Written by Nils-Bro Müller     Posted on October 8, 2009

Nils-Bro Müller is Senior Advisor at the Danish Commerce and Companies Agency (DCCA), where he is responsible for the Danish XBRL solution. He has been working with XBRL since 2005 and is on the board of XBRL Denmark.

Denmark, where XBRL will be mandatory for company reports in 2011, has been making significant progress toward adopting XBRL since it became an Established Jurisdiction in November 2007. Starting in March 2008, small- and medium-size companies have been able to submit full annual reports in XBRL to the DCCA, the official registrar for Danish companies. As well, the submission taxonomy encompasses tagging for transmitting data to the Danish tax authorities and Statistics Denmark. All companies need to do is submit their data to the DCCA once yearly in XBRL format; the DCCA segregates and processes the document’s data and re-transmits it to other relevant public agencies. A company’s accountants can upload instance documents to the DCCA portal from their own computer; they also can use a Web service that delivers an instance directly to the DCCA’s backend.

One of the DCCA’s main objectives in publishing these reports is ensuring that their display and presentation be exactly the same as when they were signed at a company’s general assembly (stockholders) meeting. Therefore companies (or their accountants) choose a style sheet to be uploaded with the XBRL instance document. DCCA has developed a default style sheet that can handle the “look” of company accounts’ annual filing, which we expect many firms will use, but we can accept any PDF style sheet that the company or its accountants choose. We publish both PDF and XBRL versions of each financial statement, and an Excel version can be chosen as well.

Our XBRL implementation is based on the same software as that used for the Spain’s national banks’ XBRL solution. This platform originally was developed by Software AG in Spain, but DCCA converted this to run on a Linux platform. The application front-end and enterprise service bus (ESB) are standard JBoss software, which we use in many of our applications.

Our taxonomy is approximately 2,900 elements and includes both Danish and English text. Currently it covers what are classified in Denmark as Class B companies, which represent approximately 90% of all Danish companies. The taxonomy is based on the EU's accounting directives Nos. 4 and 7, which prescribe P&L and balance sheet, as well as generally accepted accounting principles for Danish small companies (mainly for the notes to the statements). The taxonomy encompasses a full annual report, containing the following sections: statement by the board of executives and board of directors, independent auditor’s report, executive report, accounting policies, profit and loss, balance sheet, and notes.

Our solution was introduced because we believe companies, the financial sector, and the public sector will benefit from significant cost savings when XBRL is used for both internal and external reporting. A current problem is that companies and auditors aren’t yet ready or motivated to use XBRL, nor are systems in place to create instance documents. As a result, thus far we have received a relatively few 250 reports. This paucity of submissions is typical of other countries where XBRL filing is merely voluntary, however. Even though the benefits are well known, nobody seems to file in XBRL before it is mandatory to do so.

This is the paradox — that XBRL’s benefits are manifest, but companies won’t adopt it until they have to — that the international XBRL community must contend with. In my view, we’re currently ignoring that reality. Instead, we praise XBRL and all its benefits in well-worn phases each time we meet at international XBRL conferences.

At any rate, you are welcome to visit our XBRL portal, which is called DRP (digital reporting platform). Unfortunately we only have a Danish version at the moment, and you need a Danish certificate (OCES certifikat) before you can log in. But if you can, have a look.
 

Written by Bob Schneider     Posted on September 26, 2009

Opinion of the microblogging service Twitter falls between two extremes. The “complete waste of time” view is captured in the Verizon commercial where the zombie-like Dad is slumped in a chair, tweeting “I am sitting on the patio…” and every useless thought in his head. The opposing “truly innovative” vision is represented by the brave Iranian students whose tweets propelled a nation to the brink of revolution.

Both image are facets of the truth. But for those who want to participate in the XBRL conversation, it’s the picture of vigor and purpose that is relevant, even if the consequences don’t rise to the level of political insurrection. Sure, there’s the occasional tweet by a 20-year-old of “I’m still WASTED from last night and my XBRL paper is due in TWO hours. HELP!” But as a whole, the tweets that discuss XBRL represent reliable news and useful commentary on the interactive data world.

