1. ACG 6415
Introduction to XBRL

2. What is a Supply Chain?

3. Financial Reporting Supply Chain

4. 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.

5. Financial Reports have become less useful
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
XBRL
could be a useful tool to help them find and interpret financial reporting information
although there was a low level of understanding about how XBRL exactly works.
Regulators were the most positive respondents about the use of XBRL
auditors and users also considered that having information presented using XBRL would be useful.

6. A tool to create efficiency in the Financial Reporting Supply Chain
So what is XBRL?
A tool to create efficiency in the Financial Reporting Supply Chain
But First......

7. 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

8. Electronic Data Interchange (EDI)
Computer-Computer Exchange of Data
Business Data
Direct processing
Standardized
ANSI X12
US and Canada
EDIFACT
International

9. EDI Components

10. Electronic Data Interchange Set
EDI Service Bureau

11. 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!

12. 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!

13. Metadata – Data about data - Flickr

14. What is this – Untagged Data

15. What is this?

16. How can we understand Untagged Data

17. Tags give meaning to the Data
<?xml version="1.0" ?>
<transactions>
<transaction_ >
<id> </id>
<type>Object Sale</type>
<description>GazeboGiver</description>
<deposit>200</deposit>
<time> :14:32</time>
<resident>Jumphere Carver</resident>
<end_balance>17201</end_balance>
</transaction_ >
<transaction_ >
<id> </id>
<type>Stipend Base</type>
<description></description>
<deposit>400</deposit>
<time> :54:20</time>
<resident>SYSTEM</resident>
<end_balance>17001</end_balance>
</transaction_ >

18. XML Extensible Markup Language Markup? Used to create Vocabularies
Data being exchanged
Sent from computer-to-computer (intra and inter-organizationally)
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

19. XBRL

20. 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.

21. XBRL Liberates financial data from financial documents
Interactive Data
XBRL
Liberates financial data from financial documents
How do we validate the data?
Huge opportunity for CPA’s

22. What was accounting like before XBRL?
Accounting Cycle
Journal, Ledger, Trial Balance, Financial Statements
Debits and Credits
Text based!
Manual input, manual interpretation, Re-entry of data for each separate use

23. XBRL X B R L Vocabulary based on XML eXtensible Business Reporting
Beyond original intended use
Extended by End User
Tags extend use B
Business
Financial Statement Reporting R
Reporting
Using US GAAP L
Language
XML
Vocabulary based on XML
Extensible Markup Language
Rules for describing data

24. Who is behind XBRL Securities Exchange Commission AICPA
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

25. XBRL Milestones April 1998 October 1999 July 2000 February 2005
XBRL is conceived by Charles Hoffman, a CPA with the firm Knight Vale and Gregory in Tacoma, Washington
October 1999
AICPA hosts first meeting
July 2000
Spec 1.0 is released and International organization created
February 2005
SEC creates voluntary program for reporting XBRL financial data on EDGAR
September 25th 2006
SEC’s chairman Christopher Cox announces contracts totaling $54 million ... To
Modernize and Maintain the EDGAR Database to Use Interactive Data
Complete XBRL Code Writing for U.S. GAAP Financial Statements
Create Interactive Data Tools for Investors

26. XBRL Milestones September 2006 September 25th 2007 October 9th 2007
XBRL US, the United States jurisdiction of XBRL International, spins off from the XBRL committee of the AICPA.
September 25th 2007
SEC’s chairman Christopher Cox announces the completion of all development work on data tags for financial reporting in accordance with U.S. generally accepted accounting principles
October 9th 2007
SEC’s chairman Christopher Cox announces the creation of a new office within the 74-year old agency to lead the transformation to interactive financial reporting by public companies
... the new office is the agency-wide disclosure modernization program
December 5, 2007
US GAAP Taxonomies released for Public Comments
February 11, 2007
Second Draft of US GAAP Taxonomy Released for review
Advisory Committee on Improvements to Financial Reporting (appointed by SEC Chairperson) recommended mandated XBRL tagged filings for largest 500 companies followed by a phased in approach

27. April 16, 2008 June 5, 2008 January 2009 SEC Mandates use of XBRL
XBRL Milestones
April 16, 2008
SEC Mandates use of XBRL
June 5, 2008
Final XBRL “US” taxonomies Acknowledged
January 2009
SEC Final Rules Published

28. XBRL Mandated Filing Dates
Company Type
Financial Statements
Block Footnotes
Detailed Footnotes
> 500 Billion in outstanding stock ~ 55 companies
Large Companies
Small and IFRS reporting companies

29. Mandates the 3-year phase-in of XBRL for corporations
SEC Rule
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.

30. The XBRL Structure Tags Attributes Relationships
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> ?

31. 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

32. Types of LinkBases Presentation Calculation Definition Reference Label
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

33. Found that there is an average of 1.8 errors per filing
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.