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Xbrl for dummies slide deck chapter 1 23 10 2009 long version

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XBRL for Dummies Book by Charlie Hoffman and Liv Apneseth Watson

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Xbrl for dummies slide deck chapter 1 23 10 2009 long version

  1. 1. XBRL is the electroniclanguage for business information exchange
  2. 2. Chapter 1* Discovering how XBRL is changing business reporting* Revealing the truth about XBRL* Figuring out how to make XBRL work for you* Discovering good reasons for considering XBRL* Bridging the information gap between business systems
  3. 3. Answering the Question, “Why XBRL?” Your business operates on information, so you need to know the fundamentals of XBRL.
  4. 4. Answering the Question, “Why XBRL?” XBRL is, fundamentally, a language that helps businesses effectively and efficiently bridge the current gap between business systems by crossing artificial boundaries.
  5. 5. Common Relationships That Most Businesses Have Today With XBRL, more of these SUBSIDIARIES information exchanges can be efficiently automated by using one C S U globally standard U P S approach. L T PARENT O I COMPANY M E E R R S S artificial boundaries. REGULLATORS
  6. 6. Looking at XBRL in Different Ways
  7. 7. 1: Looking at XBRL in Different Ways• A freely available, market-driven, open, global standard for exchanging business information
  8. 8. 2: Looking at XBRL in Different Ways • An XML language – * XML (Extensible Markup Language) is a set of rules for encoding documents electronically. It is defined in the XML 1.0 Specification produced by the W3C and several other related specifications; all are fee-free open standards • An XBRL language – XBRL (Extensible Business reporting Language) is a means of modeling the meaning of business information in a form comprehendible by computer applications built on XML rules produced by the W3C and several other related specifications and is a free-free open standard specific for business information exchange*
  9. 9. 3: Looking at XBRL in Different Ways REMEMBER!!• A global consortium of more XBRL stands for eXtensible than 600 members Business Reporting Language and it is an open standard, free of license fees. Source:
  10. 10. 4: Looking at XBRL in Different Ways• The worldwide development of XBRL is governed by XBRL International, a not-for profit collaborative consortium comprised of over 600 organizations (including companies, institutional investors and government agencies) from over 27 countries.• The consortium is organized into national jurisdictions and operates via electronic collaboration tools, conferences and face-to-face meetings.• Members of the consortium are committed to collaborate in the development of the XBRL information standard, to promote and support its adoption, and to incorporate the consortium’s work into their products and services Remember! April 1998 XBRL is conceived by Charles Hoffman
  11. 11. 5: Looking at XBRL in Different Ways• XBRL is a means of modeling the meaning of business information in a form comprehendible by computer applications A formal description of concepts, terms, and relationships within a given knowledge domain.
  12. 12. 6: Looking at XBRL in Different Ways• A mandate from regulators from around the world – Capital Markets REMEMBER!! XBRL is an – Government agreement on business – Central Banks information concepts, – Companies relationships, and business rules
  13. 13. 7: Looking at XBRL in Different Ways• A revolution for small investors, the most important shareholder initiative in a decade, and a leveler of the investment playing field REMEMBER!! All users of business information wants better access; more accurate and reliable information; and this will foster significant new capabilities to small investors.
  14. 14. 8: Looking at XBRL in Different Ways• A global agreement on business information concepts, relationships, and business rules Taxonomies = Agreement
  15. 15. 9: Looking at XBRL in Different Ways• A better approach to exchanging business information• When assessing adoption of XBRL and other supply chain standards, management teams should consider the typical economic consequences of standardization: – Lower costs – Improved accuracy – Higher volumes of information are available for analysis – Accelerated frequencies of availability – Improved resource allocation – More efficient processes
  16. 16. 10: Looking at XBRL in Different Ways• A new way for companies to distribute their financial and other relevant business XBRL is really more about describing business information information and enhancing that information’s exchange across internal or external business systems
  17. 17. <Remember>• XBRL is, fundamentally, an electronic language that helps businesses effectively and efficiently bridge the current gap between business systems by crossing artificial boundaries.
  18. 18. Dispelling Common Misconceptions
  19. 19. 1. Dispelling Common Misconceptions• XBRL is a standard chart of accounts – The first letter in the acronym “X”BRL stands for the word “extensible.” – XBRL is a language for expressing concepts • Creators of XBRL taxonomies decide which concepts they want in the XBRL taxonomy. REMEMBER!! A standard chart of accounts is generally fixed, not allowing for changes of any kind.
