Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi Consulting Corporation XBRL: An Interview with Amy Pawlicki of the AICPA (Part 2)
Amy R. Pawlicki is Director – Business Reporting, Assurance & Advisory Services and XBRL for the American Institute of Certified Public Accountants (AICPA). She is responsible for building awareness and understanding among the AICPA membership of XBRL. This is the second installment of a two-part interview; the first part covered questions 1 through 6.
7. It may not be widely known that the AICPA played a crucial role in the launch of XBRL more than a decade ago. Could you describe how the AICPA was instrumental in inaugurating the data standard?
Back in 1998, AICPA member Charlie Hoffman brought the XBRL concept to AICPA’s New Technology task force. As quoted in a history of XBRL that the AICPA has just released titled The story of our new language: Personalities, cultures, and politics combine to create a common, global language for business: “Hearing Charlie Hoffman’s presentation on a new technology that would allow separate systems to share financial data in real time on the Internet, the team moved quickly to fund more prototypes and to make a business plan.”
From that time forward the AICPA has supported the development and adoption of XBRL through the work of various committees and task forces, and through the establishment of XBRL International, Inc. (XII) and the XBRL US jurisdiction which was originally housed under the AICPA committee structure. In 2006, the XBRL US jurisdiction became an independent legal entity. Since then, the AICPA has remained actively engaged in XBRL US, and in XII, leveraging our communications channels and the intellectual capital contributed by our members to support the successful implementation of XBRL.
8. For decades accountants have been challenged to understand new information technology. Do you see XBRL as just one more piece of IT that accountants need to be familiar with, but not know in great detail? Or will XBRL require, at least for some accountants, a more in-depth, technical understanding? How might this vary among the different areas of accounting, e.g., financial reporting, internal auditing, external auditing, etc.?
The most important skill set accountants bring to the table with respect to XBRL is their strong knowledge and understanding of financial reporting. This is because tagging data is the equivalent of classifying data in company financial statements and footnotes, and it is critical that the “tagger” be intimately familiar with financial reporting when tagging financial statements, or with whatever subject matter they are tagging.
That said, CPA preparers, internal auditors, and external auditors alike should have at least a basic familiarity with the mechanics of XBRL from a technical perspective. Software facilitates the process to some extent, but there are many technical rules to be complied with when tagging in XBRL and when submitting documents to certain bodies such as the SEC, which has written very extensive and detailed guidelines in a new chapter of the EDGAR Filing Manual dedicated to XBRL. Some understanding of how XBRL works from a technical perspective is also necessary to comprehend potential pitfalls. Many people think that XBRL-tagged data is inherently the same as the underlying data from which it is derived, much like turning a Microsoft Word document into an Adobe PDF, and that the data is somehow “inherently accurate.” This is inaccurate – the data is only as good as the knowledge and skills of the tagger and/or a third party called in to check the accuracy of the tagging, and in the case of financial reporting in particular the required skill set is at the core of the CPA body of knowledge.
For more on this topic, readers may wish to refer to the AICPA XBRL Q&As on what accounting professionals, financial statement preparers, and audit committees need to know about XBRL. For more detail specifically on what internal auditors need to know about XBRL, I would recommend the paper XBRL: What’s In It for Internal Auditors by Gianluca Garbellotto.
9. How do you view the state of XBRL education for accountants right now? How do you see that changing in the future?
There are many progressive accounting professors out there teaching XBRL, and some have been doing so for many years. I think as XBRL adoption increases around the world, XBRL or at least the concept of interactive data in general will become more consistently covered in the education of accountants. We are starting to get inquiries from more and more professors as to whether there is standard curriculum they can be teaching related to XBRL, and I hope to learn more about what is being done and what is needed at the American Accounting Association (AAA) conference in early August.
10. With the financial crisis as a backdrop, there has been much discussion of using XBRL for the reporting of TARP, asset-backed securities, executive compensation, and other areas relevant to the financial system. Do you see much chance that XBRL will be adopted for reporting in any of these areas? Which do you see as most promising for XBRLized reporting?
With respect to TARP and asset-backed securities, in his March 11 testimony to the Domestic Policy Subcommittee Oversight and Governance Reform Committee, XBRL US President and CEO Mark Bolgiano explained how “requirements for transparency in TARP funds reporting and oversight can be met using an existing standard [XBRL] that brings a consistent format to data on financial condition, risk, value, and compensation information regardless of sources.” XBRL can be used as a tool after the fact to help unravel the information (or in some cases lack thereof) that underlies the current credit crisis, but more importantly it should be proactively applied on a go-forward basis to enhance transparency and access to data, thereby helping prevent future crises. Readers can follow the latest on a bill currently before Congress on this topic.
11. At the recent Paris XII conference you had the opportunity to speak to and hear from XBRL professionals in many countries. Is there anything that you learned from their experiences that would be instructive for those seeking to adopt XBRL in the US? Do you view the US as a leader in XBRL implementation, a laggard, or somewhere in-between?
I was encouraged to learn more about the diversity of ways in which XBRL is now being applied throughout the world. The AICPA has been and continues to be an advocate of what we call the “broader footprint” – the application of XBRL for reporting streams beyond financial reporting – as we feel this is where the biggest gains will be made in terms of process improvement and enhanced transparency of information.
XBRL adoption varies greatly around the world, which is not surprising given different needs and different legal and regulatory environments. I think what’s most relevant here is not how one country or jurisdiction is doing vis-à-vis another. Rather, there are very positive projects going on around the world that illustrate the vast potential of XBRL to be leveraged for process improvements in reporting in all areas of the private and public sectors and at the local, state, national, and international levels.
In the US to date, this potential is exemplified by pilot programs put in place under the leadership of Nevada Controller Kim Wallin, who foresees the potential for greater efficiency and enhanced transparency through the use of XBRL for tracking grants and other financial information, as well as by the FDIC project for call reporting, and SEC rule-making related to financial reporting and other investment data.
Internationally, XBRL is being used not only for financial reporting to securities regulators but also to tax authorities and stock exchanges, for reporting in the banking sector, and to standardize business reporting across multiple streams in various jurisdictions. Many examples can be found in the AICPA Journal of Accountancy article XBRL: Who Are the Early Adopters? by Karen Kernan, and on the XBRL International website.