Written by Kurt Cagle     Posted on September 29, 2009

Kurt Cagle is the managing editor of XML Today and a frequent commentator on XML-related issues. You can follow him on Twitter at @kurt_cagle

The specification space has become fairly busy lately as a new (well, actually, fairly old but resurgent) standard is now beginning to make waves outside of a fairly narrow domain. The US National Information Exchange Model (NIEM) has been in development since 2005, but with the new administration and a move toward increased modernization in the IT communication infrastructure of the executive branch, NIEM has definitely entered into the limelight.

NIEM isn't a single XML standard. Rather, much like XBRL, it is a framework for developing XML standards for use within the Federal Enterprise Architecture (FEA) that promotes a schema repository model coupled with significant re-use of XML component documents. Originally emerging as part of the Global Justice XML Data Model, NIEM is a joint effort among the Department of Justice, the Department of Homeland Security, and the Office of Justice Projects (essentially an R&D agency closely aligned with the DoJ). NIEM Information Exchange Package Documents (IEPDs) are zipped collections of schemas and instance for specific data object models from emergency response reports to arrest warrants.

NIEM-based models have been quietly making their way through both the Federal government and, largely on the strength of the judicial and emergency management schemas, are now in use with all fifty states as well, with NIEM-related projects being considered in Canada. What's more, as the data model proves itself, it has garnered interest in areas well outside of law enforcement, including education, marine provisioning, inventory management, and, yes, accounting. The Office of Management and Budget (OMB), the executive branch's primary accounting arm, is now actively promoting NIEM-based standards throughout the various agencies and departments, a move that's especially significant given that the recently created Federal CTO slot now held by Vivek Kundra is directed out of OMB.

XBRL proponents may be dismayed by this, given the oft-stated hope that XBRL would be seen as the accounting language to be used by key Federal agencies. However, the situation isn't as clear-cut as it may seem. One of the strengths of NIEM is its core mission to reduce the amount of unnecessary duplication within ontologies given the large number of existing, well-defined industry and domain specific schemas currently in use. To that end, NIEM makes heavy use of such standards as GML, as well as most of the W3C core languages, Atom, and other specifications. Additionally, NIEM IEPDs can be written to work with payloads, which offers the possibility that XBRL could be transported within NIEM.

This is not to say that NIEM will likely end up creating a wholesale adoption of XBRL as a sub-standard. The two architectures are fairly different, with NIEM being much more structural in approach and only secondarily referential, while XBRL is primarily linear sequences of properties with heavy internal referencing. The differences are significant enough that while it is possible that the NIEM Program Management Office (PMO), the organization that ultimately vets NIEM standards, will be willing to greenlight a straight adoption of XBRL, it's not especially likely.

What is more likely to happen is that some attempt will be made to create a set of "harmonized" schemas that would share common ontologies between major XBRL schemas, the NIEM core set, and any existing accounting standards that are currently in use at the Federal level. Structurally, there would probably be some kind of bridge service that might make it possible to map from one set of standards to another, either via a set of transformations or via related tools. This is something of an ongoing process that is taking place at a number of levels, as major schema frameworks get large enough adoption to effectively collide in various domains.

Long term, given the adoption that has taken place with regulatory agencies globally, it's certainly unlikely that the US will walk away from the XBRL standard.  However, it is also unlikely that the US government will sacrifice what seems to be a working, increasingly widely adopted internal standard such as NIEM when it is more likely that such a standard could be adapted to subsume many of the better elements of the XBRL standard while maintaining its own internal cohesiveness. Given this, it may behoove the XBRL community to be open to the possibilities of harmonization, on this and other fronts such as the Semantic Web harmonization currently under discussion with the W3C.

In the long run, the goal for everyone is the same: to provide a set of standards that will improve the efficiency of government messaging; make for a greater degree or reusability of content throughout the thousands of departments and agencies at the federal, state, municipal, and tribal levels; and make government accounting ultimately more transparent and accessible to the people who use and depend upon it.

For those seeking more information about NIEM, check out the NIEM website. Additionally, the NIEM PMO is scheduling a NIEM National Training Event in Baltimore on September 30  to October 2. Speakers will include Vint Cerf, one of the founders of the Internet, and OMB CTO Vivek Kundra.

Written by Marc van Hilvoorde     Posted on September 15, 2009

Marc van Hilvoorde is responsible for the development and implementation of digital reporting at the Netherlands Tax and Customs Administration (Belastingdienst). As the technical project manager of the Netherlands Taxonomy Project (NTP) he was responsible for the development and delivery of the Dutch national taxonomy. He is a former member of the XBRL International Standards Board and former chair of the Domain and Rendering working group.