  20. 20. 2. Dispelling Common Misconceptions• XBRL requires companies to disclose additional financial information. REMEMBER!! Nope, incorrect. What XBRL does is simply take what is being reported now and report it in a different format, in a format that is readable by automated computer processes.
  21. 21. 3. Dispelling Common Misconceptions• XBRL is just about financial or regulatory reporting – For example, XBRL Global Ledger is a canonical, or standardized, information exchange format for cross business system information exchange both internally and to external business partners. XBRL taxonomies also exist for exchanging nonfinancial information. Oops . . . that’s not right.!!
  22. 22. 4. Dispelling Common Misconceptions• To learn XBRL, business users have to learn about angle brackets, XPath, XLink, and a lot of other complex scary technical stuff. Whoa! Hold on there. Just because business users had to learn to use e-mail and a browser to be more effective doesn’t mean they had to learn about all the technology standards underlying the Internet. Be patient — business- user-friendly software is on the way.
  23. 23. 5. Dispelling Common Misconceptions • Users of XBRL don’t need to learn anything new. Think of when the world moved from paper spreadsheets to electronic spreadsheets. Did business users have to learn new things? Certainly. Did it kill them? Certainly not.
  24. 24. 6. Dispelling Common Misconceptions• XML is easier than XBRL, so I can XBRL is XML. You have the just use XML. choice of using the freely – XML is a syntax (a set of technical available standard that is rules governing the appropriate XBRL, or you can spend arrangement of symbols and your resources to create words): XBRL provides additional your “own” version of XBRL, which does business semantics (or business everything that XBRL meaning) not provided by XML already does in terms of alone. additional functionality. – With the XBRL standard, these semantics can be communicated to and used by others, effectively transferring business meaning.
  25. 25. 7. Dispelling Common Misconceptions1.You already have a global data warehouse, so you don’t need XBRL. But you still need …. a. Getting quality information in to the data warehouse b. Getting relevant and complete data out and into the hands of users REMEMBER!! Just like other Web standards, XBRL transforms the current producer orientation into an information supply chain in which the providers and consumers of business information collaborate.
  26. 26. Compelling Reasons to Consider XBRL
  27. 27. Compelling Reasons to Consider XBRL– Making business information exchange better, faster, and cheaper– Making financial reporting more The following transparent and discoverable slides will highlight what– Explicitly articulating business meaning XBRL can do for and thus enabling the exchange of that you. meaning between humans or between Better yet, the book business systems fills in the details.– Improving data integrity– Integrating business systems– Saving government agencies money and making them more efficient
  28. 28. Making life easier• The semantic meaning will then be useful to others, not just you. Source of graphic:
  29. 29. Saving time and money• Improving integrity of information – Collaborating with business partners• Making business systems interoperable• Looking for good investments• Analyzing information• Making your system more flexible REMEMBER!! XBRL makes your systems more flexible because XBRL was built to allow for changes to your information.
  30. 30. TIP• Build an internal semantic Web: Just as there is the Internet and intranets, there will be a Semantic Web and internal-use (that is, private, limited access) semantic Webs. A semantic Web is an approach to creating a web of information that is more like a computer-readable database (but still also usable by humans) than a bunch of human-readable pages of information, which a computer doesn’t understand. Build an internal semantic Web, using XBRL because it’s one of the more mature semantic Web technologies, and find out what the technologies can provide to your organization. Building an internal semantic Web can potentially give you an edge over your competition.• Work with business partners to create an extranet-type semantic Web: This suggestions is the same idea as the building an internal semantic Web, but with business partners instead of within your organization.
  31. 31. Helping you complete projects faster
  32. 32. Helping you complete projects faster• Leveraging a global standard• Empowering your workers• Standardizing information exchange between systems• Building a system, not a point solution REMEMBER!! Rather than building one point solution after another (a solution that solves a specific problem but not related ones), build a system that allows for the easy of creation of a category of business information. Using a standardized information architecture can facilitate a wide range of process enhancements.
  33. 33. Getting a Grip on XBRL Fundamentals XBRL instance documents, is built in the form of an electronic file and contains business information. Information is expressed in thousands of dollars. Two periods Let’s look under the hoodTwo line items
  34. 34. <Remember>• You may hear this type of XBRL document called an XBRL instance, instance, instance document, maybe XBRL instance document, or even XBRL report. What is important is that you remember that an XBRL Instance document is built in the form of an electronic file and contains business information.
