1. Information Systems and Processes XBRL at the Bank of Spain Experiences, problems and challenges Ángeles Lozano Víctor Morilla 1st Technical Meeting of European XBRL implemented projects MADRID 5/10/2006

2. INFORMATION SYSTEMS AND PROCESSES 2 Index Good practices and considerations Problems Future challenges

3. INFORMATION SYSTEMS AND PROCESSES 3 Good practices and considerations

4. INFORMATION SYSTEMS AND PROCESSES 4 Taxonomy driven model XBRL taxonomies define: –Business concepts –Relations between business concepts –Relations between business concepts and other resources  XBRL is a comprehensive language to express business metadata  Changes in the taxonomy should not impact on the system  Taxonomies as an input

5. INFORMATION SYSTEMS AND PROCESSES 5 Taxonomy driven model example XBRL Document HTML Document XSLT Processor XSLT Producer Taxonomy

6. INFORMATION SYSTEMS AND PROCESSES 6 Taxonomy driven model  Benefits: –More flexible design –Reduce errors –Only structural changes need development Let the taxonomy be your guide !

7. INFORMATION SYSTEMS AND PROCESSES 7 Taxonomies and data models Avoid designing taxonomies based on specific views of the data Analysts should see the data model behind

8. INFORMATION SYSTEMS AND PROCESSES 8 Taxonomies and data models  Total incomes by country should be equal to total incomes by product –We need one rule: TotalIncomes = IncomesByProduct  Calculate total benefits and benefits by country –We need four new formulas: TotalBenefits = TotalIncomes – TotalExpenses BenefitsInSpain = TotalIncomesSpain – ExpensesInSpain...  Add 3 new countries: –We need 9 new concepts –We need 3 new calculation rules

9. INFORMATION SYSTEMS AND PROCESSES 9 Taxonomies and data models  With a good design: –Two items: Incomes Expenses –Two dimensiones: Country dimension (Spain, Italy, France...) Product dimension (TVs, Radios, Fridges...) items countries products

10. INFORMATION SYSTEMS AND PROCESSES 10 Taxonomies and data models  Total incomes by country should be equal to total incomes by product –This rule is implicit to the model  Calculate total benefits and benefits by country –We need to add one formula: Benefits = Incomes –Expenses  Add 3 new countries: –We just need to add 3 new countries

11. INFORMATION SYSTEMS AND PROCESSES 11 Taxonomies based on data models  Benefits –Reduce redundancy –Improve consistency –Improve maintainability –Improve flexibility  The team that develops a taxonomy needs: –Business analysts –IT analysts

12. INFORMATION SYSTEMS AND PROCESSES 12 Reporting process The reporting process is defined by: –Communication channel –XBRL Taxonomy –Instance documents –Additional data

13. INFORMATION SYSTEMS AND PROCESSES 13 Reporting process: taxonomy entry points  Every instance document must refer to: –At least, one schema file –Any number of linkbase files  High number of possible combinations !  Taxonomy entry points constrain the number of combinations  Empty schemas that refer to predefined combinations of taxonomy files

14. INFORMATION SYSTEMS AND PROCESSES 14 Reporting process: taxonomy entry points  COREP and FINREP define a multidimensional data model: –A set of primary items –A set of dimensions (and its members) –The set of possible combinations of primary items and dimensions (facts)  COREP templates define subsets of the whole data model  Some COREP templates overlap COREP multidimensional data model

15. INFORMATION SYSTEMS AND PROCESSES 15 Reporting process: taxonomy entry points  Entry points reduce redundancy on instance documents: –XBRL representation of data does not depend on the template –Information does not have to be filed twice  Entry points reduce complexity of the reporting process  Entry points help improving the consistency of data –Entry points join together highly coupled templates

16. INFORMATION SYSTEMS AND PROCESSES 16 Reporting process: constrains on instance documents  Monetary unit  Precision  Number of entities and time periods reported in one single instance document  Bank of Spain: –Monetary unit must be Euro –Precision must be of at least thousands –One entity and one period per instance document

17. INFORMATION SYSTEMS AND PROCESSES 17 Reporting process: additional data  Taxonomies define business data  Reporting process need additional data –Who is the sender of the information? –When the information was extracted?  It is important to differentiate process data from business data  Spanish project will use a taxonomy, common to every entry point, for this data: –Sender of the information –Time period reported –Entity reported –List of templates submitted –List of templates not submitted because don’t apply  We have avoided to include this information as part of the context

18. INFORMATION SYSTEMS AND PROCESSES 18 Reporting process: group and individual information  Holdings of company groups report information: –Individual: as a single company –Consolidated: as a group of companies  Two alternatives: –Including one additional dimension: individual / consolidated –Considering the group as a different entity Single company has code 0456 The group has code 0-0456 ACME Corp ACME Electronics ACME pharmacs ACME books

19. INFORMATION SYSTEMS AND PROCESSES 19 General project considerations  XBRL as the only format available to file data? –XBRL scares people –Several choices: Allow more than one format –Easiest for financial entities –Two formats must be maintained National Bank Financial entity Financial entity Financial entity xml xbrl

