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Improving the quality and timeliness of internal reports Walter Hamscher ([email protected]) Chair, XBRL International Steering Committee Consultant to PricewaterhouseCoopers
Improving the quality and timeliness of internal reports
Walter Hamscher ([email protected])
Chair, XBRL International Steering Committee
Consultant to PricewaterhouseCoopers
The business reporting supply-chain
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investment,Lending, andRegulation
Processes
Participants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies
You are hereYou are here
Improving the quality and timeliness of internal reporting using XBRL The Goal The Obstacles What XBRL Offers Why XBRL Now Next Steps
Goal 1: Consistent, uniform data produced efficiently
Supp InfoFormsForms
FormData
Submits
Receives
Division Level
Extract
MergeData
Group LevelDepartment LevelParticipants
Processes
MaintainDefinitions
CollectData
DistributesForms
FormDataDivisionDetail
ReceivesSend
RequestsPrepareReport
Submits
Query
FindSources
Goal 2: Repurpose consistent data as needed
Supp InfoFormsForms
FormData
Submits
Receives
Division Level
Extract
MergeData
Group LevelDepartment Level Participants
Processes
MaintainDefinitions
CollectData
DistributesForms
FormData
Dept Detail
ReceivesSend
RequestsPrepareReport
Submits
Query
FindSources
AnalyzeData
Regulator, Partner…
Net
Improving the quality and timeliness of internal reporting using XBRL The Goal The Obstacles What XBRL Offers Why XBRL Now Next Steps
Reporting challenges Timeliness and quality of
source data and estimates
Inconsistent terminology
Changing collection requirements
Implementation cost & resistance to change
Variant of Pareto’s 80-20 postulate:
80% of effort in reporting goes into dealing with the 20% of the data that is not already well-structured and organized in a stable, widely used format
Solutions offered by a standard language Timeliness and quality of
source data and estimates
Inconsistent terminology
Changing collection requirements
Implementation cost and resistance to collaboration
Minimize data re-keying and copy-and-paste using a universal format
Single definitions shared within an organization by all software applications
Software able to use new and changing data definitions immediately
Open, royalty free, independent standard and consortium
Process efficiencies are hard to achieve
Different Data Dictionaries: Field names, field order
System 1: AccountNo, Amount, Date
System 2: MonetaryAmount, PostDate, AccountNumber
System 3: PostingDate, Account#, Value
System 4: Date, Journal, Account, Amount
Similar Data
Account, Amount, Date
Different Representations for the same concepts in common data field
Journal: PJ, Payroll Journal, Payroll
Date: 12-31-03, 20031231, 12/31/03
Different
Data Formats
CSV
ASCII
WKS
XLS
Improving the quality and timeliness of internal reporting using XBRL The Goal The Obstacles What XBRL Offers Why XBRL Now Next Steps
What is XBRL?Implications Maps to existing data in
legacy systems or newer ERP systems operating today
Uses standards to leverage investments in financial management systems
Bridges today’s environment to future architectures such as .NET
Enables a financial reporting environment in which results can be shown in a shorter payback period.
Technical Details XBRL = eXtensible Business
Reporting Language
Freely available extension of XML (root language)
NOT a new accounting standard, ERP, or software package
– Already adopted by SAP, Oracle, PeopleSoft, Microsoft Office, Microsoft Business Solutions, and over 20 other products
Leverages existing technology and can adapt to ANY reporting/ accounting system
How XBRL differs from 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
ContextsUS $
FY2003Budgeted
ContextsUS $
FY2003Budgeted
XBRLItem
“200”
XBRLItem
“200”
What XML Offers
Supp InfoFormsForms
FormData
Submits
Receives
Division Level
Extract
MergeData
Group LevelDepartment Level Participants
Processes
MaintainDefinitions
CollectData
DistributesForms
FormDataDivisionDetail
ReceivesSend
RequestsPrepareReport
Submits
Query
FindSources
Co.Specific
Definitions
Co.Specific
Definitions
Distributes
.What XBRL Offers
Supp InfoFormsForms
FormData
Submits
Receives
Division Level
Extract
MergeData
Group LevelDepartment Level Participants
Processes
MaintainDefinitions
CollectData
DistributesForms
FormDataDivisionDetail
ReceivesSend
RequestsPrepareReport
Submits
Query
FindSources
Std.Data
Vocabulary
Co.Specific
Definitions
Std.Data
Vocabulary
Co.Specific
Definitions
Distributes
AnalyzeData
Regulators, Partners, Outsourcers
Net
.
