XBRL: Will it Revolutionize Financial Reporting?

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XBRL Will it Revolutionize Financial Reporting?

• UAA ACCT 316 Accounting
  Information Systems
  Dr. Fred Barbee

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AICPA Top Ten Technologies - 2003
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Top Ten Technologies 2003

• Information Security
• Business Information Management
• Application Integration
• Web Services
• Disaster Recovery Planning

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Top Ten Technologies 2003

• Wireless Technologies
• Intrusion Detection
• Remote Connectivity
• Customer Relations Management
• Privacy

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AICPA Top Ten Technologies - 2002
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Top Ten Technologies 2002

• Business and Financial Reporting Applications
• Training and Technology Competency
• Information Security and Controls
• Quality of Service

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Top Ten Technologies 2002

• Disaster Recovery (includes business continuation
  and contingency planning).
• Communications Technologies Bandwidth
• Remote Connectivity Tools

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Top Ten Technologies 2002

• Web-based and Web-enabled Applications (Internet)
• Qualified IT Personnel
• Messaging Applications (e-mail, faxing,
  voicemail, instant messaging).

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Top Ten Technologies 2002

• Business and Financial Reporting Applications
• Training and Technology Competency
• Information Security and Controls
• Quality of Service

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What is XBRL?
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eXtensible . . .

• Capable of being extended or protruded.
• Of or relating to a programming language or a
  system that can be modified by changing or adding
  features.
• eXtensible Flexible

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XBRL

• XBRL is an XML-based framework that provides a
  standards-based method
• to prepare,
• publish in a variety of formats,
• reliably extract and
• automatically exchange financial statements of
  both public and private companies and the
  information contained within.

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XBRL (From xbrl.org)

• Provides an XML-based framework that the global
  business information supply chain can use to
  create, exchange, and analyze financial reporting
  information including, but not limited to . . .

More
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XBRL . . .

• Regulatory filings such as annual and quarterly
  financial statements.
• General ledger information, and
• Audit schedules.

More
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XBRL . . .

• XBRL is freely licensed and facilitates the
  automatic exchange and reliable extraction of
  financial information among various software
  applications anywhere in the world.

More!
No
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What is XML?

• eXtensible Markup Language

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XML

• If HTML is the fire-engine red paint and supple
  leather interior of a sports car . . .

• XML is the turbocharged engine and sport
  suspension.

Michael Morrison.
Teach Yourself XML in 24 Hours
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XML
XML Stands For . . .
eXtensible
Markup
Language
Universally accepted method of exchanging
information.
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eXtensible Markup Language

• is a meta markup language the

• considers a universal standard for describing
  both structured data and the behavior of
  applications that process the language.

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VPML Virtual Pet Markup Language

• ltpetsgt
• ltpet nameMaximillian type pot bellied
  pig age3gt
• ltfriend nameAugustus/gt
• ltfriend nameNigel/gt
• lt/petgt
• ltpet nameAugustus typegoat age2gt
• ltfriend nameMaximillian/gt
• lt/petgt
• ltpet nameNigel typechipmunk age2gt
• ltfriend nameMaximillian/gt
• lt/petgt
• lt/petsgt

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HTML XML Comparison

• Sample HTML Coding
• ltH3gtSale Price 24.95lt/H3gt ltIgt(Suggested retail
  39.95)lt/IgtltBgtShipping cost 4.00 UPS Groundlt/Bgt
• Sample XML Coding
• ltPRICE typesale unitUS Dollargt24.95
  lt/PRICEgt ltPRICE typeretail unitUS
  Dollargt39.95lt/PRICEgtltSHIPPING typeUPS Ground
  unitUS Dollargt4.00lt/SHIPPINGgt

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What Is XML?

• XML is a
• platform-independent,
• self-describing,
• expandable,
• standard data exchange format.

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XML is Platform Independent

• Windows
• Unix
• Macintosh
• Mainframe
• Linux

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XML is Self-Describing

• Example
• ltDATEgtJuly 26, 1998lt/DATEgt
• Describes the information, not the presentation
• Format neutral

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XML is Expandable

• Whereas HTML has a fixed set of tags
• ltH1gt, ltBgt, ltPREgt
• XML lets you create your own tags
• ltsugary-substancegt
• ltShakespearean-charactergt
• ltcash-equivalentgt
• The key focus is on content, not presentation

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XBRL Builds on XML and SGML
Industry Developed, Supported
XBRL
2001
XML and XML enabling technologies X-Link, X-Schema
W3C Supported
1998
ISO Standard
SGML Standard Generalized Markup Language
1986
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How does it work?

• XML gives meaning to information through the use
  of tags

ltCustomergt ltNamegtBob Smithlt/Namegt
ltCompanygtXYZ Corporationlt/Companygt
ltTitlegtCEOlt/Titlegt ltAgegt49lt/Agegtlt/Customergt
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How XML Works
Improves the way companies -- and applications
-- share information Enjoys strong industry and
vendor support
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What XML is Not!!