20. INFORMATION SYSTEMS AND PROCESSES 20 General project considerations  XBRL as the only format available to file data? –XBRL scares people –Several choices: Allow more than one format Only XBRL –Key: establish a fluent relationship with bank’s software providers National Bank Financial entity Financial entity Financial entity xbrl

21. INFORMATION SYSTEMS AND PROCESSES 21 General project considerations  XBRL as the only format available to file data? –XBRL scares people –Several choices: Allow more than one format Only XBRL XBRL is the only format allowed, but providing a translation tool –Very similar to German solution –Entities to consider providing XBRL directly –Translation tool must be maintained National Bank Financial entity Financial entity Financial entity xbrl txt

22. INFORMATION SYSTEMS AND PROCESSES 22 General project considerations  Error management –Expect information with errors –Design carefully how errors and exceptions are handled Don’t impose constrains that are not needed Notify errors with clear user messages and suggested corrections Budget support resources Use log files to store errors and warnings

23. INFORMATION SYSTEMS AND PROCESSES 23 General project considerations  Providing helper services – Instance validation tool – Instance visualizing tool –Taxonomy dictionary –Taxonomy browser  Or relying on third parties to provide this services

24. INFORMATION SYSTEMS AND PROCESSES 24 General project considerations  Software platform: –Validation –Visualization –Instance creation (e-forms) –ETL  XBRL market tools vs. in-house development  Spanish COREP: –Commercial XBRL engine for validation –Visualization and ETL based on XSLT, but using the API of the XBRL engine

25. INFORMATION SYSTEMS AND PROCESSES 25 General project considerations  Project deployment –Communication plan Appoint meetings with financial entities Appoint meeting with software providers –Real data for testing System implementation Taxonomy implementation Adequacy of business rules Performance –Support Budget support resources

26. INFORMATION SYSTEMS AND PROCESSES 26 Problems

27. INFORMATION SYSTEMS AND PROCESSES 27 Closed and open reporting models  The closed model constrains the data to be filed: –What MUST be filed –What CAN be filed –Any other information cannot be filed –Regulators following a closed reporting model don’t allow extra information to be sent  The open model just establishes a set of guidelines –Entities can extend the information

28. INFORMATION SYSTEMS AND PROCESSES 28 Closed and open reporting models  XBRL does not support some basic constrains required by a closed reporting model: –Data that must be filed An empty instance document is valid  It will be possible to express these constrains with the future formula linkbase: –Possible = adequate ?

29. INFORMATION SYSTEMS AND PROCESSES 29 Calculation linkbase not enough  Calculation linkbase allows definitions of summation items networks  Other basic arithmetic operations are not allowed  With formula linkbase will be possible  Summation across dimension members is not possible  With formula linkbase will be possible –Possible = adequate ? –Calculation linkbases are extensible –Formulas linkbases will be –But individual formulas won’t

30. INFORMATION SYSTEMS AND PROCESSES 30 Calculation linkbase not enough  Summation checks are run when an instance document contains at least one value for each part of the equation: –A = B + C + D –A=10 –B=5 –C=2 –D=3 OK –A=10 –B=5 –C=0 –D=0 Wrong! –A=10 –B=5 Wrong!

31. INFORMATION SYSTEMS AND PROCESSES 31 Modularization  Modularization should make easier reusing available taxonomies  Instead of importing the whole taxonomy, you just import a part  It is the author of the extended taxonomy the one that decides the criteria to split the taxonomy  COREP modular design: –One taxonomy per dimension (14) –One primary items taxonomy per business template (18) –Some common primary items taxonomies (3) –One template taxonomy per business template (18)

32. INFORMATION SYSTEMS AND PROCESSES 32 COREP dependencies graph of t-mi template

33. INFORMATION SYSTEMS AND PROCESSES 33 COREP dependencies graph of t-mi template Spanish extension

34. INFORMATION SYSTEMS AND PROCESSES 34 Modularization Is modularization something users should be really care? Should this “modularization” issue be solved by XBRL technology instead of taxonomy designers? Have a look at the presentation “Large Taxonomies, Small Footprint” by the Fraunhofer Institute at the Madrid XBRL International Congress

35. INFORMATION SYSTEMS AND PROCESSES 35 Challenges

36. INFORMATION SYSTEMS AND PROCESSES 36 Evolution of the SIIF project Financial entities Bank of Spain SIIF (XBRL) FIN (Mainframe) Financial statements (flat files) Complex validations <2005 2005 Basic validations Basic validations Other statements (flat files) Public statements (XBRL) Complex validations 2007 Complex validations Complex validations Other statements (flat files) PE, Basel II (XBRL) Complex validations 200? Complex validations Complex validations Financial statements (XBRL) Complex validations 20?? Complex validations Complex validations Financial statements (XBRL) Other applications

