Improving the quality and timeliness of internal reports

1
Improving the quality and timeliness of internal
reports

• Walter Hamscher (walter_at_hamscher.com)
• Chair, XBRL International Steering Committee
• Consultant to PricewaterhouseCoopers

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The business reporting supply-chain
External Financial Reporting
Business Operations
Internal Financial Reporting
Investment, Lending, and Regulation
Processes
You are here
Investors
Financial Publishers and Data Aggregators
Companies
Participants
Auditors
Trading Partners
Regulators
Management Accountants
Software Vendors
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Improving the quality and timeliness of internal
reporting using XBRL

• The Goal
• The Obstacles
• What XBRL Offers
• Why XBRL Now
• Next Steps

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Goal 1 Consistent, uniform data produced
efficiently
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Goal 2 Repurpose consistent data as needed
Regulator, Partner
Analyze
Net
Data
Division Level
Group Level
Department Level
Participants
Form
Merge
Submits
Collect
Form
Submits
Data
Data
Receives
Send
Data
Data
Dept Detail
Prepare
Maintain
Extract
Find
Requests
Report
Definitions
Sources
Query
Supp Info
Receives
Distributes
Forms
Forms
Forms
Processes
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Improving the quality and timeliness of internal
reporting using XBRL

• The Goal
• The Obstacles
• What XBRL Offers
• Why XBRL Now
• Next Steps

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Reporting challenges

• Timeliness and quality of source data and
  estimates
• Inconsistent terminology
• Changing collection requirements
• Implementation cost resistance to change

• Variant of Paretos 80-20 postulate
• 80 of effort in reporting goes into dealing with
  the 20 of the data that is not already
  well-structured and organized in a stable, widely
  used format

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Solutions offered by a standard language

• Timeliness and quality of source data and
  estimates
• Inconsistent terminology
• Changing collection requirements
• Implementation cost and resistance to
  collaboration

• Minimize data re-keying and copy-and-paste using
  a universal format
• Single definitions shared within an organization
  by all software applications
• Software able to use new and changing data
  definitions immediately
• Open, royalty free, independent standard and
  consortium

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Process efficiencies are hard to achieve
Similar Data Account, Amount, Date
Different Data Dictionaries Field names, field
order System 1 AccountNo, Amount, Date System 2
MonetaryAmount, PostDate, AccountNumber System 3
PostingDate, Account, Value System 4 Date,
Journal, Account, Amount
Different Data Formats CSV ASCII WKS XLS
Different Representations for the same concepts
in common data field Journal PJ, Payroll
Journal, Payroll Date 12-31-03, 20031231,
12/31/03
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Improving the quality and timeliness of internal
reporting using XBRL

• The Goal
• The Obstacles
• What XBRL Offers
• Why XBRL Now
• Next Steps

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What is XBRL?

• Implications
• Maps to existing data in legacy systems or newer
  ERP systems operating today
• Uses standards to leverage investments in
  financial management systems
• Bridges todays environment to future
  architectures such as .NET
• Enables a financial reporting environment in
  which results can be shown in a shorter payback
  period.

• Technical Details
• XBRL eXtensible Business Reporting Language
• Freely available extension of XML (root language)
• NOT a new accounting standard, ERP, or software
  package
• Already adopted by SAP, Oracle, PeopleSoft,
  Microsoft Office, Microsoft Business Solutions,
  and over 20 other products
• Leverages existing technology and can adapt to
  ANY reporting/ accounting system

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How XBRL differs from XML

• XBRL adds to XML
• Multi dimensional financial data representations
• Financial reporting vocabularies (taxonomies)
• Aliases and other definition relationships
• Mathematical relationships between concepts
• Flexibility about how to present items to users
• Structure for authoritative policies and guidance
• Reporting apps need these even when using XML

Definitions AKA Liquid Assets
References GAAP I.2.(a) CoA 1100
Presentation Cash Cash Equivalents
XBRL Item 200
Calculations Cash Currency Deposits
FormulasCash 0
Contexts US FY2003 Budgeted
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What XML Offers
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What XBRL Offers
Regulators, Partners, Outsourcers
Analyze
Net
Data
Division Level
Group Level
Department Level
Participants
Form
Merge
Form
Submits
Collect
Send
Submits
Receives
Data
Data
Data
Data
Division
Detail
Prepare
Maintain
Extract
Find
Requests
Report
Definitions
Sources
Query
Supp Info
Receives
Distributes
Forms
Forms
Forms
Processes
Co.
Co.
Distributes
Specific
Specific
Definitions
Definitions
Std.
Std.
Data
Data
Net
Vocabulary
Vocabulary
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Internal reporting demonstration

• Change shape of data, not site user activities
• Reduce manual intervention for data quality