• XML is Not
• A religion.
• The solution to all world problems.
• A solution for all electronic commerce problems.
• A solution to all legal-technology problems.

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What is XML?

• XML is a Tool
• XML is a Really Cool (Powerful) Tool!
• Like all tools, XML can be used wisely and
  unwisely.

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Why is XML so Important?

• Vendor neutral
• Readable data format
• More flexible and easier to use than EDI

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Why is XML so Important?

• All major software products are becoming XML
  enabled
• Defacto standard for data exchange
• Enabling new levels of interoperability

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XML

• Widely expected to reduce cost of publishing to
  the Net by as much as 50.

70 of all B2B transactions executed on the Web
will be done using XML.
?
?
?
?

• And by next year

Gartner Group prediction
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Who defines the tags?

• Tags are defined by industry consortiums
• Each industrys standard tags are commonly
  referred to as a taxonomy

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XBRL Taxonomies

• Commercial and Industrial Companies, US GAAP -
  Published
• Federal Departments, US
• Mutual Funds, US
• Financial Institutions, US
• Commercial and Industrial, IASC

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XBRL Taxonomies

• Commercial and Industrial, German GAAP
• Bank Call Reports - FDIC

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Whos Building Taxonomies?

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Industry Specific Context
Auto Industry
ltCAR-MODELgt
Chemical
ltSYMBOLgt
Publishing or Mythology
ltGODgt
ltRECORD- LABELgt
Music
Aerospace
ltPROGRAMgt
Astronomy
ltPLANETgt
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HTML, XML, and XBRL?

• How do they differ?

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HTML

• In simple terms, HTML is a system of marking up a
  document so it can be published on the WWW.
• Documents prepared in HTML contain reference
  graphics and formatting tags.

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HTML

• HTML is a series of pre-defined tags that
  primarily focus on describing how content appears
  on the Internet.
• HTML describes what font, font size, and color
  the text of this paragraph should be when viewed
  via a web browser.

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HTML

• With HTML you have a lot of content but no real
  context.
• That is where XML comes in.

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eXtensible Markup Language

• XML is the universal format for data on the web
  that uses tags to give context and structure to
  content.

• XML is a standards language ratified in February
  1998 and maintained by the World Wide Web
  Consortium (W3C).

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eXtensible Markup Language

• XML does not replace HTML it is a complimentary
  format that is platform independent, allowing XML
  data to be rendered on any device, such as a
  computer, cell phone, PDA or tablet device.

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eXtensible Markup Language

• XML allows developers to easily describe and
  deliver rich, structured data from any
  application in a standard, consistent way.

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eXtensible Markup Language

• Whereas HTML offers a fixed/pre-defined number of
  tags . . .
• XML neither defines nor limits tags.
• XML provides a framework for defining tags
  (taxonomy) and the relationship between them
  (i.e., schema).

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• XBRL is an XML-based schema that focuses
  specifically on business reporting.
• XBRL is a complement to XML, allowing accountants
  and regulatory bodies to identify items that are
  unique to the business reporting environment

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• XBRLs schema defines how to create XBRL
  documents and XBRL taxonomies (i.e., GAAP, IAS),
• Providing a set of business information tags that
  allows users to identify business information in
  a consistent format.

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• XBRL is also extensible in that users are able to
  create their own XBRL taxonomies that define and
  describe tags unique to a given environment.

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• XBRL How It Can Improve Todays Business
  Environment

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XBRL Benefits

• Case 1 Consolidating Subsidiaries
• Case 2 Issuing Financial Statements
• Case 3 Analyzing Financial Information
• Case 4 Following Government Regulations

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What are the problems solved by XBRL?
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XBRL . . .

• XBRL is freely licensed and facilitates the
  automatic exchange and reliable extraction of
  financial information among various software
  applications anywhere in the world.

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(No Transcript)
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• What is XBRL Used For?

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What is XBRL Used For?

• XBRL, at least at first, will be used to publish
  digitally companies financial statements for
  external users.
• An XBRL-based F/S is a digitally enhanced version
  of paper-based F/S which includes the complete
  set of F/S including the accountants report.

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• Potential XBRL Applications

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Potential XBRL Applications

• Financial Statements
• Taxes
• Regulatory Filings
• Accounting and Business Reports
• Authoritative Literature.

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• What are the benefits of XBRL for Financial
  Statements?

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XBRL Benefits

• Preparing a financial statement for
• Printing
• A Web Site
• Regulatory filing
• Means potentially entering information three
  times.

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XBRL Benefits

• With XBRL, information will be entered once and
  the same information will be rendered
• As a printed Financial Statement
• As an HTML document for a Web Site
• As an EDGAR filing
• As a raw XML file
• As some specialized reporting format

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XBRL-enabled Financial Statements
Financial System
Drill Down
Result . . .
Transparency!
Transaction Details
Transparency!
Transparency!