Compiled By

Sumit Binani

MBA (IIM-Cal), AICWA, FCS, ACA

&

CS Mamta Binani

UNDERSTANDING XBRLeXtensible Business Reporting

Language

Need for XBRL is not newBusinesses Exchange Information100 ways to exchange info is part of the

problemClients, Stakeholders, Regulators, Bankers,

AuditorsUse of diff technology to compare benefits &

costsNeed for a common standard accepted format

for data exchangeXBRL has stood out of the pack

BUSINESS CASE FOR XBRL

Evaluation Criteria-Effectiveness & EfficiencyCost of Capturing data(training, maintenance,

multiple software tools)

Timeliness of data

Flexibility of Data Collection

Quality of Data

Reuse of Data

BUSINESS REPORTING SOLUTIONS

XML Standard: Low training cost. Lots of standard software for working with XML.

Open Standards Provide Leverage: Free tools, free standards, not locked into one specific vendor.

Commercial off-the-shelf software can be usedCheap Business Rules Engines Improve Data

Quality.Flexible, Extensible, Comprehensive SolutionStructured versus Unstructured DataAutomated Exchange of Data within same org

XBRL CHARACTERISTICS

Access to DataTimeliness, Quantity, Accuracy, Type of dataSEBI, RBI, MCA, Auditor, Banks, Holding CoOnsite data is most qualitative and accessibleTransparency, Accuracy, is often questionedXBRL is not about imposing any specific

reporting burdenAutomobile Companies – Quality Control Ex

REACH VS RICHNESS OF DATA

We have both reach and richness? Every entity could generate electronic audit

schedules of data in XBRL. Regulators, auditors’ systems could read this data

whenever they want from their location.A secure web service could be provided by every

company and used by auditors, regulators (the SAME systems used for internal audit of the data, NOT different systems) rather than the endless paper, spread sheets,Word documents, etc.

How would that impact business reporting?

WHAT IF

Consider an invoice. Data on the invoice might include:

the invoice number, "I-10001“; the invoice date, "July 1, 2005“; the quantity of each line item, "500 boxes“; • the amount of each line item, “Rs 3000“; • the total amount of the invoice, “Rs 9000"

The metadata for the invoice, which is data which expresses the information the invoice must contain, might be things like:

the invoice number must start with the letter "I", be followed by a dash, and must be a 5 digit number,

the invoice MUST contain an invoice number, an invoice date, at least one line item, and a total

METADATA-Data about data

Expressed in a consistent, standard way, can be read by a computer application.

Can be exchanged automatically between applications along with the data being expressed, resulting in new and better ways to transform and evaluate data.

Driven applications can be updated by Business Users - cost-effectively than "hard coded" applications

In terms of financial reporting, we see applications driven by XBRL financial metadata (a standardized set of financial terms, or taxonomies)

METADATA-Data about data

The fact that data can be defined in an organized way rather than unstructured, semantic meaning can be expressed as metadata,

At a relatively low cost because the applications are useful, flexible, and therefore used by so many.

A key to improving business reporting is metadata driven computer applications using open standards to express that metadata.

XBRL lays the platform for the same

METADATA

One of the most powerful features of XBRL

Types of business rules might be: Definitions such as "Assets = Liabilities + Equity“ Calculations such as "Total Property, Plant and Equipment

= Land + Buildings + Fixtures + IT Equipment + Other“ Process oriented such as "If property, plant, and

equipment exists; then a property, plant and equipment policy must exist and property, plant and equipment disclosures must exist.

Instructions or documentation such as "Cash flow types must be either operating, financing, or investing.

Separate from the Processing Logic -empowers Business User

BUSINESS RULES CAPABILITY

And what if the business rules are also in a global standard format?

One can exchange the rules with others. for example,1. use the rules to explain the data you are collecting,

2. which data needs to be collected,

3. validate the data prior to it being submitted, and

4. which data collection forms should be used by the type or quality of entity submitting data.

