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The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR
Conceptual OverviewEric E. Cohen [email protected]
11th XBRL International Conference
Boston April 27th, 2005
XBRL GL & FR for Internal ReportingXBRL is well known as a tool to standardize financial
statements, tax returns, and other publicly available or external facing documents. XBRL is also an important tool for more efficient, effective and accelerated internal reporting. From XBRL GL, the generic representation of transactional information that bridges the gap between transactions and reporting, to the use of XBRL for Financial Statements to represent common internal reports that involve summarizations and calculations not found in accounting systems, XBRL is a powerful tool for internal use as well. From transaction to summaries, XBRL meets the need.
Agenda Internal reporting XBRL for internal reporting Data in internal reporting Information concepts in internal reporting Working together
Internal Reporting: Three Tracks
Edit reportsAd hoc reportsPosting reports
Daily cash/AR/APPerformance
Primarily for internal use only
Preparation for external use
More detailed versions of external reports
FinancialTax
SegmentPII*
* Personally identifiable information
In General Internal Reporting is
More detailed More frequent More varied (less
standardized) Fewer “EDI or Die” vendor
demands Change/up-front costs of
standardization without pressure from third party
But: more pressures now Internal controls - SOx
404 PCAOB 3, Section 5.c
Types of Internal Reporting Operational and administrative Management
Planning Control Decision making
Internal reporting drives Procurement Staffing and scheduling Management and direction Cash management Preparation for external reporting …
Types of Internal Reporting Preparation for
Financial Statutory Legal Social Environmental reporting
What Makes it Worse? Systems are Changing
New sources Online accounting Disparate systems
Traditional non-integrated Point of sale Job cost Branch systems
Outsourced Payroll systems and providers
New technologies Web services
Requirements are changing SARBANES-OXLEY, PCAOB
We have seen a return to third-party processing. From ADP in the seventies to ASPs in 2005, one business’s data is being captured on another businesses’ computer.
Old WorldASBASB BLTBLT
HDLHDL
AFTAFT TGITGI FRYFRY
DRWDRWSWGSWG
QYDQYD DLYDLY
BSTBST
WIUWIU
ASBASB
ZISZISXOIXOI CUICUI
RMORMO
DLYDLYXPSXPS
KYFKYF
KFCKFC
WHRWHR
JIAJIA GEXGEX
FQAFQAVUHVUH
HCOHCO
WKDWKD
ECPECP
SKDSKD
MFPMFP
WCPWCP
DKEDKEAJTAJT
New World
ServiceService ServiceService ServiceService
ServiceService ServiceService ServiceService
BusBus
XBRL for Internal Reporting Benefits of XBRL for external purposes is obvious
Shared meaning, different vocabulary Standards and definitions Global consumption Machine to machine consistency Public: From A to B to C
Is internal different?
Proprietary Formats: XML Alone
qbxml
smbxml
Intacct xml
SAP
Peoplesoftxml
qbxml
smbxml
Intacct xml
SAP
Peoplesoftxml
Oracle
Enter Extensible Business Reporting Language
XBRL is An international consortium
of the business reporting supply chain
An agreement on the use of technology to build common user dictionaries and express business information
Dictionaries Summarized reports Detailed information
MORE THAN DICTIONARIES
XB
RL
qbxml
smbxml
Intacct xml
SAP
Peoplesoftxml
qbxml
smbxml
Intacct xml
SAP
Peoplesoftxml
TaxReporting
Standards-based Data Interchange
XB
RL
GL
qbxml
smbxml
Intacct xml
SAP
Peoplesoftxml
qbxml
smbxml
Intacct xml
SAP
Peoplesoftxml
OracleIndustry transactional XML
•XBRL FR – Views of Data•A fact•At a time or for a duration•In a unit of measure•For an entity•Under a scenario
•XBRL GL – Data•A framework•Based on journal history•Standardizing representations
•Documents•Entries•Parties•Resources•Links•Tax•and more
Fills the GAPS between GAAPS
BUSINESS
Investors
Aggregators
Regulators Creditors LendersTax Website
Transaction Creation
ERP G/L Packages CRM
•Orders•A/P•Delivery
Customers•Orders•A/R•Delivery
2-way2-way
Suppliers
Oneway
Oneway
XBRLBUSINESS REPORTING
(e-)BusinessX12, UBL, CEFACT FORUM, Other XML
INITIATIVES
XBRL GLJournal Taxonomy
DetailAccountingrecognition/classification
Intra system Detail to summary
Scope and role of XBRL
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investment,Lending,
RegulationProcesses
Participants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies
Economic Policymaking
CentralBanks
XBRLGL, the
Journal Taxonomy
XBRLFinancial Statements
Data in Internal Reporting Consolidations Data migration Archival Data transfer Audit Trail
Basic Challenge: Similar Data, But …
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
XBRL GL provides platform for agreed-upon and well defined list of concepts –
make sure my “Account” and your “Account” means the same thing (not
bank account or customer account but GL account.)
Based on XML, XBRL GL is order independent; sharing element names
for import/export means that AccountNo, AccountNumberm
Account# and Account will all be express as one common name;
applications will know what to expect inpublishing and consuming data files.
So many external data formats; XML provides a popular and increasing
supported / demanded data format.
Once you have agreed on data field standardization, software applications require agreement on content in many cases. XBRL GL provides enumerated
values to supplement XML data standards to help in this area.
