Research Framework for Examining XBRL Software to Extend Taxonomies and Create
Instance Documents
Diane Janvrin (Iowa State) Maureen Mascha (Marquette University)
Seventeenth Annual Research Workshop on AI/ET in Accounting, Auditing and Tax
August 2, 2008
OutlineOutline
Importance
Research Framework
Illustration
Future Research Opportunities
Demand for software to extend taxonomies and create instance documentsDemand for software to extend taxonomies and create instance documents
“Preparers are faced with an ever increasing level of complexity in their financial reporting requirements. To employ XBRL, they are tasked with mating these complex financial statements with an equally complex set of technologies, the XBRL Specification and the appropriate taxonomies. In order to cut through the complexity, these preparers need tools, guidance, and third party assistance to lead them through the process.”
Peter Derby, Managing Executive for Operations & Management, Office of the Chairman, U.S. Securities and Exchange Commission, Boston Massachusetts, April 26, 2005.
“Software vendors are not currently ready for such a large demand for their services. We have experienced some difficulty in obtaining and installing third party software…”
Susan Kinsey, Assistant Treasurer, National City Corporation, July 7, 2008
“XBRL reporting is fine with me. But it is not fine, that to comply, my public clients must buy $10,000 worth of software or retain a printer at 4 times that amount. Where is the SEC tagging tool or an overlay adaptable to a reasonably price xml tool?”
Paul M Vuksich, Public Company Attorney, June 20, 2008
ImportanceImportance
SEC proposed rule 33-8924 to mandate XBRL adoption
Usage by audit firms to steamline analytical review process (Bay et al. 2006; Gunn 2007)
Errors in XBRL tagging process may go unnoticed until SEC requires companies to file rather than furnish instance documents
Research FrameworkResearch Framework
Understand process to extend taxonomies and create instance documents
Measure preparers’ willingness to accept and use software
Measure effort required to use software
Examine preparers’ qualitative perceptions of software
Analyze data and report results
Identify functionality of software to extend taxonomies and create instance documents
Identify financial reporting stage where preparers map information to XBRL
Process to Extend Taxonomies and Create XBRL Instance DocumentsProcess to Extend Taxonomies and Create XBRL Instance Documents
Choose standard taxonomy
Download standard taxonomy to software product
Choose financial information to tag
Set up context
Map each individual account value to specific XBRL element (tag) shown in standard taxonomy
Validate tagging process
Generate instance document
Management reviews instance document for reasonableness
Extend taxonomy by creating new elements (tags) for accounts not shown in standard taxonomy
Audit instance document (currently optional)
Issue instance document
Framework DemonstrationFramework Demonstration
Two early packages – Dragon Tag and Interstage XWand
Difficult to find appropriate subjects – we used 216 ais students
Task– Taught how to use assigned software to create
balance sheet with one taxonomy extension
– Used assigned software to create simple income statement with one taxonomy extension
Data collected– Willingness to use software, effort required,
qualitative perceptions
Framework DemonstrationFramework Demonstration
Functionality Review
– Noted differences
Financial Reporting Stage
– Early adopters more likely to create financial statements and then map XBRL tags to values (i.e. bolt-on approach)
Understand process to extend taxonomies and create instance documents
Framework DemonstrationFramework Demonstration
Measure willingness to accept and use software– Dragon Tag had higher PU and PEU
Measure effort required to use software– Most participants spent between 30 to 60
minutes on simple task
Examine qualitative perceptions of software– Found tools easy to use with consistent
interfaces
– Noted some interface issues, ability to add new elements and confusions over making corrections
Future Research OpportunitiesFuture Research Opportunities
Functionality of software– Compare perceptions of add-in software to
stand-alone
Reporting stage– Bolt-in software today; examine integrated
approaches
Future Research OpportunitiesFuture Research Opportunities
Understand process– Tag footnotes in blocks or components?
– Simple vs more realistic financial statements
– Use of unaudited vs auditing financial statements
– Should XBRL tagging process be audited?
– Who are most appropriate subjects?
– Will results differ when using participants with greater knowledge of XBRL concepts?
Future Research OpportunitiesFuture Research Opportunities
Measure willingness to accept and use software– Test possible improvements to software to
increase ease of use ratings
– how do differences between Dragon Tag and Interstage X-Wand influence PU and PEU?
Measure effort required to use software– Need to include cognitive effort and length
of learning curve in effort measurement
Future Research OpportunitiesFuture Research Opportunities
Examine qualitative perceptions of software– Develop and evaluate ways to improve
• how users extend a taxonomy
• process of mapping financial values to XBRL tags
• process of identifying and correcting errors
Other issues– Do differences in user perception depend on
whether software choice is mandatory or optional?
– Examine preparer learning curve after they tag financial statements for several periods
Stand alone XBRL SoftwareStand alone XBRL Software
Dragon Tag - Rivet XWand - Fujutsu Spider Monkey – Core Filing True North – Decision Soft Intelligent Financial Systems – Core Filing FRx 6.7 - Microsoft UB Matrix – UB Matrix
Dragon TagDragon Tag
Set-upDragon Tag is an add-in product that directly interfaces with MS Office products
("drag-and-tag").
