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The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Cohen [email protected] 11 th XBRL International Conference Boston April 27th, 2005
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Page 1: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 2: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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.

Page 3: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Agenda Internal reporting XBRL for internal reporting Data in internal reporting Information concepts in internal reporting Working together

Page 4: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 5: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 6: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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 …

Page 7: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Types of Internal Reporting Preparation for

Financial Statutory Legal Social Environmental reporting

Page 8: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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.

Page 9: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Old World of Electronic Data Exchange

NEW WORLD

Page 10: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 11: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

New World

ServiceService ServiceService ServiceService

ServiceService ServiceService ServiceService

BusBus

Page 12: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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?

Page 13: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Proprietary Formats: XML Alone

qbxml

smbxml

Intacct xml

SAP

Peoplesoftxml

qbxml

smbxml

Intacct xml

SAP

Peoplesoftxml

Oracle

Page 14: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 15: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 16: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 17: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 18: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Data in Internal Reporting Consolidations Data migration Archival Data transfer Audit Trail

Page 19: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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.

Page 20: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

XBRL GL Challenges Local Concepts of “General Ledger,” Holds More

Page 21: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Internal Data Exchange

Outsourced Travel and Expense

External payroll provider

Non-integrated point of sale

Subsidiary with separate system

AP

AR

IM

PR

GL

Page 22: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 23: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 24: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Facilitating Web Services, AssuranceMapping 1 Mapping 2

Spell Check

Shipping Rate Check

Credit Check

Logistics Check

Rules and Journalization

Audit and monitoring tool

Page 25: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 26: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 27: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 28: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 29: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Data fields

ConceptsViews of data

Fields of data

External recipients

Internal recipients

Related recipientsBank, accountant, regulators

Broad Spectrum of XBRL Uses

Page 30: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

XBRL GL Works With XBRL FR

IAS

Internal

Tax

US

XBRL GL

Page 31: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 32: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Benefits of XBRL for Internal Reporting Improves assurance Details agreeing or reconciling to reporting

Internal auditing External auditing

Page 33: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 34: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 35: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 36: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 37: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

Questions?

Eric E. [email protected] (585) 271-4070

Find out morewww.xbrl.orgwww.pwc.com/xbrl

<xbrl>

Eric E. [email protected]

Page 38: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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

Page 39: The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Coheneric.e.cohen@us.pwc.com 11 th XBRL International Conference BostonApril.

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.


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