Statutory and regulatory reporting is hardly the favorite subject of company managers, but most of them accept it as a necessary evil. The vast majority of businesses comply with its reporting requirements without much protest, supported by an army of accounting, audit, and IT professionals.  

In the many years I have been involved in the field not much has changed, and that seems a bit odd to me. It’s true that we have noticed a shift to digital reporting that improves timeliness and data quality. The old information exchange model is still very much in place, however. Regulators typically request the same information at the same time from every company, so many government agencies have large computer systems that do major duty during “filing season” then are put on standby the rest of the time. Additionally, the existing dogma in regulatory reporting seems to be “one size fits all.” As the numerous spreadsheets floating around on servers and hard drives within organizations can attest, however, the accounting industry already knows that one-size-fits-all simply isn’t true.

Furthermore, regulators almost never consult with other government agencies to get on the same page with their specific inquiries. In fact, it is difficult to align different investigations within the same regulatory agency. As a result, regulators repeatedly ask for the same information — information that’s already been reported, information that could be obtained just by asking another agency. I get more than a little annoyed when I have to manually update three different calendars with the same information, and I know others share my frustration.

Managers may see statutory and regulatory reporting, and its requisite inefficiencies, as proper and necessary, but that does not absolve regulators of their responsibility to innovate and make things easier for them.

In the Netherlands, the Government, regulators, and business all have recognized this obligation. Toward that end, the Government and regulators are collaborating in support of the adoption of Standard Business Reporting (SBR), a continuation and deepening of the Dutch Taxonomy Project begun in 2004.

Based on the XBRL standard, a national and cross-agency taxonomy has been created. The national taxonomy is not only for regulatory and statutory reporting; it can also be used for tax filing and statistical reporting. Commercial banks have said they will use the taxonomy for credit assessment reporting as well.

Why is SBR important? It has become increasingly clear over recent years that regulations, and the ways regulators operate, need to change. Regulators traditionally have faced the risk of not having necessary data; more recently, a different exposure has become more prominent: having the right data but not doing anything with it. In the current global financial crisis, we now read reports of numerous red flags that simply were missed. So often, a simple cross-agency inquiry could have revealed the truth but was not performed.

To address the need to use data properly, the current financial information supply chain simply is no longer sufficient. Computer systems already are pushed to the limit. Systems may contain the necessary data, but often they seem incapable of presenting it in a proper way to regulators. Meanwhile, regulators in turn are becoming reluctant to ask for more data, in part because it can be too time-consuming to analyze additional information. Unfortunately, there are examples of regulatory reporting which is only that: reporting. In other words, data is sent and received, without any further investigation or analysis. For every regulator, this should be unacceptable. Unused data is a waste of the time spent preparing it, and its mere collection fails the public by providing a false sense of security.

The piles of data will only increase, so if information overload were the issue, all regulators ought to stop collecting data. The real issue at hand isn’t information overload, however: it’s the need to search, find, and retrieve the information that’s been collected. To make information discoverable for users, tracking and tracing data is an important precondition. Thus, tagging data with the help of an XBRL taxonomy facilitates search, retrieval, and analysis.

More must be done to make life easier for business, however. One of the key items for regulatory innovation is facilitating cross-agency collaboration. Regulators need to introduce more robust and more sophisticated information exchange models and build the infrastructure to fit those requirements, and software vendors need to build new systems that support users’ needs.

These needs are evolving, as boundaries between organizations blur. Goods, money, and people move around the world ever more quickly, and this faster circulation means a more rapid flow of corresponding data and information. This means that it’s necessary to develop new globally oriented views on what regulation in the future will look like and how it will function. The new regulatory dogma should be “Get the right information at the right time,” guided by the principle of cross-agency reuse of information.

Here is an illustrative parallel: this regulatory and reporting trend matches the development of GPS systems to replace paper road maps. When drivers use a GPS system, they are concerned only with their own routes; they don’t need to open an unmanageable, one-size-fits-all paper roadmap. Each driver determines what destination to pursue and which road he wants to travel, and each driver gets his own route and the right information at the right time: “Turn right here.”

Similarly, statutory and regulatory reporting can move much closer to the actual needs of the users of information, and at the same time decrease preparers’ reporting and administrative burden. This improvement is the goal of the SBR program.

Businesses can motivate regulators to innovate and change their behaviors, as well. This is why the Dutch cross-taxonomy now is under constant review by the public domain. People have asked, Why are these tags in there? Who is using this information? By shaping what information is defined by the taxonomy, the public shares a tool of regulatory control: identifying, explicitly, what information is sought, at what intervals, and under which law.

It is in the interest of both the users and preparers to move towards the reuse and comparability of information. Introducing digital reporting using open standards like XBRL can provide wonderful opportunities to achieve these goals, which will benefit everyone involved. Just ask your local regulator.