Xbrl

The Next Technology Revolution XML XBRL 1 Today’s Objectives †¢ Overview of XML & XBRL †¢ Show you how this technology makes doing EBusiness: – Faster – Cheaper – Better †¢ Conclusion 2 Let’s move up the Value Chain Transactions Data Information Knowledge Decisions Transactions Data Information Knowledge Decisions Transactions Data Information Knowledge Decisions Transactions Data Information Knowledge Decisions 3 Evolution to Web Services Web Program the Web Browse the Web Web Services Text Files Web Pages Innovation FTP, E-Mail, Gopher Connectivity TCP/IP HTML XML 4 Automation Presentation Technology XMLXML stands for: eXtensible Markup Language Universally accepted method of exchanging information 5 eXtensible Markup Language †¢ †¦Ã¢â‚¬ ¦is a meta markup language the World Wide Web Consortium (W3C) considers a universal standard for describing both structured data and the behavior of applications that process the language . 6 What Is XML? †¢ â€Å"XML is a platform-independent, self-describing, expandable, standard data exchange format 7 XML is Platform Independent †¢ †¢ †¢ †¢ †¢ Windows Unix Macintosh Mainframe Linux 8 XML is Self-Describing Self†¢ Example: – July 26, 1998 †¢ Describes the information, not the presentation †¢ Format neutral XML is Expandable †¢ Whereas HTML has a fixed set of tags – , , †¢ XML lets you create your own tags – – – 10 How does it work? †¢ XML gives meaning to information through the use of tags Saad Hafizi COB Chairman, Novac 21 Caution.. †¦Just because something is .. Does not mean it is accurate? 11 The XML Puzzle XML Document Core Schema Transformation Tools Industry Specific Vocabularies Company Specific Vocabulary 12 How XML Works How XML Works Improves the way companies — and applications — share information Enjoys strong industry and vendor support 13 What is ‘XML’? †¢ What XML is Not – Not a religion. Not the solution to all world problems. – Not a solution for all electronic commerce problems. – Not a solution to all legal-technology problems. †¢ XML is a Tool – XML is a Really Cool (Powerful) Tool! – Like all tools, XML can be used wisely and unwisely. 14 Why is XML so Important? †¢ †¢ †¢ †¢ †¢ Portable Vendor neutral Readable data format More flexible and easier to use than EDI All major software products are becoming â€Å"XML† enabled †¢ Defacto standards for data exchange †¢ Enabling new levels of interoperability 15 XML †¢ Widely expected to reduce cost of publishing to the Net by as much as 50%. And by next year Gartner Group prediction 70% of all B2B transactions executed on the Web will be done using XML. 16 Who defines the tags? †¢ Tags are defined by industry consortiums †¢ Each industry’s stan dard tags are commonly referred to as a taxonomy 17 â€Å"Content in Context† (Industry-specific) Auto Industry Chemical Industry Publishing or Mythology Music Industry Aerospace Astronomy 18 Who’s Building Taxonomies? Accounting Economics EDI Healthcare Legal Publishing Science Advertising Architecture Communication E-Commerce Financial Insurance News Retail Supply Chain 19 Automotive Banking Education ERP HR Music Real Estate SoftwareDefines Tags 20 XBRL International is gaining strength †¢ XBRL activities occurring in— – – – – – – – – – – – – – – – – – – United States Canada Australia China & Hong Kong Japan Malaysia New Zealand Singapore Taiwan Germany India Ireland Netherlands Nordic Federation (Denmark, Norway, Sweden) South Africa Spain Switzerland United Kingdom †¢ And on a global level through the— – Inter national Accounting Standards Council – International Press Telecommunications Council – International Standards Organization 21 XBRL International is gaining strength †¢ On a Global level through the— – – International Accounting Standards Council International Press Telecommunications Council International Standards Organization †¢ On a Country Level: – – – – – – – – – – – – – – – – – – United States Canada Australia China & Hong Kong Japan Malaysia New Zealand Singapore Taiwan Germany India Ireland Netherlands Nordic Federation (Denmark, Norway, Sweden) South Africa Spain Switzerland United Kingdom 22 XBRL Impact â€Å"The explosive growth of the Internet is not only changing the way companies conduct their business, it also promises to forever alter the way they communicate business performance. – CFO M agazine, February 2000 23 XBRL Documents †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ XBRL for Financial Statements XBRL for General Ledger XBRL for Journal Entry Reporting XBRL for Credit Reporting XBRL for Performance Press Releases XBRL for Risk Reporting XBRL for Regulatory Filings XBRL for Tax Filings XBRL for Assurance Schedules XBRL for Authoritative Literature XBRL for â€Å"Business† Reporting 24 Who’s Embracing XML now? †¢ Software developers Using XML as the core technology for new products †¢ Database developers Building XML support into their products. †¢ Industry groups Deciding how information should be shared. Organizations Investigating how to tie their inter and intra company processes together. 