BUSINESS RULES CAPABILITY

Humble beginning back in 1997Charlie Hoffman, a USA CPA, Visionary behind

XBRL using power of XML technologyXBRL is about better way of reporting

accounting, financial and other information to interested users

One of the goals of XBRL is to create the information once and be able to easily present it in many ways

Reduces Time, Save Costs, Enables Quick Information & analysis

HISTORY

• October 1999• XBRL committee formed ; More than a dozen member organisations in

USA• December 2000

• Membership >70 organisations• February 2001

• Membership >100 internationally, UK XBRL launched• June 2001

• XBRL for US GAAP Financial Statements announced • October 2001

• XBRL Australia and Japan launched• February 2002

• Recognised XBRL jurisdictions include Australia, Canada, Germany, Hong Kong, Japan, Singapore, UK

• ....... And the developmental journey continues

HISTORY OF XBRL

Incorporated as Section 25 CompanyManaging Affairs of Indian Jurisdiction of XBRL

InternationalObjectives

promote and encourage the adoption of XBRL in India as the standard for electronic business reporting in India

facilitate education and marketing of XBRL Develop, manage & update XBRL taxonomies represent Indian interests within XBRL International contribute to the international development of XBRL

XBRL INDIA

Global effort to build “the digital language of business” by participants of the business reporting supply chain

XBRL permits the automatic exchange and reliable extraction of financial information across all software formats and technologies, including the Internet.

It enhances efficiency by allowing tagged (coded identifier) financial information to be transmitted in many formats and deployed with various analytical tools.

Users of Transnational Data (change label from eng to other)

WHY XBRL

Business Reporting Supply Chain

Adapted from “XBRL for CFOs” (www.xbrl.org)

ExternalFinancialReporting

BusinessOperations

InternalFinancialReporting

Investmentand Lending

AnalysisProcesses

Participants

AuditorsTradingPartners

Investors

FinancialPublishersand Data

Aggregators

Regulators

Software Vendors

ManagementAccountants

Companies

Benefitting out of creation of digital version of financial information using a common language

Communicate financial info electronically

No need to re-key data

Easier and cheaper than EDI

Built upon eXtensible Markup Language (XML)

Free public standard defining data sharing,

publishing & exchange systems.

Separates information from style

Single source-can be output to any format

SALIENT FEATURES OF XBRL

InvestorsCorp.

Operational Data Stores

++

Report

Report

ReportRegulatory

Filings

Text

Text +

Statement in PDF

Statementsin Print+

Statementon Web

Text

returnsASIC/ATO

Today: A Convoluted Information Supply Chain

GL

C of A

+

+

+

Auditor

Credit Application+

BanksText

Adapted from “XBRL for CFOs” (www.xbrl.org)

RegulatoryFilings

Web Site

Tax Returns

Bank Filings

Printed Financials

Accounting System

Other Sources of

Information

XBRL

With XBRL: Multiple Outputs from a Single Specification

Source “XBRL for CFOs” (www.xbrl.org)

RegulatoryFilings

Web Site

Tax Returns

Bank Filings

Printed Financials

XBRL

Investors

Other Parties

XBRL: Information flow TO stakeholders

Source “XBRL for CFOs” (www.xbrl.org)

The basis of XBRL is the XML.

XML is a recommendation of the World Wide Web (W3C) and is a subset of SGML (Standard Generalised Markup Language).

HTML is also a subset of SGML, but XML has been designed to overcome some limitations of HTML.

A key feature of XML is that is separates information from the way it is presented.

XML works by first defining a structure for the data – referred to as a schema. This defines the structure and the elements names for data without referring to any values of the data.

Secondly, files (called instance documents) are created that contain the data, but do not contain any information about how that data is to be presented or published.

As a result, the data is also separated from its presentation or style.

THE TECHNOLOGY

Simply put, traditional financial statement data is tagged using a taxonomy to create an instance document.

XBRL’s delivery unit is the instance document.

The instance document is transmitted by the party who prepares the information to the party who can use it.

Understanding how XBRL works must therefore include some acquaintance with the necessary inputs to instance documents, the way in which instance documents are prepared for delivery, and some of the terminology XBRL’s developers have created.

HOW XBRL WORKS

TraditionalFinancialStatement

Presentation

FinancialStatement

Data is“Tagged”

Using XBRLTaxonomy

XBRLInstance

Document

Taxonomies contain definitions that are used to create tags that will be incorporated in instance documents.

All taxonomies must comply with the rules in the XBRL Specification, but they differ because they are specific to the type of information to be electronically expressed and to the related presentation requirements.

Taxonomies developed for the U.S. thus far reflect U.S. generally accepted accounting principles and reporting requirements primarily for four different industries: insurance, investment management, commercial and industrial, and banking and savings institutions.

These taxonomies were exposed for public comment, revised, and granted approved status by XBRL International.

APPLYING TAXONOMIES

The 4 approved taxonomies contain definitions and information about financial reporting concepts, for example, goodwill, net income, gross sales, and cash and cash equivalents.

A financial reporting concept within XBRL is called an element.

Each element is assigned XBRL basic attributes and relationships.