  35. 35. The Four Main Parts of an XBRL Instance Document 1. Values a. The values are the text (individual values or entire narratives) and numbers in the report 2. Context a. The context explains important information about the values. You need to understand what entity’s value relates to, what period the values relate to, and if the values are actual, budgeted, and so on 3. Concepts a. Technical representations of business terms. For example, “Net Income (Loss)” and “Sales, Net” 4. Dictionary or Taxonomy a. Concepts are expressed within a dictionary b. The important thing here is that the dictionary is the central location where concepts are pointed to information that defines that concept. The dictionary gives a precise definition about the meaning of each term (semantics), including references and examples.
  36. 36. Tag — You’re it: Tags add structure I Tags look like this within the XBRL instance: End TagBeginning Tag Within the XBRL instance, the business information, or the value, is expressed in the form of what is often referred to as tags.
  37. 37. Tag — You’re it: Tags add structure IITags look like this within the XBRL instance: Concepts used within the XBRL instance are specified within the XBRL Taxonomy in the form of other tags, or elements
  38. 38. Tag — You’re it: Tags add structure III• Dictionaries can be flexible• Dictionaries can enforce rules• Users can change report organization In XBRL, the creator of a report, such as a financial statement, tags it. These tags add structure, which helps computers understand and do things with the information within the report.
  39. 39. XBRL processors “get” XBRL• You can create XBRL instances and XBRL taxonomies by hand or even by using rather simple macros. – You can use an XML parser (application designed to work with XML documents) to read and create XBRL information. After all, XBRL is just XML.• Sometimes you may want to do all this creating by hand, but generally you won’t. – Enter a special piece of software called an XBRL processor. This handy tool understands the logical and the physical models of XBRL and how all the pieces fit together, and they can help you make sure that everything is correct, including the rules that make sure that the values in the XBRL instance (report) follow the rules specified in the XBRL taxonomy (dictionary). Be patient — business-user- friendly software is on the way.
  40. 40. <Tip>• Computers can read (meaning import or export information) XBRL instances and XBRL And guess what? You taxonomies easily because all that they need can find many open to do so is contained in those files. If a human needs to read them, no problem: Apply a style source XBRL sheet (information that helps a computer processors, free XBRL understand how to present the information processors, and for humans to read), use an XBRL viewer-type commercial XBRL application, or simply import the information into your favorite brand of spreadsheet. You’re processors. (Chapter not locked into any specific application or even 14of the book points any specific style sheet. Have it your way! The you to these and other same computer-readable dataset makes the handy software.) information flexible. And any viewer makes the entire dictionary available to you so that you can understand all the concepts, relations, rules, and so on from which the information in the report follows.
  41. 41. <Tip>• Many organizations can, and do, simply use Microsoft Excel spreadsheets to create their reports, cobbling together information from various business systems into some sort of business report.• Others use specialized report writer software.• Currently, these last-mile processes of financial reporting or other business reporting tend to be highly manual in most organizations.• These processes will eventually leverage XBRL to streamline business report creation. XBRL will also make reusing reported information significantly easier.
  42. 42. Benefitting from Using XBRL
  43. 43. Benefitting from Using XBRL I• Decreased total cost of ownership: – The FDIC reduced the total cost of ownership of their system from $65 million to $39 million, a savings of $26 million.• Greater timeliness of information: – The FDIC reduced the time it took to make information available from 45 days to 2 days.• Higher quality of information – Contributing to the reduction of mathematical errors from 18,000 to 0 in the very first filing period XBRL was used – Reduced the number of analysts needed to detect and correct mathematical errors by 33 percent because the analysts did not have to call banks and ask them to correct this type of error in their submissions
  44. 44. Benefitting from Using XBRL II• Greater reusability of information – The FDIC makes the information it collects for banks available to the other five members of the FFIEC and to the public. • Before XBRL the data was converted to different formats for the different systems and requirements• Greater flexibility of information collection – Communicate all changes in one format • Changing the system became a breeze. Software vendors could automate the process of reading the changes and change their software applications to support filing financial institutions.
  45. 45. Discovering Other Ways to Use XBRL• Wacoal• CEBS – (Committee of European Banking Supervisors)• The governments of the Netherlands, Australia, Singapore, and New Zealand think big! – SBR (Standard Business Reporting) – Projections by these governments predict that SBR will reduce company compliance costs by 25 percent annually — or more than $1 billion in combined savings per year!
  46. 46. <Remember>• In today’s world, businesses commonly deal with more than one government agency and many times with government agencies in more than one country. If one regulator mandates XBRL, thousands, hundreds of thousands, or, in some cases, even millions of businesses will be required to use XBRL.
  47. 47. Making XBRL Work for You I• XML is a syntax; XBRL expresses semantics. – XBRL goes further than many XML languages in providing the ability to express semantics or meaning. Understanding this difference is critical to understanding XBRL.• XBRL is about creating information structured for meaning. – Unstructured versus structured information Remember!!!! No standard is perfect.