37. INFORMATION SYSTEMS AND PROCESSES 37 Evolution of the SIIF project  Improve the quality of data –Validation at the origin –Accurate definition of data  Flexibility (taxonomy driven model)  Better data model: better analytical capabilities

38. INFORMATION SYSTEMS AND PROCESSES 38 Inter-instance validation  Validations between different time periods  Validations between different statements  Validations with data from other systems  Current calculation and formula linkbases work on instance document level  Inter-instance validation is not considered

39. INFORMATION SYSTEMS AND PROCESSES 39 Inter-instance validation  One possible solution: –Produce auxiliary instance documents that put together information from different time periods, statements,... –Run validation on these instance documents –These instance documents would be defined by “internal taxonomies”  Performance?  Maintainability? Financial entities XBRL Instance builder Single instance validation XBRL Public Taxonomy Private Taxonomy Inter-instance validation XBRL

40. INFORMATION SYSTEMS AND PROCESSES 40 Inter-instance validation Validation engine with storage integrated solutions Taxonomy designers defines rules XBRL engine knows where to get proper instance documents State of the art of technology?

41. INFORMATION SYSTEMS AND PROCESSES 41 XBRL Storage and operation Which is the best solution to store XBRL data? Relational databases? XML databases? Mixed solutions?

42. INFORMATION SYSTEMS AND PROCESSES 42 Versioning  How to minimize the impact of new versions on our systems?  How to deal with new versions of taxonomies imported by our taxonomies?  How to compare data defined by different versions of the same taxonomy?

43. INFORMATION SYSTEMS AND PROCESSES 43 Link role registry XBRL taxonomies define: Business concepts Relations between concepts There is a set of standard relations: Calculation linkbase Reference linkbase Presentation linkbase... But XBRL allows user-defined arc-roles: user-defined relations XBRL International’s Link Role Registry to include user-defined arc-roles Efficient way to extend XBRL without touching core specification Should we promote to the link role registry arc-roles that cover our common needs?

44. Information Systems and Processes Thanks for your attention ! Ángeles Lozano, Víctor Morilla

45. INFORMATION SYSTEMS AND PROCESSES 45 Design stage: business rules  Current XBRL specification has limited validation capabilities  XBRL Formula will not be available in short time  Possible solutions: –Define our own implementation of formulas XBRL allows user defined arc roles and attributes Flexible, but expensive solution –Use a propietary formula implementation State of the art of formula and dimensions ? –Develop specific code to solve your current needs

46. INFORMATION SYSTEMS AND PROCESSES 46 Design stage: taxonomy driven model XBRL taxonomies define: –Business concepts –Relations between business concepts –Relations between business concepts and other resources  XBRL is a comprehensive language to express metadata  Changes in the taxonomy should not impact on the system  Taxonomies as an input: –More flexible –Reduce errors –Only structural changes need development Let the taxonomy be your guide !

47. INFORMATION SYSTEMS AND PROCESSES 47 Design stage: cache issues  High number of documents in short time  XBRL validation can be a heavy process  But, loading XBRL taxonomies is the more expensive one  Cache mechanisms  Entry points simplify the problem Number of documents received Due data Submission period

48. INFORMATION SYSTEMS AND PROCESSES 48 Reporting process  COREP defines a closed reporting model: –COREP templates reject facts not expected –But XBRL (using standard arc roles) cannot check data that MUST be sent.

49. INFORMATION SYSTEMS AND PROCESSES 49 General project considerations  XBRL as the only format available to file data? –XBRL scares people –Several choices: Allow more than one format –Easiest for financial entities –Two formats must be maintained National Bank Financial entity Financial entity Financial entity xml xbrl

50. INFORMATION SYSTEMS AND PROCESSES 50 General project considerations  XBRL as the only format available to file data? –XBRL scares people –Several choices: Allow more than one format Only XBRL –Key: establish a fluent relationship with bank’s software providers National Bank Financial entity Financial entity Financial entity xbrl

51. INFORMATION SYSTEMS AND PROCESSES 51 General project considerations  XBRL as the only format available to file data? –XBRL scares people –Several choices: Allow more than one format Only XBRL XBRL is the only format allowed, but providing a translation tool –Very similar to German solution –Entities to consider providing XBRL directly –Translation tool must be maintained National Bank Financial entity Financial entity Financial entity xbrl txt

52. INFORMATION SYSTEMS AND PROCESSES 52 Design stage: visualization service example Front-end Financial entity XBRL HTML XBRL HTML XBRL Services XBRL engine API Taxonomy

53. INFORMATION SYSTEMS AND PROCESSES 53 COMPILE TIME RUN TIME Design stage: visualization service example Front-end Financial entity XBRL HTML XBRL engine API XSLT Processor Taxonmy XSLT

54. INFORMATION SYSTEMS AND PROCESSES 54 Financial Entity Design stage: visualization service example Front-end XSLT Javascript XSLT Processor XBRL XSLT HTML

55. INFORMATION SYSTEMS AND PROCESSES 55 Reporting process: extending the European taxonomy