Download - CPA’s and the Company Business Information Supply Chain Mike Willis Founding Chairman, XBRL International Partner, PricewaterhouseCoopers

CPA’s and the Company Business Information Supply

ChainMike Willis

Founding Chairman, XBRL International

Partner, PricewaterhouseCoopers

Business Trends Detroit Automobile Company, 1899 Ford, 1903 The impact:

1908 12 to 14 hours to assemble $1000 price per car

1914 93 minutes to assemble $360 price per car

1929 1 in 5 Americans owned a car

http://www.hfmgv.org/exhibits/showroom/1908/tbig.jpg

Business Trends (cont.) 1974

Average Grocery Store had 9000 SKU’s Chewing gum sale in Ohio changed that forever

Today – UPC implications $17B annual savings in grocery chain savings alone Average Store over 30,000 SKU’s Greater controls over assortment, inventory levels and

pricing Scanning /self check out are routine

We showed that it could be done on a massive scale, that cooperation without antitrust implications was possible for the common good, and that business didn’t need the government to shove it in the right direction.

— Alan Haberman, Chairman, Symbol Standardization Subcommittee

Open Standards – Discussion Topics Company Applications

Operational Use Risk & Credit Assessment Internal Reporting External Reporting

The Corporate Reporting Supply Chain

ExternalFinancialReporting

BusinessOperations

InternalFinancialReporting

Investmentand Lending

AnalysisProcessesProcesses

ParticipantsParticipants

AuditorsTradingPartners

Investors

FinancialPublishersand Data

Aggregators

Regulators

Software Vendors

ManagementAccountants

Companies

What

ACORDXBRL

Ledger XBRL

Financial Statements



BusinessOperations






Investors


Aggregators

Regulators

Software Vendors


Companies

What

ACORDXBRL

Ledger XBRL

Financial StatementsYou are here

Transaction Data

Multiple Departmental Excel Spreadsheets

Senior Management

Consolidated spreadsheets for management

Email & File Servers

Management Reporting Current Architecture

2000 elements = 6500 spreadsheets (this is not a typo)

SQL

SQL

Transaction Data

Multiple Departmental Excel Spreadsheets

Senior Management

Consolidated spreadsheets for management

Email & File Servers

Management Reporting Current Architecture

SQL

SQL

Subsidiary ERP’s

Senior Management

Internal Reporting

Supplemental information aggregation

Transaction and or

subsidiary Data

Senior Management

Viewing and aggregation for department & management

Web Services Architecture

XMLWeb

ServicesSchema

Visibility of Information The first obstacle is……….?

Language

XBRL can help to increase the consumers access to information in their own language regardless of what language the report is published in.

Let’s find the amount for ‘financial income’

Once you have virtual access to the underlying detail data; then you can begin to access it.

Management can access

Board members can access it

Others???

How they access it is also part of their ability to analyze it?

Visualization – A better way of analyzing information today

Most information today is in columns of numbers


• Identified business drivers that contribute to a company-defined outcome (EVA, ROCE etc) can be mapped out; Performance in each of those drivers can be colour coded

• Management are provided with a clear view of what caused a given outcome and the scale of their impact.

• Includes organisation charts that reflect financial performance;

• Favourable performance shown in blue (and adverse performance shown in red);

• Enables an immediate top-down view of business unit performance throughout the global company.

Business templates: to portray financial/non-financial information


• Monthly financial data can be compared against either budget and/or against previous year to get idea of under/over performance;

• The data can then be smoothed into a Moving Annual Average to clarify the underlying trend of the variable

• The standard deviation of any financial variable may be calculated for every business unit in group;

• Business units with a high standard deviation for a given financial variable (i.e. > 2) can be immediately identified and ranked in order;

• The analysis provides an immediate way of identifying unusual performance amongst a large group of business units.

Statistical analyses: to identify trends and outliers


• Possible end-of-year sales, profit .etc outcomes can be calculated on the basis of a number of forecast scenarios;

• The average of these scenarios can then calculated and assessed against management forecasts;

• Enables an immediate identification of over optimistic forecasts and the possibility of profits warnings.

• Variables can be plotted against one another to determine their respective influence on a given outcome;

• In the above example, gross profit margin is shown against sales for FY2002 and actual outcomes are shown against those that were budgeted for.

