Written by Bob Schneider Posted January 19, 2007

The 14th International XBRL Conference was held in Philadelphia in early December. I did not attend, and press reports were spotty, so I was curious to find out more about what went on. Many of the presentations are now available online, about 60 in total. Most are PowerPoint slides, which can be very useful for attendees who recall the speaker’s narration and those familiar with the material. But I have to admit that, for me, viewing slides can be like watching TV with the sound off okay for a Heat-Lakers game, but more often like watching a quiescent Laverne and Shirley.

It appears, though, that full text for most of the speeches of the plenary sessions are available, and some of those for the various tracks as well. I have gone through these, and several are well worth your time. As always, if you think I’ve skipped over any presentation worth mentioning, please let me know. (By the way, if you were a presenter and would like to use this space to describe or expand upon your Philadelphia talk, please contact me — I’d be delighted to publish your post.)

The keynote address of SEC Chairman Christopher Cox was, pardon my New Yorkese, a real humdinger. In the Philadelphia setting, his battle cry of “no taxonomies without documentation” had special urgency. Mr. Cox’s speech ranged widely but coherently, touching upon the improvements that XBRL offers users, his recognition of the crucial role played by the private sector in XBRL adoption, and the impact of interactive data on the audit process, One revealing stat he cited was that only about 5% of accounting restatements were due to deliberate errors, while over half are attributable to misapplication of basic accounting rules. Chairman Cox believes XBRL will be an enormous help in eliminating these errors.

Ian Ball, Chief Executive of the International Federation of Accountants, discussed how XBRL enhances credibility at each link of the information supply chain, which includes (1) management, (2) auditors, (3) regulators, creditors, and reporting agencies, and (4) users. The advantages he cited for the auditing profession seemed particularly salient (well, at least for this former auditor):

“More importantly, however, the current manual data mining can be replaced by more timely, accurate and complete data for analysis of all types. Simple balance sheet statistical sampling efforts, for example, can be replaced by 100% validation routines, or by deeper analysis of ledger-level data. XBRL will permit more effective analysis of data for anomalies greater access and lower cost access to data from ledgers enables the more effective analysis of large data pools for anomalies of fraud, compliance and other forms of audit assessments.”

Those remarks are followed up in the accompanying The Impact on Assurance, New Challenges For The Audit Profession. The paper discusses various scenarios where XBRL will be used, including the conversion of traditional statements to XBRL as well as the case where the XBRL statements are the primary statements. Principal author Gerald Trites of XBRL Canada helpfully includes a good deal of background on the reporting process and on XBRL, so it’s useful for a broad range of readers.

A good complement to this discussion is Kuo-hua Chou’s presentation How Valid Are They?. In essence, Mr. Chou performs a reality check on claims of infallibility for calculations in XBRL statements. In examining XBRL Voluntary Filing Documents with the SEC EDGAR System, Mr. Chou validated 93 instance documents against their discoverable taxonomy sets and found a significant number of inconsistencies. “All these inconsistent instances have calculation errors,” Mr. Chou writes. In describing his findings, Mr. Chou also provides significant background about XBRL and XML.

Jeff Diermeier, President & CEO of the CFA Institute, discussed the help XBRL affords investors in terms of transparency and accuracy. He warned, however, of rushing the process of taxonomy creation. Specifically, he was cool on the SEC’s target date of summer 2007 for taxonomy completion, since he believes it “increases the risk of delivering an end product which does not meet the expectations” of users.

Finally, the comments of Sir David Tweedie, Chairman of the International Accounting Standards Board (IASB), on standardizing global accounting principles are extremely useful. He spoke about interaction of (a) the development of XBRL taxonomies and (b) the convergence process between IFRSs and US GAAP, with its target date of 2009. He stated, that to the extent that US GAAP and IFRSs are converging, so should the XBRL taxonomies. He also noted the important commitment of the FASB and the IASB to make continued progress in other areas where accounting practices under both sets of principles require improvement.

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