The 140-character limit of tweets defines the essence of the service, and it’s Twitter’s best and worst attribute. The required brevity concentrates the mind wonderfully and makes for quick reading. But some thoughts do require more than 140 characters, and by the time you include your username -- and quite possibly a web link, a reply address, and an RT for retweets -- there isn’t much room left over for content.

One enormous positive of Twitter that is perhaps not universally known, however, is that its database is updated continually in real-time (or thereabouts). This is in striking contrast to Google, which, even with diligent pinging, may not index your blog post for several minutes, a few hours, or even a few days.

I recently did a small study to examine XBRL tweets in some depth. I had two main questions: (1) Who tweets about XBRL, and (2) What XBRL topics do they tweet about.

Using Twitter search, I retrieved all tweets between August 23 and August 29 containing the keyword XBRL, reviewed the tweet, and classified the content by subject (eg, SEC filings, UK taxation, meeting/event). I also recorded each tweeter, reviewed their bio on their Twitter homepage, and classified them by occupation (eg, accounting, marketing) or, where more appropriate, function (news feed, XBRL organization, etc.).
 
As an attempt at a rigorous study of XBRL tweeting, the shortcomings of my work are multiple and substantial:

• Naturally, only public tweets are included, no private ones
• It's highly likely there were a few XBRL-related tweets that did not include keyword XBRL (such as a reply to another tweet, where the XBRL subject was understood)
• Twitter search (formerly Summize) has a less-than-sterling reputation and is known to miss a few tweets. I did compare my hits to those from one of the independent Twitter search engines, however, and didn’t find significant differences
• The one-week sample was taken during late August, a quiet, semi-holiday period
• Whenever the study is done, a one-week sample will be greatly influenced by what is being published on the Web at the time. For example, during the week an interview with Michelle Savage of XBRL US in which she gave advice to IR professionals was tweeted and re-tweeted several times, boosting the IR content category
• Classifying both tweet (for content) and tweeter (for profession or auspices) in single categories was naturally sometimes difficult. When I tried to classify myself as a tweeter, for example, I had trouble choosing among several categories

With all those caveats, I still think the results provide some indication of who tweets and what they tweet about. In all, I looked at 143 tweets. Thirty of the 143 were retweets; but that number is understated, since I only counted a retweet if it included the characters RT (other tweets similarly repeated tweets without saying so).  Ninety-eight of the 143 included hyperlinks, which indicates well that XBRL tweets often recommend resources on the Net.

The content of the tweets can be broken down as follows:

The high count of 45 for XBRL General reflects a few broad articles that were published during that time about XBRL, including CFO.com’s XBRL: The Inside Story, which was tweeted and retweeted often (and which could have easily gone in the "internal reporting" category).

XBRL tweeters represent a wide variety of backgrounds, as shown by the breakdown of the tweets by tweeter category:

As I said, these data should be regarded with more than a pinch of salt, but it still demonstrates the range of background of XBRL tweeters. I think the one (slight) surprise for me is that there are few, if any, security analysts tweeting about XBRL. I can think of several reasons for this – not least that brokerages have strict rules about external communications – but I still find the lack of participation disappointing.

In total, there were 74 tweeters of XBRL during the period. The categories with the highest numbers were technology and media. But the overall distribution was relatively even. (XBRL Maven is a category I used for people like Eric Cohen and Neal Hannon who are leaders in the field.)

It will be interesting to do this study again in a few months for a different time period to see how the data have changed. In the interim, I will write an article soon that addresses the larger topic of XBRL and social media. 
 

Written by Ana Cristina Sepúlveda     Posted on September 8, 2009

Ana Cristina Sepúlveda is the Head of the XBRL Team at the Superintendencia de Valores y Seguros (SVS), the Chilean securities and insurance supervisor, and oversaw the development of the SVS CL-CI 2008 XBRL taxonomy. She is currently working on the development of this taxonomy for reporting in 2010.