25 †¢ XML for Financial Reporting †¢ Enables a dramatic improvement in the processing of financial reports †¢ XBRL documents can be— – – – – – Pr epared efficiently Exchanged reliably Published more easily Analyzed quickly Retrieved by investors simply to enable smarter investments 26 Benefits †¢ XBRL is: – NOT a new accounting standards but enhances the distribution and usability of existing financial statement information – Enabler and an extension for relational database functionality for all financial statement information 7 Problems XBRL Addresses †¢ Ineffective communication to investors †¢ Inefficient aggregation and analysis †¢ Inefficient creation of financial statements 28 Why XBRL ? Enable business reporting that leverages the Internet & XML Effective access and analysis of business reports Improve corporate communications with stakeholders 29 Who benefits Process Benefits: Lowering Financial Reporting Cost †¢ Today’s external reporting processes – Rework and delay – Ad hoc and non repeatable – No path forward Accounting System Explanatory Text Thir d Party Information Printed Financials Regulatory FilingsWeb Site Tax Return Trade Filings 30 Who benefits Process Benefits: Lowering Financial Reporting Cost †¢ Common interchange format and storage is good information management practice – Reduces redundancies & discrepancies – Repeatable processes using tools – A platform for continuous reporting Accounting System Explanatory Text Third Party Information XBRL Documents Printed Financials Regulatory Filings Web Site Tax Return Trade Filings 31 XBRL: Interoperability & Multiple Uses G/L Package ERP XBRL Custom Developed Systems US GAAP Financial Statement In English US GAAP Financial Statement In DutchUS GAAP Financial Statement to the Web US GAAP Financial Statement to Print XBRL Other Sources of Information XBRL Other Sources of Information Other Sources of Information US GAAP Financial Statement to Cell Phone XBRL: Interoperability & Multiple Uses G/L Package ERP US GAAP Financial Statement Investors & Creditors XBRL Custom Developed Systems EDGAR Filing XBRL Tax Filing XBRL Government Other Sources of Information Bank Filing XBRL News Agencies And Others Other Sources of Information Other Sources of Information Press Release Once Every Event is tagged in XBRL†¦ G/L Package ERPIAS Financial Statement in German US GAAP Financial Statement In English French Tax Filing Investors & Creditors XBRL Custom Developed Systems XBRL XBRL Government Other Sources of Information Canadian Banking Filing XBRL News Agencies And Others Other Sources of Information Other Sources of Information EDGAR 10k line item via Cell Phone XBRL Working Model: Planned Specifications XBRL for G/L Journal Entry Reporting XBRL for Financial Statements XBRL for EDGAR Filings Processes Business Operations Internal Financial Reporting External Financial Reporting Investment and Lending AnalysisXBRL for Business Event Reporting XBRL for Tax Filings Financial Publishers and Data Aggregators Participants Companies Investors Trading Partners Management Accountants Auditors Regulators Software Vendors XBRL: not a Transaction Protocol What it is †¢ XBRL is merely a format to serialize complex, structured financial data: e. g. , statements, G/Ls. †¢ Therefore, it cannot replace OFX, ebXML, ANSI X. 12 Trans Set 821, OMG G/L Spec, †¦ †¢ Future message sets in those protocols could include XBRL tagged data if they need to send financial statements in the message body. XBRL provides a framework and an AICPA approved vocabulary that can be extended to many other reporting frameworks. 36 XBRL: not an accounting standard †¢ Means of communicating – Current GAAP – Current practice †¢ Flexible standard – Future standards – Future general practice 37 XBRL: A Fragment of a Raw Data Raw Data in Spreadsheet Company Coca Cola Co. Coca Cola Co. Financial Statement Balance Sheet Line Item CurrentAssets. Cashand CashEquivalents CurrentAssets. Cashand CashE quivalents Label CurrentAssets. Cashand CashEquivalents CurrentAssets.Cashand CashEquivalents Year 1999 Value 1611 Balance Sheet 1998 1648 Same Raw Data in XML (XBRL) Format $1,611 $1,648 38 39 What software ‘sees’ is the differentiator and drives benefits (here is an example) 40 Importance of Reporting â€Å" [W]hat excites the CEO is the ability to know what the business is doing at any given point in time, react quickly to market shifts and competitive threats and remain in tight control while empowering employees to make informed decisions more quickly. Year End Earnings Release Call August 10, 1999 John Chambers Cisco CEO † 41 â€Å" Virtual Close TheBest Practice has, in my opinion, just as much impact on a company’s future success or lack thereof as the wellpublished e-commerce area. Year End Earnings Release Call August 10, 1999 John Chambers Cisco CEO † 42 XBRL Impact †¢ â€Å" †¦ If Europe moves quickly to take up these standard s, it could give them an attractive lead in the race to accessible and comparative key data that would stimulate investor interest. It would undoubtedly spawn a plethora of research tools that would be useful to both private and professional investors. † †¢ †¢ – Investors Chronicle, August 9, 2000 43XBRL and the Emergence of ‘e‘eStandards’ †¢ E-Standards are fundamental †¢ HTML is the standard that enabled the web’s first ‘Big Step’ †¢ XML