xbrl – the new language of business laurie ball, cpa swenson advisors, llp (murrieta) audit...
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XBRL – The New Language of Business
Laurie Ball, CPASwenson Advisors, LLP (Murrieta)
Audit Director
Accounting DayMay 12, 2008
XBRL: Officially eXtensible Business Reporting Language Open specification for software that uses
XML data tags to describe financial information
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
Free! (no licenses or royalties)
XBRL: In English New “language of choice” for electronic
communication of business and financial data throughout the world
Allows for creation of interactive, intelligent data
Digitizes business reports in accordance with the rules of accounting in each country or with other reporting regimes such as banking regulation or performance benchmarking
In Other Words… A customizable set of rules for attaching
identifying codes – or "tags“– to items of financial information
Often referred to as bar-coding for financial information
Provides links to other valuable information
Biggest Supporters XBRL International SEC Chairman Christopher Cox!!
Chairman Cox recently credited XBRL for:
“…making business reporting easy, transportable and transparent.”
17th XBRL International Conference Eindhoven, Netherlands
May 7, 2008
History of XBRL “New” technology turning 10 years old
later this year! Conceived by a CPA in Tacoma, WA Idea for XBRL originally taken to AICPA
High Tech Task Force AICPA funded prototype project in 1998 XBRL Steering Committee formed in 1999
AIPCA, Big 4, Great Plains and Microsoft among first members
History of XBRL XBRL International held first conference in
London in February 2001 10 countries attended
Jurisdictions of XBRL International formed in October of 2001 Australia Canada Germany IASB Japan Netherlands UK
XBRL International Today, a nonprofit consortium of roughly
550 companies and agencies worldwide working together to promote and support XBRL
Comprised of over 20 local jurisdictions (including XBRL United States)
Attendees from 37 different countries at annual conference last week
XBRL US A nonprofit consortium of roughly
500 organizations including: Accounting firms Software providers Newswires Financial printers and filing agents Information services
XBRL US Members Member organizations a “who’s who” list:
ADP AICPA Big 4 firms CCH Tax and Accounting Dun and Bradstreet Financial Accounting Foundation FDIC IRS Microsoft Morgan Stanley and the list goes on!
XBRL Vocabulary Based on XML
xEtensible Markup Language Resembles HTML as same group developed
both) Tags Taxonomies Instance Files
Tags Must have unique name for all tags such as:
Current assets Inventory Work-in-process inventory
Attributes can be added: Type of value (number vs. date) Normally debit or credit
Arithmetic relationships can be established: Equity equals assets minus liabilities Total assets equals total liabilities and equity
Tags Hierarchical relationships can be established:
Work-in-process is a type of inventory Inventory is a type of current asset A current asset is a type of asset
Links to relevant accounting literature can be made Translatable into other languages worldwide Syntax includes opening and closing tags
A Simple Example
An element, such as a person's first, middle and last name, is “sandwiched” between and opening tag and a closing element tag as follows:
<firstName>John</firstName> <middleName>Henry</middleName> <lastName>Doe</lastName>
Taxonomy File
A long list of tags: Includes various accounting concepts, Information about the attributes of various elements in
the list Databases with information about the external
references associated with the various elements The relationships between the various elements
Concepts and relationships only; does not include any values
More static (i.e., balance sheet)
Instance File
Stores the tagged information for a set of financial statements
Collection of facts only (captions, amounts, dates)
Fluid; changes year to year Filed as an exhibit along with the
Taxonomy File
Uses of XBRL Aids in preparing, sharing and analyzing
financial statements Can be “extended” to address the specific
reporting needs of companies, industry groups and regulators
Works for non-financial information (performance measures, loan applications, regulatory reporting, statistics)
Primary Benefits Gives investors quick access to
information in a form they can easily use Lets companies prepare their financial
data more quickly, more accurately and for less cost
Makes the world's capital markets truly global and interconnected
China Was First China first country in the world to mandate
XBRL reporting Started in 2003 with 50 companies on
voluntary basis Now required for all listed companies on
China Securities Regulatory Commission and the Shanghai Stock Exchange
Program now includes more than 800 companies
Others Followed Suit
Countries who have also made XBRL reporting mandatory:
China Singapore South Korea Israel Japan
Others Are Preparing
Some of the world's largest economies have made, or announced plans to make, XBRL reporting mandatory:
Australia India United Kingdom Committee of European Securities
Regulators United States
Current US Users
Over four dozen public reporting companies now voluntarily participate in the SEC’s pilot program including: Alcoa Inc. Xerox Corp Healthcare Realty Trust, Inc. ICU Medical, Inc. Coca Cola Enterprises, Inc.
Not Yet…but Soon!
In May 2008 remarks, Chairman Cox said:“As most of you know, the SEC will be discussing a rule later this month that would set a firm schedule for using interactive data in public company filings in the United States.”
Chairman Cox went on to say:“With a complete set of data tags for U.S. generally accepted accounting principles now in hand, we in the United States are ready to "go live" with interactive data. The preparer's guide is there, the software and vendor communities are there, and even the viewers and investor tools are there. Everything is in place.”
Tagging Software
Reads the line item description and “suggests” the tag or tags that are most likely to be appropriate
Usually makes the right guess but can “correct” as needed: Search list for a different tag Go directly to the corresponding accounting
literature descriptions if uncertain
Accounting Software
Tags “automatic” -- XBRL data tagging is an integral part of the system
Less costly and easier to prepare financial statements
Less risk of human error
Resources
Major financial printers and filing agents XBRL International websites:
www.xbrl.org www.xbrl.us
SEC website: Spotlight on Tagged Data and XBRL Initiatives for EDGAR Filings (http://sec.gov/spotlight/xrbl.shtml)
Software vendors
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