XBRL Solutions, Inc. 1 “In times of change learners inherit the earth, while the learned find...

1XBRL Solutions, Inc.

“In times of change learners inherit the earth, while the learned find themselves beautifully equipped to work in a world

that no longer exists.”

Eric Hoffer


XBRL: Executive Overview

Charles Hoffman, CPA, MBA

XBRL Solutions, Inc.

Tacoma, Washington

(253) 752-9429

[email protected]

XBRL Steering Committee and XBRL Solutions, Inc.


“I can provide you with any piece of financial information, from any company, in any language, according to any set of

generally accepted accounting principles, anywhere on this earth – including on this

cell phone, or up in that airplane.”

XBRL – ride the light…


Objectives

To provide an overview of XBRL To provide background to help you to see

why XBRL is important To explain how XBRL works, so you can

see what problems it can and cannot solve Demonstrate XBRL in action To communicate information relating to the

build-out of XBRL De-mystify any aspects of XBRL or XML

you need de-mystified


Agenda

Who am I Who are you What is the Solution What is the Problem Conclusions Additional Information Questions and Discussion


Who am I CPA, MBA Price Waterhouse auditor Financial officer for 12 years Database/accounting tool developer to help me do my

job Consultant – helped other accountants use technology AICPA Innovative User of Technology Award recipient

(1997) Wrote an article explaining XML for Journal of

Accountancy (1999) XBRL Steering Committee Member Played key role which helped start the XBRL wheel

rolling


Who Are You?


What is the Solution?


What is the Solution? Internet (TCP/IP, HTTP, SMTP) – standard

communications infrastructure HTML (XHTML) – standard document format XML – language for building information exchange

languages XBRL – an information exchange language, based on

XML Other XML-based languages for transactions, reporting,

any data exchange SOAP (Simple Object Access Protocol) – one computer

application talking to another computer application User agents – applications which work over the Internet,

not just web browsers Intelligent Agents – result of all of the above


What is the Solution? You will best appreciate XBRL if you understand the

Internet and the problems that XML solves for the Internet

You will best appreciate XML if you understand the problem XML solves

You will best appreciate the fundamental nature of the change that is occurring (has occurred) if you understand WHY the change can occur

This is NOT a technical presentation, but we will talk about technology

Security is implied throughout this presentation


Security

The Internet will NEVER be perfectly secure Nor will banks ever be perfectly secure Nor will your house be perfectly secure Nor will your car be perfectly secure Security will ABSOLUTELY need to be

addressed and solutions imbedded in everything addressed in this presentation

It can be


The Internet


The Internet: Cost Effectiveness

“Everyone can be a publisher of information with as little as an HTML enabled word processor, a free file transfer program, and a $19 a month account with an Internet Service Provider.”


The Internet: What is it?

In the “early days”, email made up 85% of use of the Internet

Web browser? HTML? Web pages What is this “second generation” Internet or

Internet 2?


The Internet Is… Standards - everyone agreeing to use TCP/IP More Standards - like HTTP, HTML, FTP, SMTP HTML – the “killer app” that made the Internet take off, but

is NOT the Internet (Think of the PC and the “killer app” – the spread sheet –

when they were first introduced; think of where PCs are now; project where the Internet will be if it follows the same curve)

HTTP – the REAL “killer app” XML – the data exchange standard User Agents – of all sorts, not just web browsers Intelligent Software Agents – possible because of all of the

above Bottom line: Making possible for $100 what used to cost

$100,000


And the Internet means… Small companies can act like large companies Large companies can act like small companies Every company is a “dot com” company, whether

you want to be or not (Funny how companies did not refer to themselves

as “telephone companies” when the phone came out or “paper companies” when paper was invented)

Fundamental change of infrastructure Big opportunity, but also a big threat Change


XML


XML: Everywhere

“XML should be everywhere! Every database should be able to import and export XML-formatted text. So should every programming and scripting language. That’s the purpose of XML; to break down the barriers and to allow all kinds of data to be interchanged with all kinds of software.”


XML: Fundamental and Important

“XML gives Java something to do.”

John Bosak, Sun Microsystems


XML: What is it?

eXtensible Markup Language Works well over Internet, but DOES NOT

NEED THE INTERNET to be useful. Simpler derivative of SGML (Standardized

Generalized Markup Language) which has been a standard for 10+ years

Data focused cousin to presentation focused HTML (Hyper Text Markup Language)


XML is a… platform independent, self-describing, expandable (extensible), standard data exchange format that can be used either independently or embedded

and used within other solutions. It is both readable by humans, and understandable

by computers. It was designed to work well over the Internet and built so it can easily be embedded within

Internet-related products.