The SVS, Chile's equivalent of the SEC, decided in 2005 that International Financial Reporting Standards (IFRS) would be adopted for financial reporting; implementation began this year for those companies whose stocks are most actively traded on Chile's securities market. These firms have already submitted their financial statements for quarters ended March 31 and June 30, and all other corporate issuers of securities will begin to report in IFRS next year.

Development of an XBRL taxonomy for IFRS in Chile began in January 2008. The SVS team comprised members of both the IT and financial departments of the agency. The going was initially tough: it was the first time that the team had had contact with XBRL, and we had to absorb its rules and devise methods to work with it successfully. These difficulties were exacerbated by the many changes in IFRS during the 2006-2008 period. Our team included several accounting professionals and their views often differed on what disclosures were required under IFRS. Resolving these disagreements and obtaining consensus took some time.

Finally, in October 2008, the SVS released the SVS CL-CI 2008-10-31 XBRL Taxonomy for reporting of financial statements under IFRS. The new taxonomy is an extension of the IFRS General Purpose Financial Reporting (IFRS-GP) taxonomy for 2006, the latest version at the time the SVS taxonomy was created, and has been updated according to the 2008 Bound Volume. 

The current SVS CL-CI XBRL Taxonomy represents the legal regulations (IFRS as well as Chilean GAAP) applicable when the taxonomy was released. It consists of a single schema file that imports IFRS-GP elements and defines additional concepts. The SVS CL-CI XBRL Taxonomy uses 2,636 IFRS-GP concepts, of which about 2,490 are non-abstract items. It does not use the presentation and calculation relationships defined in the IFRS-GP. It does use all elements of the IFRS-GP 2006 taxonomy that were still in force and ignores that do not serve current needs. Additionally, we created 1,087 elements to fulfill requirements under the new rules.

However, we do not use certain structures from the IFRS-GP 2006 taxonomy, including notes to the financial statements required by asset, liability, and income statement disclosures; income statement classes; and so forth. Instead, we chose to use the presentation linkbase from the 2008 IFRS Taxonomy for disclosures required by IAS or IFRS.

In essence, although the SVS CL-CI Taxonomy is an extension of the 2006 version of the IFRS-GP Taxonomy, its architecture is based on the IFRS 2008 Taxonomy. Additionally, the taxonomy has been modularized standard by standard and regulation by regulation based on IFRS and Chilean GAAP. Each standard has been organized in components of the report (statements, notes, and disclosures).

There has been resistance to these changes inside the financial department, and it has been hard for our analysts to accept the new information model. They did not like the presentation of disclosures as required by IAS and IFRS, which represented a substantial change from how disclosures have historically been handled in Chilean financial statements. On the other hand, the new information model has made it easier to prepare financial statements, because it contains every disclosure required by IFRS rules, and there are clear references to where to go and what to do. Against that positive, however, it should be said that the new model is more complex. We have received criticisms from companies that too much detail is being asked of Chilean companies, which often don't have readily available the information that's now required.

During the taxonomy development period, the team prepared a webpage to report about the project and developed tools to help companies use the taxonomy. We also created a “taxonomy explorer,” which is useful to review the taxonomy, the presentation linkbase, the elements, and all the references. We have offered workshops for companies to give them some basic knowledge of XBRL and to encourage them to generate their financial statements in XBRL files.

Nevertheless, the first submission of XBRLized financial statements by companies was difficult. We intended to offer a tool which would enable companies to enter the required XBRL information and generate their XBRL files. But this attempt proved to be a mistake, and we had many problems in actual practice. We now require companies to generate their own financial statements and not use the interactive form. (Company financial statements are available on the SVS website.)

In addition, there have been the start-up problems you'd expect where company staffs have had little background working with IFRS and XBRL. We receive many technical queries, such as how to indicate a particular element and how to deal with tuples using certain software.

