XBRL News and Commentary from the Hitachi XBRL Business Unit
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XBRL Spain Calls for IT Architectures Offering Potential for XBRL Open Source Software

Written by Hitachi Staff
Posted on June 28, 2011 Comments
June 28, 2011 | General | Barron King

XBRL Spain has launched an IT architectural competition to flesh out architectures that could potentially be developed into open-source, freely available software through public fundraising. XBRL Spain is hoping to entice global XBRL IT experts with 1,000 euros and awards recognition for the five top proposals.

Proposals are due Aug. 25 in one of five categories. The first is for an open-source converter from legacy formats to XBRL reports, customizable for each XBRL taxonomy. The second is for an open-source downloader from XBRL instance documents into a relational database, also customizable for each XBRL taxonomy. XBRL Spain also is looking for proposals for a generic open-source human-computer interface for viewing XBRL reports, such as HTML or spreadsheets, and for guidance to supervisors and reporting entities on XBRL implementation for primary reporting. Finally, XBRL Spain is open to any other proposals on any relevant IT topic related to advancing the utility of XBRL.

Winners in each of the five categories will be announced live during a Sept. 9 webinar on financial reporting in the 21st century. XBRL Spain is also happy to consider ideas outside the context of the contest if experts would like to share their ideas but have them considered for a prize. IT architects also are needed to join the adjudication panel, which will be chaired by Enrique Bonson, XBRL Spain vice president, and Herm Fischer of the XBRL Standards Board.

The goal of the competition is to advance the capture, analysis, creation, and viewing of XBRL reports on the part of investors, IT subject matter experts, academics, and even average citizens. The overarching objective is to further implement XBRL within supply chains while also reducing the regulatory burdens associated with XBRL. XBRL Spain is hopeful the competition will lead to solutions that complement and collaborate with existing solutions in the areas where current solutions are limited or nonexistent, especially as it relates to dimensional taxonomies.

The critical question for XBRL’s development today is how to lower the barriers for entry, says XBRL Spain. The not-for-profit XBRL consortium believes free or open source software may be a viable path. Open-source software has been successful for two reasons. XBRL Spain says. The software may be cheaper to use and support than proprietary applications, and free software may be an innovative, cost-effective way to develop and sustain applications that are targeted at specific needs.

The contest is seen as a way to investigate IT architectures as the first step to create a suite of open source XBRL tools and an off-the-shelf IT skeleton that is easily customizable to close the digital gap in primary reporting – from the reporting entity to the supervisor, from website to citizen, from supervisor to small investor.

 

 

 

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RIXML Proliferates in Back Offices, Feeding Analysts XBRL Data

Written by Hitachi Staff
Posted on June 15, 2011 Comments
June 15, 2011 | General | Barron King

Companies with experience in XBRL are asking some legitimate questions about who is making good use of the data they’re so meticulously producing in interactive format. Rest assured, says a representative of consortium RIXML.org, analysts are getting up to speed and putting XBRL to work.

In a recent PwC webcast on a broad range of XBRL issues, 22 percent of respondents said they assume very few people are using their XBRL reports based on traffic to their web sites, and an equal number said very few of their retail analysts are using their XBRL reports based on their discussion with those analysts. Only 10 percent of the webcast participants said they are using XBRL internally to analyze their peer companies.

Yet deep in the back offices of buy-side and sell-side firms, analysts are toiling away building and supporting firm models, says Sara Noble, interoperability chair for XBRL and RIXML at the research consortium. RIXML.org is a consortium of buy-side and sell-side firms and vendors that are working to define an open standard for categorizing, tagging, and distributing global investment research.

RIXML uses XML to facilitate data sharing between internet applications. The RIXML standard is to analysts what XBRL is to public companies. It enables firms to tag research content with sufficient detail that analysts can quickly search, sort, and filter aggregated research data.

Companies may get halting or unsteady answers about XBRL utility from their retail analysts because those analysts typically are not accessing company-specific information from company-specific websites, Noble said. Rather, they’re getting it in aggregated fashion from the firm’s back office, or they may be accessing company-specific XBRL data from RSS feeds rather than corporate websites. SEC’s EDGAR RSS feeds immediately and automatically broadcast exhibits directly to analysts, sparing them the trouble of fishing through corporate websites to manually download posted XBRL exhibits, Noble said.

Noble said there are a number of XBRL-enabled analytical applications in the market that are being used by analysts and companies alike, and analysts are networking and collaborating with respect to what they’re finding in XBRL exhibits. They’re especially speaking up about company-specific extensions that have gone too far, she said. She suggests companies troll the XBRL US web site for a listing of other XBRL-enabled analytical applications to get a sense for how analysts are getting up to speed on the utility of XBRL and how companies can even put it work for their own competitive analysis.

As it continues to develop, XBRL is becoming a little like social media for financial data, she said. Information can flow directly from the provider of the information to the consumer, with no intermediaries, she said. It’s a perfect opportunity for companies to use XBRL to highlight what’s truly unique about them.