XML is … “The last missing piece of the Internet” Catching on like wild fire – no other technology has

caught on so quickly A solution to a fundamental problem – effective

exchange of all sorts of data Its value is directly proportional to its use – and it is

being used Is a language for building languages – needs things

like XBRL to work Will transform the Internet from “pictures” or

“individual documents” to a big, interconnected database


XML: Versus EDI

EDI Optimized for

compressed messages EDI server costing

$10,000 to $100,000 Uses proprietary EDI

VAN Months to learn Requires C++

programmers Machine readable

XML Optimized for easy use

and programming Web server costing less

than $5,000 Uses Internet

connection Hours to learn Requires JavaScript,

VB, Python, Perl Human and machine

readable

Source: The Gartner Group


XML: Initiatives

There are hundreds, including: XBRL – eXtensible Business Reporting Language

(reporting oriented) ebXML – Electronic business information

(transactions oriented) NewsML – News stories HR-XML – Human Resources OAG – Open Applications Group, integration of

enterprise applications Rosetta.net – Electronics industry data/transaction

exchange, supply chain integration See XML.ORG


XML: Example<?XML version=“1.0”?>

<!DOCTYPE FinancialStatement SYSTEM “http://www.xml.com/FinancialStatement.dtd”>

<FinancialStatement>

<CompanyName>The World Online, Inc. </CompanyName>

<CurrentYear>1998</CurrentYear>

<PriorYear>1997</PriorYear>

<BalanceSheet>

<Assets>

<CurrentAssets>

<Account Name=“Cash” Balance=“101,577”/>

<Account Name=“Receivables” Balance=“232,438”/>

<Account Name=“Inventory” Balance=“858,219”/>

<Account Name=“Other” Balance=“1,490”/>

</CurrentAssets>

...


XML: What is it?

Adds structure to unstructured data A universal database format A universal file format A universal transaction format (alternative

for and then a replacement of EDI) A universal data integration format A universal metadata format (data

dictionary) Last missing piece of the Internet


XML: What can you do with it? Nothing new, just more effective and efficient way of

doing “the same old things” Cheaper and better – a lot more effective and

efficient Better searches Better data exchange (EDI) Multiple representations for one document: as raw

data, print, web, CD-ROM Report and organize data Automatically and reliably extract and reuse data


XML: Better Searches

<Degree Level=“Masters” Type=“MBA”>

<Education><Degree Level=“Masters” Type=“MBA” Year=“1994”>MBA, University of Michigan School of Business, 1994</Degree></Education>

Resume

MBA

Search Engine

Degree with Type=“MBA”

Not Marimba

Not Museum of Byzantine

Architecture (MBA)

Not MBAR Consulting,

Inc.

Not MBA Records


XML: Better Data Exchange

AccountingSystem

AccountingSystem

The Internet

Windows NT

Mainframe Unix

Silicone Graphics

AS/400

EDI Transaction SetsACH

BAIOFX

SWIFT

IRS tax filings

FSML

EDGARX M LProprietary

AIX

NetwareTCP / IP


XML: Multiple Representations

Region SalesEast 12Central 17West 22South 14

0

5

10

15

20

25

East Central West South

East

Central

West

South

Region SalesEast 12Central 17West 22South 14

Total 65

Region SalesTotal 65


And XML means…

Cheaper, more reliable interoperability Less reliance on proprietary solutions You can actually exchange word

processing documents and the formatting does not get goofed up

Another fundamental change in infrastructure


I say tomato, you say…?

Image if everyone used the same operating system and database platform, and all the platforms were connected, and they all used the same data query language… The Internet (TCP/IP, HTTP) and XML provides this.

I say tomato, you say tomato.

But what if we called the same things in those databases by different terms? XBRL and other XML-based languages minimize this problem.


XBRL


XBRL: What is the Problem?

“The Electronic Dissemination of Accounting Information – Resource Discovery, Processing

and Analysis”

Roger Debreceny, Glen Gray, Tony Barry

[email protected]



“Business Reporting on the Internet”

Andrew Lymer, Roger Debreceny, Glen Gray, Asheq Rahman

International Accounting Standards Committee



“Electronic Distribution of Business Reporting Information”

Financial Accounting Standards Board (FASB)


Text Document (Glob of Text)


XML/XBRL


Financial Statement


Financial Statement - XML/XBRL


XBRL: Not “New Standards”

XBRL is not about setting accounting standards

XBRL is about expressing accounting information electronically in a format to make re-rendering that information easier, including on paper – but also in other forms


XBRL: Framework

eXtensible business Reporting Language Not just financial statements, a framework XBRL for Financial Statements XBRL for Management Reporting XBRL for General Ledger Transactions XBRL for Edgar Filings XBRL for Administrative Reporting XBRL for …