These are characteristics that are formally defined by the taxonomy. They include numerical or non-quantitative descriptors.

The basic attributes and relationships are part of the data item’s context for purposes of XBRL.

The basic attributes and relationships are designed to be sufficient to enable other computers to understand the data item they receive and to enable people at those computers to use the data item with their application software for analysis, comparisons, or other computerized operations they wish to perform.

APPLYING TAXONOMIES

This illustration shows that the financial reporting concept goodwill is the XBRL element “goodwill,”

which is assigned basic attributes and relationships.

FinancialReportingConcept:Goodwill

XBRLElement:Goodwill

BasicAttribute

s

Relationships

to otherElements andInformation

6 STANDARD ATTRIBUTES ARE IDENTIFIED FOR GOODWILL IN THIS ILLUSTRATION

XBRLElement:Goodwill

BasicAttributes

Label

Tag Name

Description

Data Type

Balance Type

Period Type

Goodwill

Intangible Assets Goodwill

The excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed

Monetary

Debit

Instant

RELATIONSHIPS ARE IDENTIFIED FOR GOODWILL IN THIS ILLUSTRATION

XBRLElement:Goodwill

Relationshipsto otherElements andInformation

Reference

Presentation

Calculation

Publisher: IASBName: AS 142Paragraph: 18URL: http://www.fasb.org/pdf/fas142.pdfURL Date: 2004-08-01

Condensed Balance Sheet (Assets)AssetsCash and cash equivalentsProperty plant and equipmentGoodwillTotal Assets

Total Assets =Cash + Property plant andequipment + Goodwill

Customization to Capture Unique Info“extensible” feature of XBRL. Compliance maximizes the comparability of

the XBRL instance documents for external financial reports when extension taxonomies are employed.

An organization can modify an element in a base taxonomy as well as supplement that base taxonomy,

extension taxonomy must comply with the XBRL Specification.

EXTENSION TAXONOMIES[facilitates Company Specific Business Needs]

EX-1 A company presents goodwill before property, plant, and

equipment in its balance sheet, It can create an extension to change the relationship that is

defined in the base taxonomy to present it that way. EX-2 Assume Company MB tags its financial statements using the

commercial and industrial taxonomy. Company MB has a line item on its balance sheet for “XYZ

Inventory.” Because it is unique to Company MB, “XYZ Inventory” is not

listed in the commercial and industrial taxonomy. It therefore creates its own extension taxonomy that includes

the new element. EX3 For instance, if the generic element “sales” were too

general for specific needs, a taxonomy could be extended with two new items “equipment sales” and “consumables sales.” Both would roll up to the “sales” element.

EXAMPLE OF EXTENSION TAXONOMIES

Tagging Operations leads to creation of Instance Document

Instance Doc captures the base taxonomy and the extensions

Softwares run the XBRL Instance Doc to produce desired report

Reports enables users to analyse or otherwise process published info

Instance documents that convey financial statements in XBRL can be created with the help of tagging software

Certain software products can extract data in XBRL format from accounting databases

INSTANCE DOCUMENT & STYLE SHEETS

XBRL information is published with the aid of a style sheet application.

The style sheet describes how documents are presented on screens or in print.

It can convert the XBRL data in an instance document into a document that looks similar to financial information, such as a bsheet or income statement.

It is a standard mechanism for organizing and presenting XBRL data.

Style sheets are written in an extension of XML that is compatible with XBRL.

The extensible style sheet language called XSLT is widely used to format and reformat XML documents, including XBRL documents.

INSTANCE DOCUMENT & STYLE SHEETS

Spreadsheets

Basel II Reporting

Commercial & Consumer Loans

Forms, Forms and Forms

EXAMPLES OF BENEFIT FROM XBRL

XBRL developed draft General Purpose Financial Reporting Taxonomy for Commercial & Industrial Companies (Mfg & Services Sector)

Covers the financial statements confirming to Indian AS, Company Law & SEBI Listing norms while adapting architectural features of the IFRS general purpose taxonomy 2006

MCA has finalised the taxonomy for C & I for filing Bsheet & P & L in XBRL

XBRL Taxonomy for the banking sector is being developed

UPDATES FROM XBRL INDIA

Mandated certain class of companies to file balance sheet and accounts for the year ended 2010-11

First Phase to CoverAll Listed Companies in India and their subsidiaries including overseas subsidiaries

All Companies having a paid up capital of 5 crores and above or Turnover of Rs 100 crores or above

All Companies falling in phase 1 are permitted to file upto 30-9-2011 without any additional fee.

MCA UPDATES ON XBRL

Thank You