XBRL News and Commentary from the Hitachi XBRL Business Unit
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Realizing the RIXML.org/XBRL.org Partnership: It’s ALL about the Workflow

Written by Jack Roehrig
Posted on February 28, 2011 Comments
February 28, 2011 | General | Barron King

RIXML.org (www.rixml.org) remains an organization dedicated to the adoption and implementation of an XML-based tagging standard for research data.  Both sell-side publishers of research and institutional buy-side consumers of research and vendor intermediary channels, which are value-added distributors of research, have a direct stake in the successful implementation of this standard.

Why tagging and why now?  A colleague of mine in RIXML.org recently passed on an observation that sums up the need for standardized structure (tagging) quite well: this is a transitional time for the research business. Research packaging and distribution decisions are taking on greater urgency in two different roles:

  • Business drivers — content that adds to the investment decision making process needs to be clearly paid for.  “Fuzzy” pricing models, on the hope of increased commissions and order flow, are fewer and further between.  “Content in context” is paramount.  Rich, deep tagging to identify such content will help to mitigate the opportunity costs of misplaced or irrelevant research to clients.
  • Technology drivers, which speaks directly to the transitional time for the research business.  I like to use the iTunes analogy.  How many times has anyone searched for songs in iTunes when those songs’ tags are absent or misplaced?  Those songs will probably not make users’ playlists.  In the same way, research that is not tagged correctly or not tagged at all will not make consumers’ “playlists”.  The proliferation of PDAs, iPhones, iPads, and their apps among institutional portfolio managers and consumers will only heighten the need to structure (tag) research in its proper context.  This is a very exciting time for research to ride along on this technology toolset wave.

RIXML.org is a Direct Association member of XBRL.org.  We see our relationship as highly complementary; we face off to XBRL at the working group level.  XBRL is clearly designed to bring efficiencies to the research analyst workflow process, saving time in data gathering, reducing error rates, and embedding live extensible data filings into publisher workflow to produce more timely and effective earnings models, fundamental company updates, etc.

Our RIXML members see the potential benefit of XBRL.  While we are still in the early innings, early models are emerging to bring the two together in practical implementation.  We expect these practical models to seek and find their right level in our business in 2011.  The membership firms in RIXML.org will continue to benefit from greater understanding of the XBRL vendor applications that may serve as enablers for these workflow models.

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A 21st-Century Government Reorganization Demands 21st-Century Tools

Written by W. David Stephenson
Posted on February 24, 2011 Comments
February 24, 2011 | Non-Financial Reporting, XBRL GL | Barron King

In the State of the Union, President Obama announced that one of his priorities was a comprehensive review of government agencies to decide which should be eliminated, merged, or reorganized, saying “We can’t win the future with a government of the past.” This will be the first major study of government reorganization in more than 50 years. If it is to succeed, it must use 21st-century tools and a 21st-century mentality as well.

According to the White House, promoting foreign trade and exports will be a major focus of the reorganization. That made me think instantly of XBRL as a key tool, because it is becoming such an important global tool as more countries move toward adopting the XBRL-based Standard Business Reporting system for corporate governmental reporting.

But I’m not just thinking about XBRL as a reporting mechanism under a newly reorganized federal government, as important as that would be.

I believe that this review offers a perfect opportunity for a bold creative exercise. The heart of the evaluation would be tracking data flow throughout the government. As you may remember, the president pointed out that “… the Interior Department is in charge of salmon while they're in fresh water, but the Commerce Department handles them when they’re in saltwater.” The function could then be assigned to one agency or another based on where the majority of the data flows and is acted upon.

But we can’t just track information flows and then report them using 20th-century technologies. That’s where the really bold part of the reorganization would come in. As part of documenting the data flows, each data point should be tracked back to the first place it was entered. At that point, it should be structured with XBRL GL tags.

That would mean that no matter how agencies are re-aligned or perhaps abolished, the reorganization process could bring about a dramatic change in the way the government (and, eventually, the private sector) handles data every day, because of tagged data’s property of not having to be re-entered. Processes could be redesigned so the data would automatically flow wherever the same tags were inserted, whether inside one agency, or to multiple ones if that can’t be avoided.

What would that mean?

  • Government decision-making would improve, because employees would have access to real-time, not just historical, data.
  • All government workers could easily become knowledge workers, with ready access to the information they need to do their jobs.
  • Even though there will still be some situations where different permits or reports have to be reviewed and acted upon sequentially, many more could be dealt with simultaneously. Everyone who would need to review and sign off could discuss the situation with each other, rather than evaluate and act in isolation, as is presently the case. This would simultaneously cut the cost and time that a company would have to spend before getting an approval, while improving protection of the public interest because every work group concerned could review a situation collaboratively.

XBRL GL is far too powerful a tool for daily administration of a government agency or a private company to be obscured by the growing use of XBRL as a reporting tool. Yet I believe that is exactly what is happening: managers have unfairly categorized XBRL tags as something to be added at the very end of a process, rather than being the basis for all of the data flowing through the organization every day.

