XBRL: The Time to Learn is Now

ASWA November 2001 by Neal Hannon Bryant College

Why Are Academics Involved in XBRL?

Colleges and Universities need to understand how business changes with the introduction of XML, Web Services and the rapid movement of information from computer to computer

XBRL will soon become a dominant method of handling business reporting

Other areas of business are also moving to XML enabled information. (HR, CRM, ERP, Insurance, etc.)

The Case for XML..

XML - a computer markup language that is extensible (flexible XML - a computer markup language that is extensible (flexible … can be added to)… can be added to)

XML is actually a bare-bones set of syntax rules to markup XML is actually a bare-bones set of syntax rules to markup any kind of text and dataany kind of text and data

XML provides the structure of the text or dataXML provides the structure of the text or data XML describes to humans & to computers what the data is XML describes to humans & to computers what the data is

… not how to display it… not how to display it

XML has become the fastest growing technology for information transportation and exchange the world of computing has ever seen.

Business Integrator Magazine says that nearly nine out of every ten enterprises claim that XML will be and important technology for their IT strategies over the next year

The Case for XBRL…

The purpose of XBRL is “to enhance the flow of financial information through the creation of a globally useful language in which to describe financial facts and concepts.” David vun Kannon

XBRL is uniquely positioned to Provide mobility and transportability

to financial and business facts. Students in AIS, Advanced

Accounting,Auditing, Consolidations, Mergers, Tax, Not-for-Profit will all be

affected by XBRL, which will drive change in Finance

The Case for XBRL…

I would like to see you take your XBRL project a step further, providing

account classifications for companies in Common industries. In short, I challenge

you to turn all of this data into meaningful information for investors

Arthur Levitt, Former Chairman, SEC

The Case for XBRL…

SEC Chairman Pitt complains that financial Reports are backward-looking, hard to

understand, and don't highlight the Information investors need. Some of the

improvements he is considering:

SLICE `N' DICE

Accountants are developing XBRL, a way of coding financial reports on the Internet,

that will let investors download and manipulate companies' numbers any way they like

Business Week, November 5, 2001

The Case for XBRL

Financial Professionals will need to collect, interpret and report data in many different XML dialects

XBRL provides a bridge not only to financial statements, but to all business reporting.

The Case for XBRL

“Do your main job first; get the financial statements right. Then tackle enterprise

data integration. But not until the integrityof the financial statements are at the

highest level possible. The SEC is a strongsupporter of XBRL”

Lynn Turner, former chief accountantfor the SEC

Improves the way companies -- and applications -- share business reporting information

How XBRL WorksHow XBRL Works

1. XBRL Specific Data1. XBRL Specific Data 3. XBRL information flows freely across the Internet or VPN, LAN and WAN

3. XBRL information flows freely across the Internet or VPN, LAN and WAN

5. XBRL data can be used in applications B or other comparable applications

5. XBRL data can be used in applications B or other comparable applications

Application - AApplication - A Application - BApplication - B

Common XBRL

Vocabulary

2. Application data is converted into a common XBRL vocabulary

2. Application data is converted into a common XBRL vocabulary

4. XBRL-tagged data is mapped into applications specific data

4. XBRL-tagged data is mapped into applications specific data

XML/XBRL

translator

XML/XBRL

translator

What software ‘sees’ is the differentiator and drives benefits

XBRL Business Uses

The internal use of XBRL is just Beginning to be explored, broughton by XBRL for General Ledger in

public beta. New XBRL releases are compliant with the latest version

of W3C’s XML Schema

Internal Uses include:Account analysisBalanced Scorecard

Automated exception reporting

Wireless, PDACell Phone

Consider External Financial Reporting

How much of thispainting would be needed to represent $$ spent on external financial reporting for a major US corporation last year compared to total spending?

Maybe 1%???

Can you guess why some companies are notthrilled with XBRL?

XBRL Business Uses

External Uses include:SEC FilingsIRS and State Tax Filing

Annual Reports Creditor Reports

Wireless, PDACell Phone

Externally, XBRL focuses on theproduction of GAAP financial statements for the business financial reporting supply chain. The externalfocus of XBRL is evident by theheavy participation in XBRL.org bythe AICPA and Big 5 Accountingfirms

XBRL International

International Accounting Standards and Major Countries arechanging the way Accounting is conducted world-wide

Hot spots of development include Australia, Singapore, Germany, Japan, followed by Canada, the Netherlands, Spain, South Africa,Hong Kong, Great Britain, and theScandinavian countries.