XBRL: Cross-references

One XBRL taxonomy can be cross-referenced to another XBRL taxonomy, as required

XBRL will cross-reference to other XML-based languages, as required

XBRL can be cross-referenced to relational databases – you DO NOT need tags in relational databases, just a simple method of establishing the cross-reference


XBRL: Components Detail

Core Schema explains how to build instance documents

Meta model explains how to build a taxonomy

Taxonomy(s) – dictionary or vocabulary Instance document(s) - database


XBRL: Components Summary

Company Taxonomy

(Describes terms/concepts)

Instance Document

(Such as financial statement)

Core Schema (How to create instance)

Meta Model

(How to create Taxonomy, used by all taxonomies) CI Taxonomy

(Describes terms/concepts)

Media Taxonomy (Describes terms/concepts)

KPMG Taxonomy (Describes terms/concepts)

type


XBRL: Terms Specification – describes how, in XML terms,

taxonomies and instance documents are to be built Taxonomy – “dictionary” of facts Instance – “database” of facts (items) Element – XML element, such as <item> or <group> Item – one fact Group – helps organize items Label – describes (or overrides) items Attribute – provides additional descriptive

information for item


XBRL: Understanding

All these are on the XBRL.ORG web site: Specification Taxonomy Sample Implementation Training and Help Resources


XBRL: Design Goals “Bleeding Edge” – designed with an expectation of

what the technology will be; works right now, will get even better as technology catches up, mostly XML Schema

Loosely Coupled (email example) Modular in nature International in nature Cross-reference to other XML-based languages Imbedded within other XML-based documents Flexibility


XBRL: Taxonomy


XBRL: Taxonomy

Viewer


XBRL: Taxonomy

Printout


XBRL: Taxonomy

Builder


XBRL: Instance Creator


XBRL: Taxonomy <element> - financial/accounting “concept” or

“fact”; name attribute “hooks” it to instance document; type attribute describes the data type

<documentation> - description of the element <xbrl:rollup> - identifies the parent and how it

relates to the parent; weight describes how it mathematically relates; order attribute describes the order

<xbrl:label> - provides a “default” label for the concept or fact; xml:lang identifies the language which their can be any number; labels can be over-ridden

<xbrl:reference> - provides ability to reference to literature; name, number, chapter, paragraph, subparagraph


XBRL: Taxonomy Element Sample

<element name="statements.accountantsReport" type="string">

<annotation>

<documentation>Report(s) issued by independent accountant or

internal accountant. If two reports are issued, two accountant

report sections should appear</documentation>

<appinfo>

<xbrl:rollup to="statements" weight="0" order="3" />

<xbrl:label xml:lang="en">Accountant's Report</xbrl:label>

<xbrl:reference name="SAS" number="58" chapter="" paragraph=""

subparagraph="" />

</appinfo>

</annotation>

</element>


XBRL: Instance Documents

<group> - generic grouping mechanism <item> - pieces of information <label> - override labels of taxonomy Attributes – further describe items

id, entity, type, schemaLocation, unit, period, scaleFactor, precision, decimalPattern, formatName

<group type="ci:cashCashEquivalentsAndShortTermInvestments.

cashAndCashEquivalents">

<label href="xpointer(..)" xml:lang="en">Cash</label>

<item id="BS-01" period="1999-05-31">26983</item>

<item id="BS-02" period="1998-05-31">18197</item>

</group>


XBRL: Attributes id – unique identifier entity – identifies the entity schemaLocation – location of the taxonomy used type – “maps” to accounting concept unit – identifies the unit such as “US Dollars” period – identifies the period scaleFactor – identifies the “multipler”: thousands, millions, etc. precision – identifies how “trustworthy” is the number decimalPattern – identifies the pattern of the number provided: is a negative in

(), is there a thousands seperator, what indicates the decimal place, not everyone does this like the US

formatName – extends the decimalPattern attribute


XBRL: type Attribute

type attribute “hooks” instance document item to a taxonomy

Taxonomy has additional information for type

Data type, parent, weight, label, description, reference to literature, etc.


XBRL: Instance Group/Item Sample

<group entity="NASDAQ:GPSI" unit="ISO4217:GPSI" >

<item type="ci:cashCashEquivalentsAndShortTermInvestments.

cashAndCashEquivalents" period=“1999-01-31" >-1000.01</item>

</group>


XBRL: Missing Attributes?

Budget or Actual?