Preparer interfaceMost of the work takes place within the Profile Pane.
Installation
If preparers have both the .NET Framework 1.1 and .NET Framework 2.0 installed on their computers, they need to download and manually patch the software before operating Dragon Tag 1.5.
Financial statement interface
Balance Sheet and Income Statement elements were added in the same pane, giving better continuity for preparers.
Inputting repetitive data
Dragon Tag does not require preparer to create repetitive entries. Instead, a "hopper" entry is created and used throughout the tagging process.
Taxonomy interfaceDragon Tag allows preparers to create taxonomy directly without specifying
setting types if appropriate.
Interface to tag values
Drag and drop process of tagging values.
Selecting standard taxonomy
To find tags in selected taxonomy, preparer clicks through several categories. Categories are fairly unique.
Target market
Dragon Tag appears to be product for smaller firms who prepare their financial statements from smaller accounting packages and export them into Word or Excel format.
XWandXWand
Set-up Requires Sun Java to work. Standalone product
Preparer interfaceUses several panes with somewhat similar (and therefore confusing) functionality
Installation
No issues noted
Financial statement interface
Balance Sheet and Income Statement elements were added separately; a repetitive and tedious task
Inputting repetitive data
Repetitive data has to be added into multiple filed (i.e. calculation link, presentation link, etc.)
Taxonomy interface Detailed settings available
Interface to tag values
Each value to be tagged must be manually inputted
Selecting standard taxonomy
To find tags in selected taxonomy, preparer clicks through several categories. Categories are fairly unique.
Target market
More rich JAVA product that can be packaged with a larger erp system
Spider Monkey – Core FilingSpider Monkey – Core Filing
Set-up Written in JAVA and can be used on most common systems
Preparer interfaceMost of the work takes place in two panes
Installation
No installation issues noted
Financial statement interface
Does not produce financial statements – needs Intelligent Financial Statement to generate financial statement user interface
Inputting repetitive data
Repetitive data has into multiple fields
Taxonomony interface Creates taxonomy directly without specifying setting types if appropriate
Interface to tag valuesEach value to be tagged needs to be manually inputted.
Selecting standard taxonomy
User can write taxonomies and download and modify existing taxonomies
Target market
Gives ability for users to modify and work on taxonomy simultaneously. Needs True North for validation function
FRxFRx
Set-up Connects with most GL software for tagging accounts
Preparer interfaceOne pane
Installation
Need NET framework 1.1 Service Pack form Microsoft to install
Financial statement interfaceAllows user to either manually or via Report Wizard generate software
Inputting repetitive dataEliminated repetitive data entry
Taxonomony interfaceUses user defined accounts types
Interface to tag valuesDrag and drop process of tagging values.
Selecting standard taxonomyTo find tags in selected taxonomy, preparer clicks through several categories.
Categories are fairly unique.
Target market
Goes beyond being an XBRL writer
Major Vendors Implementing XBRL CapabilitiesMajor Vendors Implementing XBRL Capabilities
OracleHyperion SAP PeopleSoft JD EdwardsCartesis
OracleOracle
Oracle GL supports the XBRL standard.Oracle GL’s Financial Statement
Generator is responsible for loading taxonomy files, as well as creating instance documents/tagging financial statements in the XBRL format.
HyperionHyperion
Hyperion has a built in module called “XBRL Manager.”
It can create XBRL output directly from Hyperion Financial Management & Hyperion Planning and Hyperion Essbase XTD.
Hyperion will be able to create XBRL tagged financial statements as well as create instance documents natively without the help of another piece of ‘enabler’ software.
SAPSAP
SAP has a built in XBRL tool that was developed by SAP.
Tool gathers the data directly from the SAP databases (“data warehouse”) and converts them directly into instance documents using various taxonomies.
Capable of creating single/individuals financial statements or consolidated statements based on the selected taxonomy.
The SAP tool has the capability of preparing the statements in a format that is readily publishable to a investor relations website/webportal.
PeoplesoftPeoplesoft
Peoplesoft General Ledger has the capability built in it for producing instance documents/tagging balance sheet and income statements that conform to the XBRL standard.
JD EdwardsJD Edwards
Has XBRL capabilities similar to those that are available in Oracle/Peoplesoft for creating instance documents/tagging BS&IS with XBRL tags.
CartesisCartesis
Cartesis Finance has built in XBRL technology within it called the Cartesis XBRL Publishing module.
Cartesis has the capability to load a given taxonomy into it, and create instance documents/tag financial statements with the XBRL standard.
Challenges to ImplementationChallenges to Implementation
Availability of software to create XBRL instance documents
Availability of software to read XBRL instance documents
Use of standard taxonomy vs industry or company specific taxonomy
Need for regulatory support
ProgressProgress
XBRL – business reporting language Provides financial information across platforms Reduces re-entering data for processing Makes it easy to use automated analytical
tools SEC voluntary filing program now exists SEC may mandate XBRL filings in 2008??