Net
Internal reporting demonstration
Change shape of data, not site user activities Reduce manual intervention for data quality
2. XBRL Asset
Request
2. XBRL Asset
Request
1. Today’sAsset Summary
Request
1. Today’sAsset Summary
Request
3. Today’s AssetReport
3. Today’s AssetReport
5. XBRL Asset
Summary
5. XBRL Asset
Summary
4. XBRLConversion
4. XBRLConversion
SiteUser
Amherst
AnalystBoston
Change shape of data, not site user activities Reduce manual intervention for data quality
2. Select from
Taxonomy
2. Select from
Taxonomy3. Today’s
Payables Reports
3. Today’s Payables
Reports
7. PayablesSummaries
7. PayablesSummaries
4. XBRLConversio
n
4. XBRLConversio
n
5. PayablesDetails
5. PayablesDetails
1. Today’s Payables
Request
1. Today’s Payables
Request
6. XBRLConversio
n
6. XBRLConversio
n
Another internal reporting demonstration
SiteUser
Amherst
AnalystBoston
Basel New Accord (Basel II)1. Capital Requirements
Standardized Approach Internal Rating - Foundation Internal Rating - Advanced
2. Supervisory Review
3. Market Discipline Core disclosures Possible supplemental
disclosures
For each portfolio,
Number of borrowers, and
Distribution of borrowers across rating grades for the last 1, 2 and 3 years
Distribution of rating migrations for the last 1, 2 and 3 years
In the advanced approach, distribution of rating migrations weighted with (a) nominal exposure and (b) EAD, both after 1,2 and 3 years.
For each portfolio,
Number of borrowers, and
Distribution of borrowers across rating grades for the last 1, 2 and 3 years
Distribution of rating migrations for the last 1, 2 and 3 years
In the advanced approach, distribution of rating migrations weighted with (a) nominal exposure and (b) EAD, both after 1,2 and 3 years.
*
Basel II reporting process
Disparate Business units (legal entities)
Group level information consolidation
Reporting to themarket Regulators Analysts
Rating Agencies …Investors
Basel II impact on internal reporting
Disparate Business units (legal entities)
Group level information consolidation
Reporting to themarket
XBRL
XBRLXBRL
XBRL
Regulators AnalystsRating
Agencies …Investors
Improving the quality and timeliness of internal reporting using XBRL The Goal The Obstacles What XBRL Offers Why XBRL Now Next Steps
Representative XBRL-enabled products Shipping
SAP mySAP financials Microsoft Business Solutions Axtapa Oracle FSG Creative Solutions (et al.)
Announced Microsoft Office 2003 Add-in Hyperion Financials PeopleSoft Enterprise Financial Management
Custom CaseWare Financials Hitachi GEMPlanet
Live applications APRA (2001) EDGAR Online (2001) DATEV/Bundesbank (3Q 2002) Wacoal (4Q 2002) – Internal Reporting OneSource (1Q 2003) Tokyo Stock Exchange (1Q 2003) Sumitomo Mitsui Banking Corp. (1Q 2003) Danish Commerce & Companies (2Q 2003) Dutch Water Authority (3Q 2003) – Internal Reporting UK Inland Revenue (4Q 2003) KOSDAQ – Korea (4Q 2003) National Tax Agency of Japan (1Q 2004) US FDIC (3Q 2004)
Morgan Stanley, Reuters, Microsoft NASDAQ-MSFT-PricewaterhouseCoopers Pilot
Improving the quality and timeliness of internal reporting using XBRL The Goal The Obstacles What XBRL Offers Why XBRL Now Next Steps
Putting a dollar value on straight-through reporting with XBRL: Sample case Committee report – known as-is
226 person-hours 2 ½ elapsed weeks
Committee report – estimated to-be Automating extraction and aggregation, eliminate rework 32 person-hours Less than 1 week
200 person-hours times # of committee reports $_, _ _ _, _ _ _ ?
Improving the quality and timeliness of internal reporting using XBRL The Goal
Consistent, uniform data information produced efficiently
The Obstacles Inconsistent information models; 80-20 rule of business reporting
What XBRL Offers A standardized reporting XML vocabulary that can be deployed at
all levels of an organization to accelerate process improvements
Why XBRL Now XBRL contrasted with coding directly in XML XBRL software in the marketplace and adoption
Next Steps Examine your hidden costs of inefficient internal reporting
What you will learn in this session XBRL-enabled reporting – Tools
Cuthbertson - CaseWare Furusho - Fujitsu Hoffman - UBmatrix Mueller - Corel Wallis – Hyperion Solutions Zwiebach - Oracle
Technical directions for XBRL International - Technologies Cohen - PricewaterhouseCoopers vun Kannon - KPMG
Live applications – Solutions Sambuichi - Hitachi Snijders - Semansys
Are XBRL and your organization ready for each other? Pryde – KPMG; Panel with E&Y and Microsoft
Improving the quality and timeliness of internal reports
Walter Hamscher ([email protected])
Chair, XBRL International Steering Committee
Consultant to PricewaterhouseCoopers