The truth is that each time new software has been implemented, there have been new problems. Startup is always hard. At the beginning there is lack of knowledge and resistance to change; but as people learn, they embrace the new standards. When we first started there were no experts in XBRL, but with the current requirements (and hence demand) for XBRLized financial statements, many software vendors have developed tools for the generation of XBRL files from within companies' own systems. The SVS team is now working on the taxonomy for next year's filings, which will be an extension from the IFRS Taxonomy 2009.

Written by Bob Schneider     Posted on  August 19, 2009

Because Hitachi Data Systems hosted the XBRL Technology Workshop & Summit, my objectivity may be justifiably questioned if I sing its praises. But the event, presented by XBRL US, was much more interesting than I had thought it would be.

My expectation was that most of the conference would be highly technical and interest only developers. Instead, the wide-ranging presentations illustrated both the breadth and depth of XBRL’s potential, as well as the significant challenges ahead for implementations.

Paul Wilkinson did an outstanding job of blogging the conference proceedings on July 28,  29, and 30,  and slides of many presentations have now been uploaded to the XBRL US site. Re-reading Paul’s comments and the slides, I experienced the alternating sensations of exhilaration and concern I had while listening to the speakers. 

On Day One, Campbell Pryde, Chief Standards Officer of XBRL US,  discussed the development of US taxonomies. What enormous progress has been made in the three years since the SEC awarded funding for the first US GAAP taxonomy! (Someone asked Campbell in another venue: With 17,000 elements in the GAAP taxonomies, why would anyone think of adding an extension?)

At the same time, Campbell’s discussion of the use of 2008 versus 2009 GAAP taxonomies as well as FASB Accounting Standards Codification evoked Matt Kelly’s admonition in his post on the SEC mandate: “Adoption not only requires some specific vow of action; it requires maintenance, day in and day out, and that can be hard to deliver.”

Makoto Koizumi’s talk reminded me of the excellent series of posts by Kobayashi Toshinori on the XBRL implementation at EDINET, and the strong participation by Japanese companies of its voluntary filing program. Koizumi noted, however, that there is no immediate plan to introduce XBRL for footnotes. The SEC’s XBRL mandate requires only limited tagging of footnotes, not the deep tagging that had originally been envisioned. And as Amy Pawlinkci has discussed, there are no immediate plans to allow US companies to tag the MD&A either.

In both the US and Japan, therefore, tagging for the foreseeable future will be mostly for the primary financials. Is that sufficiently ambitious to demonstrate the value of XBRL and gain the support of the investment community? This question was put in relief by the presentation of Darrell Heaps of Q4 Systems: he has talked to many Investor Relations Officers (IROs), and few see what XBRL does for them. On the other hand, the transformation of the “investor web” that Darrell described from only static corporate websites to dynamic social media (Twitter, wikinvest, Seeking Alpha, etc.) creates exciting possibilities for a data standard with the capabilities of XBRL.    

For me, the key message of Convergence of Taxonomies for Financial Reporting, a group presentation led by Josef McDonald of Ernst & Young, was that XBRL for IFRS is driven by the individual IFRS standards, while US and Japan GAAP taxonomies are hybrids of standard-driven and market-driven elements. This difference accounts for the lack of industry taxonomies in IFRS, and why US GAAP taxonomies are much more highly developed than those of IFRS. The good news is that, looking out toward a time of convergence in accounting standards using XBRL tagging, the world’s leading taxonomy creators are closely cooperating on international taxonomy development.       

The presentation on XBRL and corporate actions given by representatives of DTCC, SWIFT, Citi, and XBRL US was extremely exciting. Their slides demonstrated the labyrinth that corporate actions data must navigate to be fully disseminated, a process involving multiple stakeholders including issuers, filing agents, custodians, stock exchanges, and investors. As described in their excellent conference backgrounder, once the Corporate Action XBRL Taxonomy being readied by XBRL US is completed:

Issuers (or their agents) will be able to create their press release, prospectus or letter of transmittal in XBRL format, clearly indicating the market, event type, security type and whether the offer is mandatory or voluntary. All of the information that the issuer has “tagged” or identified within their document will be “machine readable” and can be extracted, searched on and consumed by the stock market, custodian, depository, transfer agent and, ultimately, the investor. Because the taxonomy is developed following the ISO 20022 standard, the data will be available in a familiar format to all users.