XBRL is exactly the kind of 21st-century tool that should be used not only in the federal agency review, but in daily operations of whatever agencies remain after the review is completed.


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The New Math for Transparency

Written by Mike Willis
Posted on February 22, 2011 Comments
February 22, 2011 | General | Barron King

When applied to the practical application of XBRL, “transparency” has more layers of meaning than is immediately obvious.  To make my point, let me take us back to our elementary school days when “New Math” was part of our curriculum.

Historically, “transparency” has largely been a synonym for “available”.  So in “Old Math” terms, the formula for transparency is:

Transparency = Availability

On the Internet, many material facts may be publicly available and yet economically impractical to access for a wide range of information users and analysts.  Locating critical information embedded in long narrative text and explanatory footnotes – and then subjecting it to manual access, parsing, and reuse processes – may require many hours of work from highly skilled professionals.  Despite information’s public availability, the high cost of access and reuse essentially renders the information opaque, not transparent.

If availability were the sole consideration, some might suggest disclosure of the information via chiseled stone tablets placed in the corporate parking lot.  The information is available, just not very accessible or reusable.  This is commonly the experience of many investors and analysts who attempt to access and reuse current electronic paper based disclosures – the level of effort required to reuse the disclosures puts them economically out of reach.

Reuse requires context for each information element to convey the material concepts so that information consumers can pull it apart and reconstruct it for their own analysis. Extensible Business Reporting Language (XBRL) makes this process possible without the loss of context.  An XBRL taxonomy defines the context for all information elements it covers and typically provides a hierarchy for related extensions. It also provides a specific definition – similar to how the UPC or bar code defines retail products – for each information element. Because taxonomies relate coded elements to one another, each element can be quickly accessed and analyzed without distorting the context of the overall communications that it was created within.

For decades, prior to the Internet, business reporting developed manually under different principles – U.S. GAAP, IFRS, and other jurisdictional-specific statutory standards. In the last few years, the SEC and IASB have provided XBRL taxonomies that are the basis for new regulatory reforms expected to both increase transparency and lower costs by enabling more automated preparation and reuse.  In a form of “supply chain standardization,” automation will replace manual efforts to access, populate, develop, and maintain analytical applications.

As a result of this standardization, the New Math for transparency becomes:

Transparency = Availability + Accessibility + Reusability

In lowering the cost of accessibility and reusability, XBRL enhances information transparency and enables consumers to analyze the disclosures more effectively.   Many preparers may want to consider that they are initially consumers before they are preparers and this enhanced transparency is also beneficial to their assembly, analysis and reporting efforts as well.

A specific analytical benefit provided by XBRL is the standardization of formulas and models that can be collaboratively developed, shared, and used across a broad range of individuals.   For enterprise analytical processes, this provides a standardized abstraction layer for more effective management of the firm's analytical intellectual property.  For individual analytical processes, this provides a Wikipedia-like environment for the collaborative development and reuse of models.  As a result, the costs associated with deploying, maintaining, and managing analytical concepts are lower due to their enhanced transparency, creating another New Math outcome of standardization.

What are other New Math benefits that might be realized from the XBRL enabled standardization of the business reporting supply chain?

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The XBRL Opportunity

Written by Barry Smith
Posted on February 15, 2011 Comments
February 15, 2011 | General | Barron King

Transparency and Convergence

For over a year, my firm (CarveOut Partners) and I have been watching the changes in the regulatory world. Our goal is to provide advice on applying the latest technology to capitalize on the opportunities presented due to these changes.

The Uncovering

The Dodd-Frank bill brings significant focus by regulating derivatives via exchange listings, spinning out proprietary trading under the Volcker Rule as well as new focus by the SEC on regulating high frequency trading (HFT) and cracking down on “expert networks.”  The areas where recent financial reform will have a significant but quiet impact dates previously to the Dodd-Frank bill or the SEC’s and FBI’s focus on HFT and expert networks, respectively. This is the area of interactive data and the digitization of financial reporting by publicly listed entities that list on a US exchange.

In 2007, the SEC developed rules to formalize XBRL reporting requirements, finalize taxonomy formats for GAAP, and create a technological infrastructure for interactive data formats. In early 2009, the SEC published final rules for operating companies (also known as issuing firms) as well as rules for publicly listed mutual funds.

It’s time to look beyond the regulatory haze and the enabling technologies to discover how Wall Street can lead in creating the value-add necessary for financial transparency.


Most Wall Street firms do not understand the significance of this wave of financial transparency brought on by the XBRL GAAP reporting initiative.  Most traditional vendors who focus on the Wall Street space see XBRL as just another reporting format, while publicly listed entities view the XBRL SEC mandate as a Sarbanes-Oxley directive.  It’s time to look beyond the regulatory haze and the enabling technologies to discover how Wall Street can lead in creating the value-add necessary for financial transparency.