is the web’s next ‘Big Step’ – Over 200 XML-Based Specifications and Protocols exist, including— †¢ †¢ †¢ †¢ RosettaNet – computer company supply chain and trading webs OBI – Open Buying on the Internet – retail e-commerce FpML – Financial Products (Derivatives, Swaps, FX) ACORD XML – Insurance industry information exchange standards derived from EDI. – UN/CEFAC = EBXML †¢ XBRL is uniquely focused on financial reporting 44 Standard . orgs (reporting vs ‘e’)Accounting / Auditing Reporting ASB IASC FASB IFAC SEC Territory Institutes ‘e-Business’ W3C OASIS;UN/CEFAC T (ebxml) xml. org RosettaNet ACORD What about these? CPAs participate / lead in these The range of what is under development today †¦ HR CRM â€Å"Horizontals† (Infrastructure) there are others†¦.. XBRL is uniquely focused on Etc. business reporting CHEMX RosettaNet ACORD FpML ANX â€Å"Verticals† (Industry Supply Chains) there are others†¦Ã¢â‚¬ ¦. XBRL Adds Reporting to E-Commerce ETax One way Regulators Investors Creditors Lenders Website One way Aggregators BUSINESS ERP G/L Packages CRM 2-way SuppliersTransaction Creation 2-way †¢Orders †¢A/P †¢Delivery †¢Orders †¢A/R †¢Delivery Customers 47 XBRL Adds Reporting to E-Commerce ETax One way Regulators Investors Creditors Lenders Website One way Aggregators B USINESS G/L Packages ERP CRM BUSINESS REPORTING XBRL 2-way Suppliers Transaction Creation 2-way (e-)Commerce OTHER XML INITIATIVES †¢Orders †¢A/P †¢Delivery †¢Orders †¢A/R †¢Delivery Customers 48 XBRL – What Key XBRL Components †¢ XBRL / XML Specification (XBRL. org) – Global architecture/technology †¢ XBRL hierarchical vocabulary (jurisdiction/industry) – Dictionary of terms by jurisdiction/industry sector Style Sheets †¢ XBRL enabled tools (preparer) (market) 49 Key to our Success Market driven model – Start simple, be inclusive Broad supply chain participation Members support XBRL Members do not compete on the â€Å"framework† Build structure & systems to support open community & market development 50 Steps in Technology Acceptance Acceptance Simplification/Tools Taxonomy Visionaries 51 Financial Institutions—and their Users Institutions— †¢ SMALL BUSINESS provides FINANCIAL INSTITU TION with their information in XBRL and receives loan approval in less than a day instead of two days—or two weeks.Average Time for Loan Processing—1. 75 days Value-added Analysis and Decision-making? 90% + time spent on Mechanics Less Risk With => Better Or Mechanics Analysis Mechanics Analysis Mechanics Analysis Mechanics Analysis Process more loans in the same amount of time 52 Benefits to Today's Users †¢ 1. Reduce cost of analyzing and reporting financial information †¢ 2. Increase speed and efficiency of business decisions 3. Enhance the distribution and access of existing financial statement information 4. More readily exchanged 5. Increase and enhance analysis 53 Benefits †¢ 1.Reduce cost of analyzing and reporting financial information †¢ 2. Increase the speed and efficiency of business decisions †¢ 3. Enhance the distribution and usability of existing financial statement information 54 Example: Cost Reduction †¢ International Sub sidiaries: †¢ Large multi-national corporation uses XBRL to quickly roll–up, analyze and publish the financial statements of numerous subsidiaries— †¢ †¢ †¢ †¢ in different countries with different languages using different GAAP on different computer systems 55 Benefits †¢ 1. Reduce cost of analyzing and reporting financial information †¢ 2.Increase the speed and efficiency of business decisions †¢ 3. Enhance the distribution and usability of existing financial statement information 56 Example: Efficient Decisions †¢ Major mutual fund company feeds XBRL-ized information to customers to differentiate their funds as more objective and reliable investments †¢ An investor uses XBRL to compare the financials for a range of companies— – Belonging to different revenue levels – Located within an industry sector – Along multiple analytical criteria 57 Benefits †¢ 1. Reduce cost of analyzing and r eporting financial information †¢ 2.Increase the speed and efficiency of business decisions †¢ 3. Enhance the distribution and usability of existing financial statement information 58 †¢ Loan Approval: Example: Credit – Small Business provides Bank with their financial information in XBRL and receives loan approval in 1 minute instead of 2 days †¢ Credit Approval: – Company approves customer credit request with automated assessment processes facilitated by XBRL †¢ Line of Credit: – Company provides capital markets with financial information in XBRL and receives expedited line of credit 59 XML Shortcomings?Not a replacement for integration and middleware tools Lots of Hype, not a solution for everything There are many different standards among industries Standards still evolving But, you can’t wait while the standards evolve†¦. 60 XBRL Development & Adoption Final Thought†¦Ã¢â‚¬ ¦.. Change is not what it used to be†¦ .. Change has become a process; it’s become a permanent part of the external environment 62 Summary †¢ FASTER – BETTER †¢ CHEAPER †¢ Our profession will have to follow technology and record business activity in an real-time mode. 63 Concluding Remarks .. 64