In my opinion, this raises a couple of questions: Doesn’t capturing key data points from text-based documents like press releases and prospectuses present the same sort of difficulties that have slowed tagging of financial statement footnotes? And with an overhaul of financial regulation in view in the US and other jurisdictions, won’t corporate action taxonomy maintenance be unusually difficult for the next few years? Regardless of these challenges, corporate actions seems an especially ripe area for the application of XBRL.

Steve Wright of Salesforce.com Foundation spoke about data in the social sector. Steve discussed the inadequacies of using a currency like the dollar for measurement of costs and benefits in the social services marketplace, and described initiatives for deriving better yardsticks for more effective measurement of social impact. Efforts like PULSE/IRIS for creating financial, operational, and social impact metrics can be effectively leveraged through XBRL reporting.  

I agree entirely with Steve on the futility of using dollars to evaluate returns on social investment. The challenge, which Steve recognizes entirely, is coming up with better measures. The concerns I have are data quality and assurance.

For example, in this blog post on Change.org, Steve posits an organization in Dakar working to decrease disease by building urban sanitation stations. Assume that the metrics created accurately reflect social impact. What biases do the data collectors have, how are they reflected in the data, and what kind of assurance can be performed on data in such an environment? But regardless of these concerns, Steve's work is representative of yet another area outside external financial reporting to which creative minds are seeking to exploit the rich potential of XBRL.   

It was extremely encouraging to hear from the young Japanese interns at XBRL US. Their work on topics like formulas, extensions, and corporate actions was all the more impressive for having been accomplished in two weeks (some of their slides looked like they would individually take two weeks to prepare).
 
I was a bit disappointed, however, to hear little mention of accounting in any of their work, and the absence of any American interns engendered the usual worry of whether US schools were producing kids with these kinds of skills (and if they are, where were they?). But I know that XBRL US  must have been delighted to have their contribution.   

The last session was on Database and Business Intelligence, which included presentations from UBMatrix,  Morningstar,  Informatica, and Oracle. I wish Morningstar no ill; but if data aggregation (a chunk of Morningstar’s business) is supposed to wither away with the waxing of XBRL, shouldn’t their people be a lot more unhappy than they seem to be? Homi Byranji of Reuters seemed similarly unworried in his presentation at the London Investment Professionals Conference  last year. If their demeanor is anything to go by, XBRL doesn’t doom the data aggregators.

Finally, I have often wondered why bloggers reporting from a conference will end with a mundane personal note that could only be meaningful to a small group of readers. I now understand why they feel compelled, as in my case, to say how great it was to match faces to the names I have admired over the past three years, and to have the opportunity to thank guest writers in attendance for all their hard work on behalf of the blog (Neal Hannon and Ashu Bhatanagar deserve special mention). I also know that this summary has only discussed half the presentations, and has done justice to none. If any speaker would like to follow up their talk with a blog post, please contact me. 

Written by Gary Purnhagen      Posted on  August 5, 2009

Gary Purnhagen has more than 20 years’ experience in helping firms in diverse industries meet document processing challenges, including SEC disclosure. His past experience has included responding to the SEC’s EDGAR program, use of the Internet and other digital media for information dissemination, and most recently the evolving use of XBRL for financial reporting. He is an independent consultant assisting firms in embracing innovation and responding to the SEC’s XBRL mandate.

In an ideal world, properly formatted XBRL files should render using the various software packages on the market matching the presentation of the HTML or PDF version of the same information. Unfortunately, this is not the case. Today, depending on which rendering software you use, how you code the XBRL file, and to what level of detail you present, you could have discrepancies between the rendered XBRL files and the HTML or PDF.