The FIX XBRL Analogy

By July 2011, all public listed US corporations will be filing 10ks and 10Qs in standardized XBRL formats.  There are more than 15 enabling vendors now assisting these issuers in formatting and submitting their financial statements, much as there were niche vendors in the FIX (Financial Information eXchange) space assisting firms with trade submission formats and communications.  As FIX became ubiquitous, so did the advancement of the electronic trading world. The ability to process data at light speed has led to quicker trade execution and analysis as well as new decision-making tools and processes that have arguably changed the global trading landscape forever.

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XBRL Developments in Spain 2011

Written by Javi Mora Gonzálbez
Posted on February 9, 2011 Comments
February 9, 2011 | General | Barron King

Business Register Financial Statements and Spanish GAAP

Since its implementation, and as a compulsory requirement established by order JUS/206/2009, XBRL has been widely used as the basis of annual digital financial statements preparation in Spain. On our website (https://www.registradores.org/mercantil/jsp/home.jsp?idioma=en&pais=EN), you can see more than 1,200,000 instances of XBRL (about 670,000 from financial year 2009 and 600,000 from 2008) that we have received, processed and made available. The content of the annual accounts can be downloaded as a compressed file that includes the XBRL file with the financial data or as a PDF that includes all documents. After the publication of order JUS/206/2009, the content and the design of the printed forms have been updated twice and so has the PGC2007 taxonomy (http://www.icac.meh.es/Taxonomia/pgc2007/Taxonomia.aspx). The Ministry of Economy, through the National Accounting and Auditing Institute and in collaboration with Bank of Spain and Registrars (among others), is preparing a new version of the taxonomy and an extension to be used by consolidated groups. This new taxonomy is going to be called NOFCAC2010 and will be available by the end of February.

XBRL for Reporting Data of General Identification (DGI) from Economic Agents

The DGI taxonomy was created by a working group comprised of leading Spanish supervisors, disseminators of information, and a number of major Spanish technology companies. Its purpose is to identify the entity that reports in XBRL as well as give information about the report itself. In order to satisfy the new requirements of the working group members, including the new version of PGC2007 and the forthcoming NOFCAC2010, a new version of the taxonomy is being prepared. We anticipate that new concepts of geoposition, handicapped employees, and the update of the national and international lists will be among the changes.

XBRL for Central Balance Sheet Data Office

One of the missions of the Bank of Spain is to collect, process, and store the financial information of non-financial companies in Spain, with the objective of increasing knowledge of each Spanish sub-industry. A GAAP 2007 XBRL extension is used to model an annual questionnaire, according to both the normal and reduced formats. Using this XBRL Annual Questionnaire, it is possible to collect (on a voluntary basis) information about an entity's annual balance sheet, income statement, features, activities, and other data, including a complete identification with the DGI taxonomy. Taxonomy ES-BE-CB v5.0 is available online. It is currently used by about 5,500 contributing companies.

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Lessons Learned from Teaching XBRL

Written by Dean Ritz
Posted on February 3, 2011 Comments
February 3, 2011 | General | Barron King

Sometimes you have to forget a lot to learn a little. In my six years working with XBRL, I’ve provided instruction to scores of engineers and financial reporting specialists inside filing companies, as well as in services firms building XBRL practices. Here are three conclusions I’ve reached about the task of teaching XBRL itself.

1. Your enthusiasm is no substitute for theirs

The adage “You can lead a horse to water, but you can’t make him drink” certainly applies. You have to find out why each person is there and what will be expected of them when they complete the training and return to their job. Then you must help the student clearly frame these objectives, so you both may keep connecting the training to these objectives. This helps you keep student’s interests first and foremost, and select material that is relevant to their objectives. Your respect for their situation encourages their enthusiasm.

2. It is easier to teach external reporting people about XBRL than technical people about financial reporting.

It would be great if all financial reporting people possessed an engineer’s comfort with data abstractions. Fortunately, financial reporting people can make up for this through practice, and they come with all sorts of great examples with which to practice. It is this domain knowledge and their practical needs that provide the basis for connecting them to the theory, to the technology, and to its use.

Often, financial reporting specialists have to forget some of their paper-based reporting methods to be successful with the move to XBRL. The statement of cash flows provides a good example. This statement is challenging because it requires understanding calculation weights and their relationship to balance types — those balance types have a meaning that is independent of the particular statement in which the fact resides and the use of negated labels to control the presentation of the fact. The technical features of balance type for elements, calculation weights, and negated labels also play a part on the balance sheet, but it is the circumstance of shared facts between the statement of income and the statement of cash flows that makes these features not only necessary to use but also necessary to understand. It isn’t uncommon to see XBRL novitiates create reports with duplicate facts: a positive version coming from the statement of income, and negative version from the statement of cash flows.

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