 

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To Outsource, Or Not To Outsource, That Is The Question

Written by Scott Barta
Posted on June 8, 2011 Comments
June 8, 2011 | General | Barron King

With the 2011 taxonomy finally being adopted by the SEC and the remaining public filers preparing to implement interactive data, tensions are running high. Even though the SEC hasn’t given a set date for the 2011 taxonomy to be used, they highly recommend that adoption occur ASAP. With a long list of additions, deletions, and changes, companies face the inevitable: to outsource or not to outsource?

As a financial officer, I know that -- from a company’s standpoint -- the first thought will always be price: how much can we save by NOT outsourcing? Will the hours spent bringing XBRL in-house outweigh the costs of outsourcing? As one recent article noted, considering the price of the Sarbanes-Oxley Act of 2002, the implementation of interactive data seemed quite insignificant. After finding the right outsourcing company for the job, the hard part was to be over. The external reporting department celebrated that they didn’t have to put together the interactive data files. Weight and responsibility were lifted off their shoulders.

Or so they initially thought.

With Phase 1 -- block tagging – it’s easy to get an SEC filing ready and hand it over a week before the filing date to ensure the outsourcing company can prepare their files. Over the next couple of quarters, things are easy breezy. Then comes Phase 2 -- the dreaded detail tagging -- with thousands of additional required tags. The process starts off the same -- with element selection -- but requires more assistance from your team to determine the right elements are selected for all of your numbers. What may seem easy for you may be hard to explain to the outsourced company, which may not be as technically proficient when it comes to accounting. Then comes the inevitable creation of custom elements, dimensions, text blocks, abstracts, etc. This may take a while as well, but, once you have everything done correctly, this will be easy to manage from quarter to quarter because very little will change. Unless there is a new taxonomy published and hundreds of changes are made… but that’s a whole different story.

Now comes the easy part, right? All you need to do now is put together your SEC filing, ship it to the outsourced company, and forget about it. However, what if there is a change that occurs during the reporting period? What if you need to add a few new elements? What if you need to add a few new footnotes? Will your outsourced company be as responsive? Will they be held to the same turnaround you proposed in the beginning of the contract? What happens when the outsourced company has more clients than originally anticipated and don’t have a plan to compensate? What will you do then?

I don’t think outsourcing is a bad choice at all; I’m simply suggesting that forward-thinking financial officers need to consider all scenarios regardless of the path they choose.  It’s worth considering and asking your team or outsourced providers up front to ensure there are no unpleasant surprises down the line.

In my next article, I’ll discuss the review process and getting your executives comfortable with the XBRL process.

 

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Looking for XBRL’s Cost Benefit? Look Past Financial Statements

Written by Hitachi Staff
Posted on June 2, 2011 Comments
June 2, 2011 | General | Barron King

There’s no precise data yet on the overall costs associated with implementing XBRL, but companies that have been at it for a while are starting to feel the sting of redundancy in submitting data to the Securities and Exchange Commission in both XBRL and HTML formats.

Even strong supporters of XBRL are getting worried about the pace of adoption on a broader scale. Sophisticated analysts aren’t yet making robust use of XBRL-submitted data, with many saying they are waiting for the system to provide fully comparable data among all companies before digging in. And many companies that are using XBRL as mandated by the SEC haven’t yet looked past the tagging process long enough to realize its considerable benefits beyond the submission of financial statements.

Companies that are using XBRL and see its potential are eager for the platform to emerge past its growing pains. They are calculating the cost of submitting their financial data in two completely separate formats to accommodate dual reporting regimes. Some are frustrated by naysayers, like the Financial Executives International’s Committee on Corporate Reporting, who are telling the SEC to curtail or halt XBRL adoption. CCR sent an unsolicited comment letter to the SEC asking that companies be allowed additional time to complete the filing, and that they be permitted to do less detailed tagging.

There are legitimate compliance concerns for a handful of filers, such as IFRS filers who do not yet have a robust taxonomy that is necessary for XBRL tagging. The SEC has said it won’t take action against IFRS filers who do not meet the phase 3 XBRL submission deadlines because they don’t have an SEC-approved taxonomy to follow.

Beyond that limited population of companies, however, XBRL has been given years of development opportunity and is now on the cusp of complete adoption. The GAAP taxonomy has developed past its initial issues so that its tags closely match financial reporting conventions. To somehow curtail it now by deferring requirements or delaying submissions would only further exacerbate adoption concerns, just as preparers, users and regulators alike are about to see the magic of XBRL unfold.

Business and industry leaders across virtually every sector have long held that better management and accessing of data and information are critical to making better business decisions. XBRL is becoming the poster child for the potential of XML to transform the way business leaders gather, access, analyze, and share information.

The sooner companies take this final stretch to get all public company financial reports into and accessible through XBRL, the faster it will be accepted and even embraced. Only then can the focus shift from costs of tacking on another reporting process to the efficiency that can be gained by eliminating unnecessary steps and procedures and making information flow seamlessly.