XBRL News and Commentary from the Hitachi XBRL Business Unit
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SEC Taxonomy Approval

Written by Hitachi Staff
Posted on March 22, 2011 Comments
March 22, 2011 | General | Barron King

Tag selection season is officially open, now that the Securities and Exchange Commission has given its final blessing to the 2011 GAAP Taxonomy.

For preparers that dug into the 2011 Taxonomy when it was released by the Financial Accounting Foundation to the SEC, it might be comforting to know that the SEC approved the FAF update of the taxonomy without making any changes. So if you’ve invested some time and effort into studying the new taxonomy to update tag selections or transition some of your unique extensions into tags, your time and effort were well spent.

If you chose to wait for SEC approval before investing that time and effort, there’s no more reason to put it off. It may be a tedious process to study the entire taxonomy looking for places where your tag selections could be improved, but it’s important to make the filing process as consistent and as comparable as possible across all companies. That starts with making sure all the elements of your financial statements are properly tagged.

The FAF is responsible for updating the taxonomy annually to reflect changes in accounting rules. But the update also is important to fix any holes or problems that might be discovered as companies continue using it to submit their financial statements in XBRL. XBRL US developed the 2009 taxonomy, but as the SEC began mandating XBRL adoption, it shifted responsibility for updating the taxonomy to the FAF in order to link it more closely to current accounting rules.

That shift occurred in 2010, so there was no taxonomy update that year. As such, the 2011 taxonomy represents two years worth of changes in accounting rules. Those two years of XBRL use has exposed many tag problems to be fixed. The SEC published a 14-page summary of the changes to help preparers more easily spot where there are differences. The FASB published a more extensive summary.

The SEC wants companies to use the new taxonomy to bring more consistency to the selection of tags and reduce the number of extensions. But oddly enough, the SEC is not explicitly requiring companies to use the 2011 taxonomy for their 2011 XBRL submissions.

No doubt, that’s a concession on the SEC’s part, that it hasn’t provided a lot of lead time for companies to use the taxonomy. That’s true for companies that have been at this for a year or two that need to update their tag selections. But it’s even truer for the thousands of smaller companies that are filing in XBRL for the first time this year, and therefore are just learning to navigate the taxonomy.

With the 2011 GAAP taxonomy approval, the SEC said it has updated the EDGAR validation and Previewer to incorporate the new taxonomies. It also has updated the Interactive Data Test Suite used by software developers.

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Why Governance Is Necessary

Written by Kurt Cagle
Posted on March 22, 2011 Comments
March 22, 2011 | General | Barron King

The news lately has sounded like there is a massive revolution building up for small (or more accurately) unmeddlesome government. Government regulations are bad, they steal away the hard-earned money from small business owners and big publicly traded companies alike (and thus from the millions of stock market investors and municipal funds in the country). Furthermore, government is so intrusive as to be a veritable police state.

This sounds good in theory, until you look at what has just happened in Japan. In the middle of the afternoon on March 11, about 150 miles NW of Tokyo, the North American Plate slipped against the Pacific plate, releasing more energy than the US consumes in a year, in the space of about five minutes. This triggered earthquakes across the entire ring of fire. The biggest one hit the island of Honshu in Japan, where Tokyo is located. The earthquake, at a magnitude 8.9 on the Richter scale, was the seventh largest in the past 200 years, and the largest to ever hit Japan. Two hours later, the wall of water displaced by the quake hit the Northeast coast of Honshu, leveling several coastal towns, and shorting out a couple of nuclear reactors that were on back-up power. Ultimately leading to an explosion at one, and a partial core meltdown.

Godzilla hit Japan. Thousands are dead, and it's likely the death toll may rise up to ten thousand or more people. It will likely take a decade or so before Japan is back up to its full capacity. And yet, when the earthquake hit, the high rise towers of Tokyo swayed like grasses in the breeze, rather than cracking apart. Schools that could have collapsed and killed hundreds of thousands of children didn't. Homes in and around Tokyo will likely need some repair, but most of the damage came from downed trees or cars being thrown into buildings - the buildings themselves held up remarkably well. The tsunami that hit later in the day similarly was blunted by large breakwaters, levees, and retaining walls. Tsunami warning sirens went off in plenty of time for people to move to higher ground.

What made the difference? Exacting building requirements with strict enforcement that enabled most buildings in Japan to be earthquake hardened. Contractors and developers hated these; they added to the cost and time of building, while providing very little profitability. The levees and breakwaters were publicly funded and expensive, money that no doubt many in the business community felt could have gone to more productive uses (especially those that made them more money).  Publicly funded schools included regular earthquake drills, and homeowners had to have some kind of tsunami warning devices (akin to smoke detectors) in their homes in order to pass inspection. People grumbled and complained, but the taxes they paid went to these projects and others. Including helping to pay for the monitoring network out of Hawaii that watches for tsunamis to occur.