XBRL proponents (and I count myself as one) will say this is a result of the original intent of XBRL and is a problem that is being addressed by initiatives such as Inline XBRL. All true. The original intent of XBRL was to create a format for computers to understand the content and context of business reporting information. It was hard enough to get the formatting correct for the computers to be able to understand this information and so the focus was not on addressing the rendering issue.

Inline XBRL essentially allows the XBRL file to be wrapped up in HTML, presenting the XBRL tagged information in HTML. The browser, presenting the HTML coding ignores the XBRL coding. The Inline XBRL in practice is still a year or two away.

Let’s pause for a moment and look at the need to render XBRL. At this point in the adoption of this new evolving technology the primary need for rendering XBRL is to allow a company to review the XBRL coding to assure that their XBRL files accurately reflects their financials as reported. Today, the best way of doing this is to render the XBRL financials and ensure that they match up with the HTML or PDF format, which was signed off by management.

The software available for preparing XBRL all can render XBRL coding to some degree, although proper valid XBRL coding at times will not render correctly. These problems can be alleviated at times by arbitrary changes in the order of codes. This requires that the preparers spend time attempting to get around the rendering “bugs” to allow proper rendering for review by the company’s management for assurance purposes.

If this was not enough of a problem, the preparers have to contend with the SEC’s Viewer, which could have its own problems with a correctly formatted XBRL file. So now, the preparers are forced to begin experimenting with the code to get around the rendering problems with the SEC Viewer.

Furthermore, while the SEC’s rules call for the rendering of the XBRL file to agree as closely as possible to the financial statements, there are real limitations to the SEC’s Viewer. For example, it seems that the SEC’s Viewer cannot handle identifying balances as Audited or Unaudited. The solution for many filers has been to ignore this crucial piece of information -- in other words, compromise the quality of information in order to improve rendering. Rendering problems also occur when dimensions, which allow for multidimensional presentation of information, are used.

Again, these problems are a reflection on the current state of the emerging technology and will eventually be addressed. However, for the time being, they are causing great concern for the filing community at large. There is no magic bullet for the problem today, although awareness by the filing community of these limitations will help in a rational response to it.
 

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 first part of a two-part interview.

1. Could you provide readers with a general overview of the areas and activities in which the AICPA is currently involved in with respect to XBRL?

We are a member of the XBRL US jurisdiction, and our President and CEO Barry Melancon is Vice Chair of the Board of Directors of XBRL US.  I am a member of the XBRL Communications Steering Committee, and our SVP of Member Competency and Development, Arleen Thomas, is a member of the XBRL International, Inc. (XII) Steering Committee and serves as Treasurer of XII.  My team and I also staff the AICPA Assurance Services Executive Committee and its various task forces and working groups, which include an XBRL assurance task force that is focused on considering potential services related to the accuracy of XBRL data tagging.  This task force recently released a Statement of Position on Performing Agreed-Upon Procedures Engagements That Address the Completeness, Accuracy, or Consistency of XBRL-Tagged Data.

2. Former SEC Chairman Chris Cox once said that requiring assurance for XBRL filings would result in its "crib death", while Dan Roberts, former Director of Assurance at Grant Thornton,  wrote the lack of an immediate assurance requirement in the SEC's XBRL mandate "made a mockery of the dream of interactive data."

Do you see merit in both points of view? If Cox and Roberts represent polar opposites on XBRL assurance, where does the AICPA's stance fall?   

If there is one thing we’ve learned through the work of the XBRL Assurance Task Force, we’re navigating uncharted waters on this topic, and it is a constant learning process. In the absence of some kind of effort to address the completeness, accuracy, or consistency of XBRL-tagged data, there is no way of knowing that the XBRL-tagged data is an accurate reflection of the underlying, audited financial statements. Given that it is the XBRL-tagged data that will ultimately be consumed by investors, regulators, and other users of information, failure to look at the accuracy of tagging creates both a disconnect and a potential expectation gap between the audited financial statements and the data that is actually being consumed.  Alternatives for addressing this issue are articulated in a recently issued Center for Audit Quality Alert entitled Potential Audit Firm Service Implications Raised by the SEC Final Rule on XBRL.  