• Todays
• Asset Summary
• Request

2. XBRL Asset Request
3. Todays Asset Report
SiteUser Amherst
Analyst Boston
4. XBRL Conversion

• XBRL
• Asset
• Summary

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Another internal reporting demonstration
1. Todays Payables Request

• Change shape of data, not site user activities
• Reduce manual intervention for data quality

2. Select from Taxonomy
3. Todays Payables Reports
5. Payables Details
SiteUser Amherst
Analyst Boston
4. XBRL Conversion
6. XBRL Conversion
7. Payables Summaries
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Basel New Accord (Basel II)

• Capital Requirements
• Standardized Approach
• Internal Rating - Foundation
• Internal Rating - Advanced
• Supervisory Review
• Market Discipline
• Core disclosures
• Possible supplemental disclosures

• For each portfolio,
• Number of borrowers, and
• Distribution of borrowers across rating grades
  for the last 1, 2 and 3 years
• Distribution of rating migrations for the last
  1, 2 and 3 years
• In the advanced approach, distribution of rating
  migrations weighted with (a) nominal exposure and
  (b) EAD, both after 1,2 and 3 years.

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Basel II reporting process
Reporting to the market
Regulators
Analysts
Rating Agencies

Investors
Group level information consolidation
Disparate Business units (legal entities)
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Basel II impact on internal reporting
Reporting to the market
Regulators
Analysts
Rating Agencies

Investors
Group level information consolidation
XBRL
XBRL
Disparate Business units (legal entities)
XBRL
XBRL
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Improving the quality and timeliness of internal
reporting using XBRL

• The Goal
• The Obstacles
• What XBRL Offers
• Why XBRL Now
• Next Steps

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Representative XBRL-enabled products

• Shipping
• SAP mySAP financials
• Microsoft Business Solutions Axtapa
• Oracle FSG
• Creative Solutions (et al.)
• Announced
• Microsoft Office 2003 Add-in
• Hyperion Financials
• PeopleSoft Enterprise Financial Management
• Custom
• CaseWare Financials
• Hitachi GEMPlanet

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Live applications

• APRA (2001)
• EDGAR Online (2001)
• DATEV/Bundesbank (3Q 2002)
• Wacoal (4Q 2002) Internal Reporting
• OneSource (1Q 2003)
• Tokyo Stock Exchange (1Q 2003)
• Sumitomo Mitsui Banking Corp. (1Q 2003)
• Danish Commerce Companies (2Q 2003)
• Dutch Water Authority (3Q 2003) Internal
  Reporting
• UK Inland Revenue (4Q 2003)
• KOSDAQ Korea (4Q 2003)
• National Tax Agency of Japan (1Q 2004)
• US FDIC (3Q 2004)
• Morgan Stanley, Reuters, Microsoft
• NASDAQ-MSFT-PricewaterhouseCoopers Pilot

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Improving the quality and timeliness of internal
reporting using XBRL

• The Goal
• The Obstacles
• What XBRL Offers
• Why XBRL Now
• Next Steps

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Putting a dollar value on straight-through
reporting with XBRL Sample case

• Committee report known as-is
• 226 person-hours
• 2 ½ elapsed weeks
• Committee report estimated to-be
• Automating extraction and aggregation, eliminate
  rework
• 32 person-hours
• Less than 1 week
• 200 person-hours times of committee reports
• _, _ _ _, _ _ _ ?

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Improving the quality and timeliness of internal
reporting using XBRL

• The Goal
• Consistent, uniform data information produced
  efficiently
• The Obstacles
• Inconsistent information models 80-20 rule of
  business reporting
• What XBRL Offers
• A standardized reporting XML vocabulary that can
  be deployed at all levels of an organization to
  accelerate process improvements
• Why XBRL Now
• XBRL contrasted with coding directly in XML
• XBRL software in the marketplace and adoption
• Next Steps
• Examine your hidden costs of inefficient internal
  reporting

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What you will learn in this session

• XBRL-enabled reporting Tools
• Cuthbertson - CaseWare
• Furusho - Fujitsu
• Hoffman - UBmatrix
• Mueller - Corel
• Wallis Hyperion Solutions
• Zwiebach - Oracle
• Technical directions for XBRL International -
  Technologies
• Cohen - PricewaterhouseCoopers
• vun Kannon - KPMG
• Live applications Solutions
• Sambuichi - Hitachi
• Snijders - Semansys
• Are XBRL and your organization ready for each
  other?
• Pryde KPMG Panel with EY and Microsoft

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Improving the quality and timeliness of internal
reports

• Walter Hamscher (walter_at_hamscher.com)
• Chair, XBRL International Steering Committee
• Consultant to PricewaterhouseCoopers