Graphical structures: to reveal “hidden” facts



BusinessOperations






Investors


Aggregators

Regulators

Software Vendors


Companies

XBRLLedger

XBRLFinancial StatementsYou are hereACORD

How does XBRL leverage XML?

XBRL adds to XML: Multi dimensional financial

data representations

Financial reporting vocabularies (taxonomies)

Aliases and other definition relationships

Mathematical relationships between concepts

Flexibility about how to present items to users

Structure for authoritative policies and guidance

Reporting apps need these even when using XML

CalculationsCash = Currency + Deposits

CalculationsCash = Currency + Deposits

PresentationCash & Cash Equivalents

PresentationCash & Cash Equivalents

FormulasCash ≥ 0

FormulasCash ≥ 0

ReferencesGAAP I.2.(a)

CoA 1100

ReferencesGAAP I.2.(a)

CoA 1100

DefinitionsAKA Liquid Assets Definitions

AKA Liquid Assets

LabelUS $

FY2003Budgeted

LabelUS $

FY2003Budgeted

XBRLItem

“200”

XBRLItem

“200”

Solution developmentStep 1.

Company Regulator

Problem = Exchange ofdata between regulated

entity and regulator

Regulator solution = Use XML Schema to

define terms for exchange

XMLSchema

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

Solution development.Regulator Perspective

Company

Regulator

XMLSchema

CompanyCompany

CompanyCompany

CompanyCompany

Company

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

CompanyCompany

Proprietary solution for RegulatorLooks good to the regulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

Regulator

RegulatorXML

Schemas

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

Regulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

Regulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

RegulatorRegulator

Regulator

Solution development.Company Perspective

Company

Proprietary solutions looks different to the companies

and is a costly and complexmodel

Regulator

Solution developmentStep 2.

Company RegulatorXBRL

Internal Reporting Instructions

3rd PartyInterpretative

Guidance

ReportingSources

RegulationsInterpretative

Guidance

Instructions

Stds (FASB,NAIC)

AuditGuidance

Validation

What you can do? ……..with a new tool.Internal Reporting Enhance Reporting Processes (ADT) Enhanced Reporting (ValueReporting) Benchmarking (ADT) Taxonomy development Connectivity to internal reporting policies Optimized Reporting Templates Intra-organizational reporting (ADT)

What you can do? ……..with a new tool.Internal Reporting Risk Management (ADT) Visualization Modeling (ADT) Compliance Reporting (ADT) Compliance Assessments (ADT) Compliance Monitoring (ADT) Compliance Monitoring (ADT) Continuous Monitoring Continuous Auditing

CPA’s and the Company Business Information Supply

ChainMike Willis

Founding Chairman, XBRL International

Partner, PricewaterhouseCoopers

Lower Costs

“…………[financial services] companies can reduce their publishing expenses 46%, by adapting an XML centric means for document development, assembly and distribution.”

Zap Think, March 2002 Financial Services XML Report



BusinessOperations






Investors


Aggregators

Regulators

Software Vendors


Companies

XBRLLedger

XBRLFinancial StatementsYou are hereACORD

Benefit Considerations

• XBRL benefits for consumers – Enhanced analytical capabilities– More timely, accurate, data for decisions– Enhanced functionality– Ease of use– Facilitates language translations

• XBRL benefits for producers– Tell your own story (precise & clear)– Accelerate adoption of reporting models– Enhanced functionality– Ease of use– Better control environment– Enhanced analytical capabilities– More timely, accurate, data for decisions

Benefit Considerations

• XBRL benefits specifically for regulators– Enhanced functionality of information– More timely, accurate, information for decisions– Enhanced analytical capabilities– Promotes more effective processes– Accelerates adoption of reporting changes– Includes regulatory input and perspectives– Lowers cost of regulation by spreading

development among collaborators

– Enhanced effectiveness of supply chain

XBRL – Ready for Prime Time?

“Some critics have suggested

that XBRL is not ready for

primetime. In fact, it is.”

Hon. Richard H. BakerChairman, Capital Markets Subcommittee

Download - CPA’s and the Company Business Information Supply Chain Mike Willis Founding Chairman, XBRL International Partner, PricewaterhouseCoopers

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