XBRL in Government 2009 NSAA IT Conference September 30, 2009 Joe Kull Joe Kull...

XBRL in GovernmentXBRL in Government2009 NSAA IT Conference2009 NSAA IT ConferenceSeptember 30, 2009September 30, 2009

Joe KullJoe Kull PricewaterhouseCoopersPricewaterhouseCoopers

PricewaterhouseCoopersMay 2009

Slide 2

We’ll cover…

What is XBRL?

Why its time has come

How it works, what it costs

Global adoption

XBRL in the US


Slide 3


Slide 4


Slide 5


Slide 6

So let’s ‘containerize’ data and transport it anywhere…..


Slide 7

So What Is XBRL?

• An XML dialect

• A free available open data standard

• Structure for quantitative or qualitative content

• ‘Structured’ data becomes interactive

• Built on collaboration and consensus

• Enables understanding across wide range of applications

• Makes data a commodity


Slide 8

Interactive data: user driven, not system confined

X Application & System Centric• Dependent on system Integrators,

developers, architects• Expensive interfaces and patches • Change is risky and expensive

Standards & Data Centric• Business rules are tied to data source• Semantic ‘consensus’• Open standards enable interoperability • Changes made to taxonomy


Slide 9

Impact of Standards• Industrial

• Transportation

• Construction

• Retail

• Medical

• Education

• Technology

IT IS TIME FOR DATA


Slide 10

XBRL Structure

Technical standards for composing XBRL taxonomies

Defines data ‘structure’ in a reporting regime

Output of structured data using taxonomy [ies]

Creates human usable documents

XBRL − Rendering

XBRL − Instance

XBRL − Taxonomy

XBRL − Specifications


Slide 11

Taxonomy document [or schema]

Balance sheet

Assets

Intragovernmental

PP&E ____

Total assets ====Liabilities

Intragovernmental liabilities

Loan guarantees _____

Total liabilities _____

Net equity position

Cumulative results ____Total net equity position ====

Total liabilities and net equity position ====


Slide 12

XBRL is More Than Just Tagging Business Information

From standard taxonomy

Custom taxonomy

Instance document

Key:

• Multi-dimensional business and financial data representations

• Flexibility of business reporting vocabularies (i.e. taxonomies)

• Mathematical relationships between concepts

• Flexibility about how to present information to users

CalculationsCash = Currency + Deposits

Formulas Cash ≥ 0

ReferencesGAAP I.2.(a)

CoA 1100

ContextsUS $X

FY2009Budgeted

XBRL<cash>“200”

LabelCash in Bank

PresentationCash & Cash Equivalents

Customized presentation

Custom calculation

Customized references

DefinitionsRelated to Liquid

Assets

Customized definition

Customized label


Slide 13

XBRL International

Consortium began in 1998

Currently 450 company members

Governance by an International Steering Committee

• Established Jurisdictions

• At Large Representatives

• Board of Advisors

• Standards Board


Slide 14

Standards BStandards Basedased Reporting and Analysis Reporting and Analysis

UKCA

ESUS

AU

NZ

IE

JPKR

BE

CO

BR

AR

SG

HK

NOSE

PL

IT

CN

IN

LB

CZ

UA

LUIASB

AE

NL

TR

GR

JAMCH

FR

SI

AT

Established Jurisdictions

Provisional Jurisdictions

Projects Ongoing

DE

DK

ZA

Focus in 2009

IL

Global Focus Jurisdictions

CHL URY

OCEG

RIXML


Slide 15

Countries with active projects

Australia Belgium Brazil Canada

China Chile Germany Netherlands

Ireland Spain France Italy

Luxembourg India Israel Japan

Korea Poland Singapore Switzerland

UAE United States United Kingdom South Africa


Slide 16

XBRL Regulatory Adoption

Government

Australian Tax Office

Committee of European Banking Supervisors (CEBS)/COREP

Chinese Securities Regulation Commission (CSRC) {sponsoring Shenzen and Shanghai exchanges}

Dutch Tax Authority

Dutch Water Authority

Spanish Stock Exchange Commission – 3000 companies

Statistics Dept of Ireland

Other

• Bank of Japan

• Bundesbank

• Eurostat

• Financial Service Agency of Japan

• The Irish Revenue

Commercial

Canadian Securities Regulators

KOSDAQ – Korea

Bank of Spain

National Bank of Belgium

National Tax Agency of Japan

New Zealand Exchange

U.S. Securities & Exchange Commission

Shanghai Stock Exchange s

Shenzhen Exchange

Tokyo Stock Exchange

UK Companies House

UK Inland Revenue/HMRC

US Federal Financial Institutions Examination Council (includes FDIC)


Slide 17

Standard Business Reporting [SBR]

• Effort to reduce reporting burden by 25% or more - Removing redundant government forms/information- Adopting common language and int’l standards- Utilizing business software to pre-fill gov’t forms- Providing electronic interface from company accounting systems- Identify reporting as a by-product of normal/natural business processes

• Emerging as a compliance best practice- Dutch Taxonomy Project- New Zealand SBR- Austrailian SBR- Singapore SBR- Ireland eGov policy- Ministry of Corporate Affairs - EC SBR projects in EU countries


Slide 18

Dutch Taxonomy Project –

http://www.xbrl-ntp.nl/english

“The Dutch government intends to reduce the administrative burden of businesses with 25 percent”

http://www.xbrl-ntp.nl/english


Slide 19

Australian SBR

“The benefits to business are ultimately estimated rise to $795M per year on an ongoing basis”


Slide 20

COREP/FINREP

Banking regulators in Europe move from 27 different ways to 1 way. BASL, IFRS, and XBRL.


