SYSTEM
SYSTEM
17601
17201
17001
16601
16201
16301
15901
15902
15912
15922
What is this?
ID
801482196
794144497
789465371
777563514
766386092
765800506
765596888
765139833
754215714
753914769
Type
Description
Debit Credit Time
Resident/Group
Stipend Base
400 2008-03-18 02:56:32 SYSTEM
Object Sale
GazeboGiver
200 2008-03-13 23:14:32 Jumphere Carver
Stipend Base
400 2008-03-11 02:54:20 SYSTEM
Stipend Base
400 2008-03-04 02:54:11 SYSTEM
Object Sale
Multi Gadget Box
100
2008-02-26 11:20:26 Dedric Mauriac
Stipend Base
400 2008-02-26 02:48:28 SYSTEM
Group Liability
1
2008-02-26 01:28:32 ICT Library Wunderkind, Ltd.
Upload Charge
10
2008-02-25 18:30:04 SYSTEM
Upload Charge
10
2008-02-19 07:34:52 SYSTEM
Stipend Base
400 2008-02-19 02:47:52 SYSTEM
Ending Bal.
17601
17201
17001
16601
16201
16301
15901
15902
15912
15922
How can we understand Untagged Data
Multi Gadget Box
Jumphere Carver
400
2008-02-26 01:28:32
Tags give meaning to the Data
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<?xml version="1.0" ?>
<transactions>
<transaction_794144497>
<id>794144497</id>
<type>Object Sale</type>
<description>GazeboGiver</description>
<deposit>200</deposit>
<time>2008-03-13 23:14:32</time>
<resident>Jumphere Carver</resident>
<end_balance>17201</end_balance>
</transaction_794144497>
<transaction_789465371>
<id>789465371</id>
<type>Stipend Base</type>
<description></description>
<deposit>400</deposit>
<time>2008-03-11 02:54:20</time>
<resident>SYSTEM</resident>
<end_balance>17001</end_balance>
</transaction_789465371>
XML
• Extensible Markup Language
• Markup?
– Data being exchanged
• Sent from computer-to-computer (intra and interorganizationally)
– Defining the data
• Enclosing the data with descriptions of what the data is
– <> Tags used to enclose data
• Used to create Vocabularies
– Standardized sets of tags (kind of like EDI)
– XBRL is one such vocabulary
– UBL is another
XBRL
XBRL: What is it?
XBRL (Extensible Business Reporting Language) is a royalty-free,
open specification for software that uses XML data tags to describe
financial information for public and private companies and other
organizations. XBRL benefits all members of the financial
information supply chain by utilizing a standards-based method with
which users can prepare, publish in a variety of formats, exchange
and analyze financial statements and the information they
contain. The world's leading accounting, financial, government and
software organizations are involved in the adoption and use of
XBRL in the U.S.
XBRL Defined
• A Vocabulary
• Adds Meaning and Context to:
– Accounting
– Financial
– Business Performance
• Turns data into Information
– Understandable
• Humans and Computer applications
– Reusable
Interactive Data
• XBRL
– Liberates financial data from financial
documents
– How do we validate the data?
• Huge opportunity for CPA’s
What was accounting like before XBRL?
• Accounting Cycle
– Journal, Ledger, Trial Balance, Financial
Statements
– Debits and Credits
• Text based!
• Manual input, manual interpretation, Reentry of data for each separate use
XBRL
• X
• Vocabulary based on XML
– eXtensible
• Beyond original intended
use
• Extended by End User
• Tags extend use
• B
– Business
• Financial Statement
Reporting
• R
– Reporting
• Using US GAAP
• L
– Language
• XML
– Extensible Markup Language
– Rules for describing data
XBRL Specification 2.1
(November 2005)
• Defines rules and syntax for XBRL
documents
– Taxonomies
• Dictionaries of standard tags
– Instance
• Contain “facts” and meta-data
Instances and
Taxonomies
• Instance Document
– An instance of a companies financial reporting
•
•
•
•
•
What company
What period
What currency
What purpose
What information
• Taxonomy
– Dictionary of what tags can be used to mark-up
data
XBRL Information
• Once in tagged format does NOT need to
be re-entered
– So HTML statement for SEC
– Glossy Printed Annual report for investors
– HTML for investor section of web page
• ALL CAN BE DONE WITH ONE UNDERYLYING
DATA SET, XBRL!
• Eliminate human error
Who is behind XBRL
• Securities Exchange Commission
– Public filings are currently voluntarily filed in XBRL format
– Mandatory public filings coming soon...
– Interactive Data!
• AICPA
– Efficiencies to the accounting profession
– Re-use of data without manual re-entering
• XBRL International
– Non-profit Organization
– Creates Standards
• XBRL U.S.
– Charged with creating US GAAP taxonomy
XBRL Milestones
•
XBRL Timeline
XBRL Mandated Filing
Dates
Company Type
Financial Statements
Block Footnotes
Detailed
Footnotes
> 500 Billion in
outstanding
~ 55 companies
12-15-2009
12-15-2009
12-15-2010
Large
12-15-2010
12-15-2010
12-15-2011
Small and IFRS
reporting
companies
12-15-2011
12-15-2011
12-15-2012
SEC Rule 33-9002
• Mandates the 3-year phase-in of XBRL for corporations
• beginning with the financial statements and block-tagged note
disclosures for the 10-Q filings of large accelerated filers for
periods ending on or after June 15, 2009.
• Includes a lower bar on liability for the XBRL filings than for those
in HTML or text format.
• The rule prescribes that interactive filings are ‘‘deemed not filed
for purposes of specified liability provisions”
– The XBRL filings are ‘‘furnished” as an exhibit and not necessarily
‘‘filed.”
• When the instance document is furnished in the second year, filers
are required to detail tag the notes and explanatory disclosures
– in addition to providing the block-tagged notes.
• Other filers will phase-in by 2011
– including foreign filers that will use the IFRS XBRL taxonomy.
The XBRL Structure
• Tags
– Description of what data is
• <Assets>1000</Assets>
• Attributes
– Meta-data (data describing data)
• <Assets bType = “debit”>1000</Assets>
• Relationships
– Is something described as <Inventory>
related to <Assets> ?
XBRL – Lets put it all together
• Instance Document
– Contain tags describing data
– ICU Medical
• Schema
– Contains the definition of the tags
• LinkBases
– Contains relationships between tags
• Taxonomy
– Combination of Schemas (defining elements) and
LinkBases (relating elements)
– XBRL US
Types of LinkBases
• Presentation
– How to organize output
• E.g. what tags make up Current Assets
• Calculation
– How related tags are summed (+ or -)
• Definition
– Different tag names are related for the same thing
• Inventory and Merchandise Inventory
• Reference
– A tag element and the standard reference (FASB) for an element
• Label
– Machine Readable to Human Readable
• CashAndCashEquivalents = Cash and Cash Equivalents
Some Early Findings
• Does it add up? Early evidence on the data quality of XBRL filings
to the SEC
–
Debreceny, Farewell, Piechocki, Felden, Gräning (2010) Journal of Accounting Public Policy
• Quality = correctness of the mathematical relationships implied by
the taxonomy and implemented in the instance document.
– i.e. Current Assets = Cash + ST Investments + Inventory + …
• Found that there is an average of 1.8 errors per filing
• ¾ of the filings were error free
• There was an average of seven errors per filing, for those filings
with errors.
• The median error was $9.1 m per filing with the maximum
exceeding $7b.