3. What do you hear from the AICPA membership regarding XBRL? How would you describe their general attitude -- "cautiously optimistic," "one more headache I can do without," or "what's XBRL?" How has that opinion changed, if at all, over the past few years?  

Thanks in large part to the efforts of past SEC Chairman Cox to support the use of XBRL for enhancing the efficiency and transparency of financial reporting, knowledge of XBRL in the US has increased significantly over the course of the past three years.  We have made and continue to make an effort to educate members and the general public on XBRL and how it will impact the practice of both preparers and auditors through articles, whitepapers, conference presentations, workshops, and other channels.  

Much of our attention now is on educating our membership and the general public on how XBRL can be leveraged beyond financial reporting to a “broader footprint” for process improvements in reporting in all areas of the private and public sectors and at the local, state, and national levels.  It is through adoption of XBRL for this broader footprint that producers and consumers of information will realize the true potential of XBRL for enhancing process efficiency (e.g., by eliminating the unnecessary duplication of efforts that results today from manually providing common data elements to multiple channels) and transparency (e.g., by communicating data in a common format that can be automatically consumed by diverse software platforms).

4. As the AICPA's liaison to the EBRC, you have worked to create a new XBRL taxonomy for the Management Discussion & Analysis. In its Comment to the SEC's proposal, the AICPA expressed the hope that companies would be able to tag their MD&A. Commission staff have indicated, however, that companies will not be able to include the MD&A in their current XBRL filings.

What are your thoughts on that decision? When do you think the SEC will allow, and even require, tagging of the MD&A?

As Bob Laux wrote in the blog posting that you link to in this question:

…the Enhanced Business Reporting Consortium (EBRC) is currently in the process of improving the taxonomy for Management’s Discussion and Analysis (MD&A).  The current MD&A taxonomy consists of approximately 70 tags with most of the elements at the same hierarchical level. This required the creation of numerous company-specific extensions to make the taxonomy useful for those companies that tagged their MD&A under the SEC’s Voluntary Filing Program. While the new taxonomy being proposed by the EBRC currently only consists of approximately 140 tags, it has a structure that should significantly simplify the tagging of the information as well as facilitate access for users of this information.

It is my understanding that at least part of the SEC’s decision not to permit companies to include MD&A in their XBRL submissions at this time is based on the fact that, at the time of the final rulemaking, there was no existing taxonomy that had gone through a formal public exposure and review process that would enable meaningful tagging of MD&A (there is an MD&A file listed among the 2009 XBRL taxonomies that was also listed with previous versions of the taxonomies at the SEC website, but it is simply a list of tags that follow the table of contents for MD&A disclosures under Regulation S-K, and tagging at this level would not be useful to consumers of MD&A disclosures). 

While a draft of the EBRC MD&A taxonomy was available for public review at the time of the rulemaking, public comment on it was limited by the fact that few companies had attempted to tag MD&A under the SEC’s Voluntary Filing Program. The EBRC MD&A taxonomy was built to take into consideration the needs of the companies that had attempted to tag MD&A under the Voluntary Filing Program.  As Bob Laux said in his post, “It is hoped that the financial reporting supply chain will openly collaborate on the proposed taxonomy in order to create more detailed tags so that narrative information can be provided in an interactive data format.”  I believe this will naturally occur as more and more companies start tagging their financial statements in XBRL under the SEC Final Rules, and as investors gain access to XBRL-tagged data in a consistent manner and can begin to understand the potential benefits of tagging narrative information such as MD&A.