Slide 21

Harvard Business Review

“Wacoal, a Kyoto-based maker of lingerie, has use XBRL to enhance its ability to aggregrate operating information from the 24 proprietary IT systems used by its

businesses in 23 countries. Wacoal needed six months and $50 million to implement the system-a sixth of the time and a third of the money that would

have been required for a traditional ERP solution it had considered.’ [Harvard Business Review, February 2007, Breakthrough Ideas for 2007]


Slide 22

FDIC Call Reports

• More accurate data –100% data received met mathematical requirements vs. 70%

• Faster data inflow – less than one day after quarter end vs. weeks after quarter end

• Increased productivity – 550 to 600 banks/analyst vs. 450 to 500

• Faster data access – within 1 day of receipt vs. several days

• Greater efficiency – workload complete 41 days after calendar quarter vs. 48 days


Slide 23

U.S. Securities and Exchange Commission

• Formally adopted XBRL for annual, quarterly, and registration statements

• Three year phased adoption starting with 500 largest, for y/e on or after 6/15/09

- Eventually will require note disclosures be structured in detail, increasing disclosures from ~300 to over 3,000

- GAAP taxonomy [FASB standards] exceeds 15,000 disclosure items

- Filing companies moving toward embedded filing seeing efficiencies

• SEC also mandating mutual fund risk and return reporting in 2011

• Other taxonomies under development underway include Morgagae backed securities, proxy disclosures, corporate actions, governance risk and compliance, risk reporting et al.


Slide 24

United Technologies Voluntary SEC Filings

• Initial investment of $300

• 80 hours on first filing, now down to 4

• Total investment of $40k and 600 hours

• Commercial tools used

• Most work done in house by existing resources

• No new information is being required

• Technical knowledge of XML not a requirement

• Focus moves from format to content


Slide 25

XBRL and Public Sector Financial Reporting:Standardized Business Reporting: Oregon CAFR Project

• Association of Government Accountants [AGA] research project to consider feasibility of developing and using an XBRL taxonomy to tag data to create a CAFR

• Various contributors including state of Oregon, GASB, FAF, NASACT, AGA, Allocation Solutions Inc., JustSystems, and PricewaterhouseCoopers.

• Plan: develop GAAP taxonomy for 156 data elements, 96 from the Statement of Net Assets and 60 from the Statement of Activities

• Many lessons learned, and opportunities. It can be done BUT it won’t be easy, cheap or fast

• Major obstacle: no regulatory driver such as the SEC

• Real question: would state/local SBR enable more attractive capital opportunties-


Slide 26

The Nevada pilot: XBRL a way out spreadsheet ‘hell’

• Use XBRL for grants reporting with expansion to a business portal

• Worked with 60 grants in Nevada Dept of Agriculture

• Current process is time consuming and error prone

- Takes two weeks to generate a monthly report

- Errors caused by manual manipulation, cutting and pasting of data

• Solution was to use an XBRL GL Adapter to tag GL entries using downloaded CSV data and populating a Web-based XForms report that processes XML.

• Report generation time cut to about an hour

• Looking next to apply XBRL to debt collection documents [taxes]

• Eventually would like to have XBRL tie together state portal for businesses applying for grants and licenses


Slide 27

Creating an Interactive Single Audit Act Database [A-133 Project]

• An AGA Corporate Research Project- Partners include HHS, NASACT, Marklogic, Allocation Solutions, FAC

• Attempt to access details in full A-133 report- individual findings as recorded in the auditor’s finding- management response in the finding- corrective action plan- summary schedule of prior audit findings

• Develop taxonomy to look at findings - for a program across entities [- across all programs within an entity- between entities

• First tests were successful: one click access from SF-SAC to detailed finding- But not with XBRL……


Slide 28

XBRL benefits

One source for external reporting

Internal consistency across all locations

Benchmarking, peer comparisons, research

Enhances control

Reduces manual handling of data

Facilitates ad hoc data requests

Small investment, documented efficiencies

Leverages legacy systems


Slide 29

Why now? Reporting will/is changing…

THEN NOW

Focus Shareholder Stakeholder

Medium Paper Web

Format Standard Custom

Frequency Periodic Real-time

Indicators Financial Statements Various Metrics

Data Emphasis Historical Projected

Costing Historical Cost Value-based info

Validation Audit Accounts Assure Processes

Environment Consistent Dynamic

Compliance Self policing Stifling


Slide 30

Why now?• Organizational economics

• Transparency

• Globalization

• ‘Bad behaviour’

• Because we can

© 2009 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context requires, other member firms of PricewaterhouseCoopers International Ltd., each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP.

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