This tale of what was done right has been lost in the recent news coverage.  The story that hasn’t gotten a lot of play is one of regulations and good governance resulting in far fewer deaths from a magnitude 9 earthquake and a thirty foot high tsunami than happened in a similar situation to Indonesia in 2006.

It shows that governance matters.  The regulations and enforcement on those regulations were no doubt costly and time consuming for the investors involved. I have no doubt that many real estate developers hated them with a passion. And yet, Tokyo is still standing. And while bruised, it's no doubt that the people of the city will pick themselves up, shake off the dust and debris, and move on with their lives. Don't believe me? Consider that six years after Hurricane Katrina swept into New Orleans, the Big Easy is roughly 40% of its previous size, and Katrina was far less devastating than the 1-2 punch that Tokyo took.

...More

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Interoperability Within Business Registers Using XBRL: Overview and Initiatives

Written by Geoffroy de Urtasun and Basile Meunier
Posted on March 14, 2011 Comments
March 14, 2011 | General | Barron King

XBRL Europe is committed to aid in the development of XBRL deliverables in order to facilitate the drafting of European standards. Several working groups are active in this field.

Business registers interoperability: context

The legal and economic data provided by the business registers are used for financial analysis, anti-money laundering, risk measurement and regulatory compliance. Efforts have been made to improve interoperability for exchanging financial reports of the European companies in response to the need for better transparency in financial information. As more of the business registers in Europe now use XBRL as a common standard, they also have developed their network.

The XBRL Europe Business Registers working group, supervised by Thomas Verdin (CEO of THEIA Partners) has developed a “Core Reference Taxonomy” to improve interoperability and allow easier comparisons between company profiles and company financial statements across Europe.

A “Core reference taxonomy”: for a better interoperability of company data

At least ten business registers or equivalent entities in member states (National Bank of Belgium, Bundesanzeiger, Erhvervs- og Selskabsstyrelsen, Infogreffe, Registrite ja Infosüsteemide Keskus, Infocamere, Kamer van Koophande, Companies Houses...) use XBRL to dematerialize company profiles and key financial figures.

They are willing to implement a common Core Reference list of indicators. This is an opportunity to define a normalized list of concepts used in company identification and financial statements across Europe. The list would be used to :

  • Identify common concepts : those which can be considered as “reference”, shared in every financial statement across Europe
  • Identify main concepts : those which can be considered as “core” elements, which are relevant for end-users, focusing on a limited list as it is impossible to match every account or element of company identification across Europe.
  • Identify a common formalization, using XBRL (taxonomy)

Consequently, the necessity to define a common reference taxonomy brings about a difficult challenge for the working group. Part of this challenge includes comparing local taxonomies and finding agreements on common points for main identification data, key figures and financial statements. This creates particular difficulties in that legal forms and accounting norms are not standardized in Europe. The working group is now working more specifically on financial statements. The objective for each European country is to match its local taxonomy to the Core Reference as closely as possible. As of now, mapping is being done in France and Italy, with others scheduled to join them soon.

Using a Core Reference Taxonomy will allow users to render filed documents in a more interactive way. This includes the possibility to display the financial statements of two companies (from two different countries) with similar concepts in front of each other. The Core Reference Taxonomy will emphasize the link with common concepts (identity, address, main figures in balance sheet and income statement) and national specificities using a presentation linkbase.

Experimental work is currently being made by different editors, such as Invoke, Xedix, and Fujitsu, based on this mapping and the Core Reference Taxonomy. A presentation is scheduled in Roma, for the next XBRL Europe meeting. Editors will ensure storage, request and rendering, and propose calculation of cross border ratios wherever the publishing company is registered.

 

by Geoffroy de Urtasun and Basile Meunier

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XBRL Benefits Emerging as More Companies Report

Written by Hitachi Staff
Posted on March 10, 2011 Comments
March 10, 2011 | Financial Reporting, General | Barron King

Even before all public companies are required to report in XBRL and well before investors have begun making meaningful use of it, the critical benefits of adopting XBRL and putting it to work in analyzing corporate data are coming to light.

Although only about 1,500 companies have reported their financial results in XBRL so far, Michelle Savage, vice president at XBRL US, demonstrates how it might have provided useful insight into systemic risk before the economic crisis. She provides some great examples of how XBRL might have been handy in heading off the credit crisis before it became a global economic tailspin.