XBRL: How Components Fit

CoreSchema

DomainSchema

DomainSchema

An XBRL Document

DocumentSchema

An HTML Document

XSLTStyleSheet

New XBRL Document

XSLT

MappingSchema

DomainSchema

Application


XBRL Benefits: Reuse

RegulatoryFilings

Web Site

Tax Return

Bank Filings

Accounting System

Other Sources of Information

XBRL

Printed Financials

Internal Use Financials


XBRL Benefits: Analysis

Mechanics (Re-keying data)

Now – majority of cost relates to data discovery and re-keying

Data ConclusionData Discovery

Analysis

* Bars represent component cost, total bar length represents total costs

Mechanics (Re-keying data)

With XBRL – cost can be re-directed to analysis

Data ConclusionData Discovery

Analysis

With XBRL, Intelligent Agents – total costs are reduced, analysis enhanced

Data ConclusionAnalysis


XBRL Benefits: Financial Supply Chain

External (Investors, creditors, regulators, etc)Internal to entity

Operational Data Stores

++

Report

Report

ReportRegulatory

Filings

Text

Text + 10-KEDGAR (Text)

GL

C of A

+

+

+

Auditor

Credit Application+

BanksText

Statement in PDF

Statementsin Print+

Statementon Web

Text


ExternalFinancialReporting

BusinessOperations

InternalFinancialReporting

Investmentand Lending

AnalysisProcessesProcesses

ParticipantsParticipants

AuditorsTradingPartners

Investors

FinancialPublishersand Data

Aggregators

Regulators

XBRL for G/L Journal Entry

ReportingXBRL for

EDGAR Filings

XBRL for Financial Statements

XBRL for Tax Filings

XBRL for Business Event Reporting

Software Vendors

ManagementAccountants

Companies

XBRL Build-Out: Specifications


XBRL Build-Out: Financial Reporting

Financial Reporting Standards Across Jurisdictions

Ind

ustry S

pecific R

epo

rting

Stan

dard

s

U.S. CanadaIAS U.K. Germany Australia

US GAAPCommercial & Industrial

(C&I) CompaniesCommercial Industrial

(CI) Companies

US GAAPFinancial Services

CompaniesFinancial Services

Companies

US GAAPC & I, extended to

Software CompaniesCI, extended to

Software Companies


Media & EntertainmentCI, extended to

Media & Entertainment

……


Media & Entertainment

CI, extended toAgriculture

…… …… …… …… …… ……

…… …… …… …… …… ……

…… …… …… …… …… ……

…… ……

…… …… …… …… ……

…… …… …… …… …………

………… …… ……

……

Done


XBRL Build-Out: Taxonomies Under Development

CI International Accounting Standards CI Canada CI Germany CI Australia CI New Zealand CI Singapore US Federal Government Financial Institutions US Financial Institutions Australia General Ledger Transactions


XBRL: Adoption

June 2000 December2000



June 2003

Adoption

Tool Development

Taxonomy Development


XBRL: Demos

Sample Financial Statement Excel Extraction Demo Excel Extraction, Office Integration Comparing Companies XBRL Validator

FreeEdgar Demo ValidatorComparisonComparisonComparison


XBRL: Means…

XML is a little bit more important because it has yet another language available for use

Automated extraction and reuse is possible Cheaper interoperability Consumers win Another fundamental change in

infrastructure


Soap


Soap Simple Object Access Protocol RPC (Remote Procedure Call) over the

Internet One computer application talking to another

computer application on a different computer

HTTP-based XML-based Standard, cheaper, easier cross-platform,

cross-computer application to application communication


User Agents


User Agent


User Agents

A web browser is ONE user agent Anything that understands HTTP is a user

agent Microsoft Access is a user agent. So is

Excel, Word Microsoft.net


Intelligent Agents (Bots)


Intelligent Agent


Intelligent Agents

Possible, because of the cheap connections provided by the Internet

Possible, because of HTTP to send a request, and receive a response

Possible, because of XML as a standard way to exchange data

Possible, because of the languages, like XBRL, which explains information in terms computer applications understand


Conclusions


Conclusions

The Internet has enabled standard global networked communications similar to the telephone, the radio, and the television

Standards save money A fundamental change in business

infrastructure has occurred A fundamental change in business is

occurring driven by this change in infrastructure

XBRL is part of this new infrastructure


Additional Information

XBRL.ORG web site Scientific American, May 1999, “XML and

the Second – Generation Web”, John Bosak and Tim Bray

Journal of Accountancy, May 1999, “The XML Files”, Charles Hoffman, Christopher Kurt and Richard Koreto

A CEO’s Guide to eCommerce Using Object-Oriented Intelligent Agent Technology, Peter Fingar


“I can provide you with any piece of financial information, from any company, in any language, according to any set of

generally accepted accounting principles, anywhere on this earth – including on this

cell phone, or up in that airplane.”

XBRL – ride the light…


Questions and

Discussion

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