  48. 48. Making XBRL Work for You II• XBRL is a general-purpose specification – No one system making use of XBRL will use 100 percent of its features.• XBRL has no standard logical model. – As a result, you need to follow the physical model of XBRL, which leads to complexity, or create your own logical model Remember!!!! If XBRL is implemented incorrectly, it can lead to interoperability issues.
  49. 49. Making XBRL Work for You III• Specific proprietary solutions are commonly better than standards; standards provide leverage• XBRL taxonomies are data models – A well-designed database schema – XBRL taxonomies and not-so-good XBRL taxonomies. Remember!!!! proprietary solutions can be very expensive with the loss on interoperability too….
  50. 50. <Remember>• XBRL doesn’t itself define an XBRL taxonomy, which serves as the dictionary everyone must use; rather, different areas of business (called domains) usually create them. If a domain has created a dictionary that you like or that you’re mandated to use, you can use that dictionary. You may even use multiple dictionaries. Or, if you don’t find a dictionary that fits your needs, you can create your own dictionary. Remember!!!! You can even modify the dictionaries of others, if the system you’re using allows for these types of modifications.
  51. 51. About the Publisher and the Authors Charles Hoffman Liv Apneseth WatsonEmail: charles.hoffman@UBMATRIX.COM E-mail:
  52. 52. <Remember>• About the PublishesIn 1807, Charles Wiley, then 25 years old, For over 200 years, Wiley has grownopened a small printing shop at 6 Reade and evolved, taking pride in its abilityStreet in lower Manhattan, New York City. to meet the changing needs of itsDuring the next four years, he worked with customers. The companys currentother printers, primarily Isaac Riley, printing migration to the digital world is theand publishing law books. In 1812, "C. Wiley, latest example of this kind ofPrinter" appeared for the first time on the transformation. Given Wileys solidtitle pages of several legal works. financial position, experienced leadership team, talented workforce,Two years later, Charles Wiley formed a and proven strategies for generatingprinting, publishing, and bookselling results, the years ahead promise topartnership with Cornelius Van Winkle, a bring exciting opportunities fornoted printer, located at 3 Wall Street. At this continued growth and Wiley also hosted the "Den," a meeting Wiley is a far cry from Charles Wileysplace for writers such as James Fenimore small printing shop, but the companysCooper and William Cullen Bryant that commitment to quality and to servingforeshadowed the Greenwich Village coffee the needs of its customers has nothouses of the 1950s changed since 1807.
  53. 53. <Remember>• About Charles Hoffman Charles Hoffman is credited as being the "father of XBRL." Charlie, a member of the American Institute of Certified Public Accountants (AICPA), brought the idea of what was to become XBRL to the AICPA. Charlie is author of the books "XBRL Essentials", a non-technical guide to XBRL and "Financial Reporting Using XBRL: IFRS and US GAAP Edition", a comprehensive guide to using XBRL in financial reporting. He was co-editor of the first XBRL taxonomy. He played a major role in creating the taxonomy for financial reporting under International Financial Reporting Standards (IFRS-GP). He was a member of both the XBRL Specification and Domain Working Groups as XBRL 2.1 was being created. Charlie is co-author of the "Financial Reporting Taxonomies Architecture" (FRTA) 1.0 specification, the "Financial Reporting Instance Standards" and a significant contributor to the XBRL 2.1 specification. Charlie is also co-editor of the US GAAP Taxonomy Architecture and part of the team expressing US GAAP within XBRL for financial reporting by public companies which is being funded by the US Security and Exchange Commission. Charlie received the AICPA Special Recognition Award in 2006 for his efforts in helping to create XBRL.
  54. 54. Liv Watson, Director International Business Development - WebFilings Liv A. Watson is one of the founding members and the current elected vice chair of XBRL International. She is a member of the Board of Directors at IRIS India Business Services Private Limited. Liv’s focus in helping capital markets, central banks and governments in implementing transparent reporting platforms. Prior to joining IRIS, Liv was the Vice President of Global Strategy at EDGAR Online Inc. (Nasdaq: EDGR) where she was responsible for developing EDGAR Online’s international business development strategy. Liv authored one of IMAs most successful CPE courses "Accounting System Technology for the 21st Century". She has also authored several published articles on future trends of the profession for international publications and journals including Harvard Business Review, Strategic Finance, the co-author of the “XBRL for Dummies” book and writes a monthly column of financial and business reporting trends for CPA2Biz.