Strolling through 2010 third-quarter data, for example, Savage discovered that the financial sector, which includes insurance and real estate, holds 65 percent of total assets but only 14 percent of revenues among companies reporting in XBRL. Fannie Mae alone held 9.5 percent of total assets.

Here’s more: In the retail sector, WalMart’s revenue represents 29 percent of the total retail trade reported revenue of $1.4 trillion. Companies in the petroleum refining sector make up less than 1 percent of the companies that have reported through XBRL to date, but their revenue in the third quarter of 2010 was almost 10 percent of total revenue reported.

That’s the kind of information that could be invaluable to investors as they learn to use XBRL to gather and sort information. But even further, that has big implications for regulators looking for stress fractures in the economic system. “With this kind of information available on a real-time basis, identifying investment opportunities and flagging problem companies can be as simple as a few keystrokes,” Savage says. We can expect the new regulatory initiatives taking shape as a result of the Dodd-Frank Act to make significant use of XBRL to look for signs of trouble.

The data will get deeper and more meaningful when thousands more companies begin reporting in XBRL in 2011 as required by the Securities and Exchange Commission. There still are plenty of questions in the marketplace about whether XBRL is really worth the time and expense, but XBRL really is the modern variation of EDGAR. When EDGAR emerged in the late 1980s, folks then had a hard time imagining how the electronic submission and storage of financial data would change the way the market accesses information. “Today, however, could any of the investors, analysts, librarians, academics or reporters who actively use it imagine a world without EDGAR?” Savage wonders.

XBRL US has created a simple application to demonstrate the power of XBRL, allowing users to extract revenue and asset information for all companies currently filing in XBRL. The application demonstrates how XBRL makes information and analysis so fast and accessible. Savage says it not only opens up a wealth of information, but it promises to level the playing field between large and small companies when all companies are reporting under XBRL.

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XBRL Developments in India 2011

Written by Vinod Kashyap
Posted on March 7, 2011 Comments
March 7, 2011 | General | Barron King

XBRL International was incorporated in 1998 to have jurisdiction for the development of XBRL and membership all over the world. XBRL India started functioning under the aegis of the Institute of Chartered Accountants of India starting in December 2008. It has recently been converted into a full jurisdiction of XBRL International for promotion & development of XBRL in India.

The Securities and Exchange Board of India (SEBI) the regulator of the Indian securities market, has embarked upon the development of a platform named “SEBI Unified Platform for Electronic Reporting – Dissemination (SUPER – D)” for comprehensive XBRL reporting by listed entities, registered intermediaries and others. The new system will be capable of managing the simultaneous filing of 500 documents on a normal day and have peak-period capacity of handling 15,000 simultaneous filings. Besides disseminating the information on a real-time basis to investors and others, the new system will also help SEBI and other regulatory and investigative agencies in monitoring any irregularities in the affairs of companies and market intermediaries. To start with, SEBI is likely to make the new business reporting mechanism mandatory for mutual funds and then expand this system to other segments in phases. SEBI has recently released the XBRL Taxonomy for Mutual Funds in India for public comments. The new platform will replace the Corporate Filing and Dissemination System (CFDS),  which was created in 2008 for filing of corporate announcements, revenue results, shareholding patterns and other information by the 100 top listed companies.

The Reserve Bank of India (RBI), the regulator for all banks in India, has already implemented XBRL-based reporting for three returns: capital adequacy data as per Basel II norms, Form A and the GPB Return by banks though the Online Return Filing System (ORFS). RBI is in the process of implementing XBRL-based filings for several other returns, including annual and quarterly financial statements.

The Ministry of Corporate Affairs (MCA) has already decided to implement XBRL-based filing for all companies in India starting in 2011. It is expected that publicly traded companies and companies above a certain size in terms of networth will be asked to submit their returns in XBRL format from July 1, 2011 and later it will be extended to all companies.

Central Electricity Regulatory Commission (CERC), the regulator for approval of tariffs for all power projects in India, is also in the process of implementing XBRL.

Jointly with XBRL India and the Institute of Chartered Accountants of India, SEBI  successfully hosted the 2nd XBRL Asian Workshop and National Conference on XBRL in India on February 17-18, 2011. An XBRL workshop provided an opportunity to share the experiences of financial sector regulators. The conference provided an opportunity to the regulators to share their plans for implementation of XBRL in their respective fields.

With the regulators pushing for implementation of XBRL-based reporting, one can expect a lot of developments and opportunities emerging from 2011 onwards.

 

by Vinod Kashyap