XBRL GL Challenges Local Concepts of “General Ledger,” Holds More
Internal Data Exchange
Outsourced Travel and Expense
External payroll provider
Non-integrated point of sale
Subsidiary with separate system
AP
AR
IM
PR
GL
I N V O I C E May 2, 2003Invoice #: 10037
Item Description Qty Extension
1078 Blue Widget 200 2,803.781083 Cyan Widget 100 1,402.93
Sub-total: 47,592.33Freight:Total: 47,592.33
<documentType>invoice</documentType>
<documentNumber>10037</document Number>
<documentDate>2003-05-02</documentDate>
From Initial Transaction
Through ERP System Actual/Virtual
GENERAL LEDGER
AR
IMbomp
APPR
customers vendors
items
employees
OEAR, IM
POAP, IM
sales orders
purchase orders
FA
assets
Outsourced procurement
REPORTING
Outsourced e-ordering
Off-site fullfillment
Third party payroll
Facilitating Web Services, AssuranceMapping 1 Mapping 2
Spell Check
Shipping Rate Check
Credit Check
Logistics Check
Rules and Journalization
Audit and monitoring tool
System 3System 1
Identificador de la Cuenta
Descripción Principal de la Cuenta
Monto Monetario
Fecha de Asignación/Ingreso
Account Number
Account Description
Entry Amount
Posting Date
Account#
Description
Amount
PostDate
System 2
accountMainID
accountMainDescription
amount
postingDate
accountMainID
accountMainDescription
amount
postingDate
accountMainID
accountMainDescription
amount
postingDate
XBRL GL XBRL GLXBRL GL
Every System as XBRL
Accounting data
Report Writer
Select information from database(s), including joins
Formulas create new data fields
Add headers/footers, conditionals with record groupings, derived totals based on sorts
Filter the record set
Provide visual formatting rules, like cross-tab
Data and Views
Report
Concentration: Data Fields
Concentration: Information Concepts
Scope and role of XBRL
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investment,Lending,
RegulationProcesses
Participants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies
Economic Policymaking
CentralBanks
XBRLGL
XBRLFR
Transactional
Representations
Consolidation
Information Concepts in Internal Reporting When you are working on internal versions of
external reports When your internal report rely on derived fields,
totals Aged receivables
30, 60, 90, 90+, other “buckets”
Combination of XBRL FR for agreed upon derived fields and totals and XBRL GL for necessary detail
Data fields
ConceptsViews of data
Fields of data
External recipients
Internal recipients
Related recipientsBank, accountant, regulators
Broad Spectrum of XBRL Uses
XBRL GL Works With XBRL FR
IAS
Internal
Tax
US
XBRL GL
Benefits of XBRL for Internal Reporting Improves internal management
Speed Detail Cost of abilities of applications Learn from mistakes, evaluate changes from plans
early Taxonomy - better communication from on top
Benefits of XBRL for Internal Reporting Improves assurance Details agreeing or reconciling to reporting
Internal auditing External auditing
Benefits of XBRL for External Users of Internal Reporting Improves sharing data with banks
Asset based lending Listing of open accounts from customers Listing of inventory
Improves sharing data with acquirers Improves sharing data with partners
Today’s Internal … Tomorrow’s External? How about
The same information from its source in greater detail - which may be tomorrow's external reporting?
Bringing together internal groups to speak the same language?
Drill down support from external today Possible (partial or total) replacement for forms
tomorrow
Deliver real-time XML data stream; On demand Web-services available data
using secure and not-so-secure links
Bring together information from various sources with all version control, security, etc.
“in plain English, which may include trend and qualitative information and graphic presentations”
Tomorrow’s Control Environment
Beyond Tomorrow: Entering New Dimensions with XBRL
Predictive
Real-time
Periodic
ProcessesPromisesProspectsProjections
TriggersDocuments After-the-fact
X: When assurance is deliveredY: When tests are performedZ: “Hardness” of data – later re-assurance?Newer assurance on this item is available: click here
Questions?
Eric E. [email protected] (585) 271-4070
Find out morewww.xbrl.orgwww.pwc.com/xbrl
<xbrl>
Eric E. [email protected]
Now’s the Time for Real-time
SEC. 409. REAL TIME ISSUER DISCLOSURES Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m), as amended
by this Act, is amended by adding at the end the following:
‘‘(l) REAL TIME ISSUER DISCLOSURES.—Each issuer reporting under section 13(a) or 15(d) shall disclose to the public on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer, in plain English, which may include trend and qualitative information and graphic presentations, as the Commission determines, by rule, is necessary or useful for the protection of investors and in the public interest.’’
“[W]e need to move toward a dynamic model of current disclosure of unquestionably material information.”Harvey Pitt, Pre-”E”http://www.sec.gov/news/speech/spch523.htm
Do You Remember? From “Highlights” of Initial XFRML Steering
Committee, 10/14/99 [We] should have an initial calibration on the initial picture
framework – getting different products (financial statements, etc. others along the supply chain) working together. We need to develop a schematic of the value streams and use cases along with objectives and a timeline and a concept statement.
[XFRML] should have its roots in the "Audit Supply Chain." XFRML as technical standard for seamless process of exchange across all audit processes.
Our opportunity is to address things internationally at the level below the financial reporting level since there is more commonality at that level.