Stig Enevoldsen

(Chairman IASC) September 1998

“The fact is that we not only speak different accounting languages but

also give different interpretations of the same events and transactions……

“I believe that the best way forward in accounting is to converge towards one

single world-wide accounting language.”

Sir David Tweedie (current IASB Chairman)

The mission of the newly-created IASB The mission of the newly-created IASB

……isis to increase the transparency of financial reporting byto increase the transparency of financial reporting by achieving a achieving a single, global method of accounting for transactions -- whether in single, global method of accounting for transactions -- whether in Stuttgart, Sydney, Seattle or Singapore.Stuttgart, Sydney, Seattle or Singapore.

Need to define

One Accounting Language

One Transaction Methodology

Within the IAS Financial Reporting Framework

To achieve the objectives of High Quality Transparent Comparable

Financial Statements

IAS Philosophy Implications

The Vision

To produce

High quality, Transparent, Comparable,General Purpose Financial Reporting

to

International Accounting StandardsUsing one accounting languageOne transaction methodology

Which are useful for making economic decisions.

The Vision for XBRL

Just do it

Electronically

in a binary environment

With the Seamless Transfer

Of Financial Information

In a known state

Without

Human Intervention

The One Accounting Language Challenge

Language System of words & rules of a particular community

ObjectiveUnambiguous globally understandable classifications

Accounting classificationsBy nature and class

Scientifically extensibleA place for everything and everything in its placeTo classify items as yet unknown

Absolute precisionBinary environment no room for judgmentFact definition increases exponentially as judgment is eliminated

Mountain Zebra Hartmans Zebra

ZEBRAS

Plains Zebra Quagga

Bergzebra Pyjama Donkey

ZEBRAS

Steppenzebra Kwagga

Zebra

(Equus Zebra Zebra) (Equus Zebra Hartmannae )

(Equus Quagga) (Equus Quagga Quagga)

Grevy’s Zebra

(Equus Grevyi )

Many Human Presentations One Fact in XBRL one fact with many labels For example profit / non profit organizations

Do You Need to Understand XML?Yes No

• Basics of XML are needed to understand how business events are captured and stored

• XML basics can be self-taught or self-directed over the Web

• XBRL is valid XML

• This is Accounting, not computer science

• I don’t have the time to fool with XML, I need to learn it first.

• XBRL will soon go “under the covers” so I can ignore it.

XBRL Market Activities• MSDW SEC EDGAR filing• Singapore and Australia (APRA) efforts• XBRL Academic Competition• “XBRL Essentials” and “Introducing XBRL:

Decision Making in a Digital Economy”• Vendor support for XBRL• Jurisdictional Activity/Status

Vendor Implementations• ACCPAC

• CaseWare

• Creative Solutions

• e-Numerate

• eKeeper

•KPMG’s “Columbus”•KPMG Consulting•Navision•Newtec•PPC•XBRL Solutions•SAP•FRS (South Africa)•FRx (Microsoft)•Hyperion•IBMATRIX•Syspro

XBRL Media Summary213 articles for 12 months ended August 31, 2001

generating over 36 million impressions1

Equivalent to over $6.1 million in annual advertising2

Generated stories in major financial publications: CFO, American Banker, Times of London, Barron’s, Financial Executive, Financial Times, Financial Director, Securities Industry News, Securities Week, Wall Street + Technology, Pensions & Investments

Secured major wire stories: Dow Jones, Bloomberg, Reuters, Newsbytes News, ABIX

24 total news releases issued by Consortium and AICPA

1-Does not include wire stories or Web stories which have virtually limitless impressions. 2-Based upon ad dollar equivalents extrapolated for a one-year period; does not include ad dollar equivalents for wire stories or Web stories.

Books, Articles, Videos

• XBRL Essentials, Hoffman and Strand, June 2001

• Introducing XBRL, Hannon and Coffin, January 2002.

• AICPA E-business Update Video and Workbook, 2001.

• IMA National Conference Video

• Over 300 Articles, Special Section in Strategic Finance Magazine (June 2001), Monthly XBRL Column

• SoftwareAG XML video www.softwareag.com

Neal Hannonnhannon@bryant.edu

XBRL Education Work Group chair IMA IT ChairPhoto and Creative Credit to Dave Garbutt, FRS, SA