This belief is supported by the following excerpt from a recent research study made possible by a grant from the FINRA Investor Education Foundation and support from the EBRC entitled Impact of Information Tagging in the MD&A on Investor Decision Making: Implications for XBRL:

This paper investigates how professional and nonprofessional investors use the information contained in the Management’s Discussion and Analysis (MD&A) portion of the corporate annual report in making financial decisions. In studying use of the MD&A, we compare the standard paragraph format used by U.S. public companies to a “tagged” format consistent with eXtensible Business Reporting Language (XBRL)…

…Overall, results are consistent with our expectation that the availability of tagging…facilitates better incorporation of risk information into investors’ mental model of the subject company, for investors who choose to focus on that information. Further, it takes them less time to review that information in the tagged format, which indicates a more efficient decision process.  In sum, this study’s results suggest that the tagged MD&A structure results in more effective and efficient incorporation of risk information into financial decision-making.

The EBRC continues to invite interested parties to review the proposed MD&A taxonomy at this website. Follow the instructions for logging in and the MD&A taxonomy will be midway down the navigation tree once you are logged in.

5. In the AICPA whitepaper you authored titled The Shifting Paradigm in Business Reporting and Assurance, you say:

Because information on the Internet, especially the Web, can be easily created and revised without proper authorization, the integrity and authenticity of information lacking independent assurance should be skeptically considered by entities and individuals using XBRL to produce and consume information over the Internet.

Could you discuss the threats and dangers you perceive and what steps you think will be required to ensure that XBRL information on the Internet can be relied upon?

This question is partially answered in my response to Question 2 above as it relates to the accuracy of tagged data.  However, as described in your reference to the AICPA Assurance Services Executive Committee whitepaper excerpt above, there is more at play in an electronic environment than just the accuracy of tagging. There are also issues of data security and authenticity.

For example, how do you ensure that an online, electronic auditor’s report with the electronic signature of the firm purported to have conducted the audit is in fact authentic (as opposed to a paper-based original that is physically signed by an authorized representative of the firm and kept in a secure, physical location such as a locked file cabinet)?  Some audit firms are monitoring the Web for fraudulent postings bearing their name.  New technologies such as digital signatures and other means should be and are being explored by preparers and auditors alike to ensure the authenticity of financial and other business information that is increasingly being made available to, and accessed by, investors and other stakeholders online in an electronic format.  

6. Your paper also states:

Moreover, with more disaggregate information being reported [as a result of XBRL], auditing also will shift its emphasis away from verifying the way in which the firm aggregates and condenses its data, towards a broader conceptualization of assurance, particularly data level assurance.”

Are you concerned that asking auditors to not only express an overall opinion on the fairness of financial statements but to assure individual, disaggregated data elements as well places an unrealistic burden on them?

I believe reporting over time will evolve further toward an electronic model where users can define and consume the data elements that are most relevant to them. I have no doubt that audit and assurance models will evolve to address the changing needs and expectations that will come out of the evolution of the financial and business reporting model. The AICPA Assurance Services Executive Committee (ASEC) is committed to assuring the quality, relevance, and usefulness of information or its context for decision makers and other users into the future by (1) identifying and prioritizing emerging trends and market needs for assurance, and (2) developing related assurance methodology guidance and tools as needed.  In addition to the ASEC XBRL Assurance task force referenced in my response to Question 1 above, the ASEC has established a Data Integrity task force, which is developing principles and criteria for data integrity to supplement the Trust Services Principles and Criteria that were previously established for system reliability.

Written by Paola Fumiani     Posted on July 10, 2009

Paola Fumiani is Project Manager at InfoCamere, which developed and manages Italy’s national data transmission system connecting the country’s 104 Chambers of Commerce and 300 different offices. She is a permanent member of the workgroup of the Associazione XBRL Italia, which developed the XBRL taxonomy for financial reporting in Italy, and a member of the XBRL EU Business Registers Working Group.

“No paper by 2012!” That’s the rallying cry of Italy’s Ministry for Public Administration and Innovation (MPAI), and its drive toward modernization is exemplified by the e-filing of general deeds’ business registration and the “XBRLification” of annual tax deposits. The MPAI’s initiative makes clear that digital is soon to be the de facto standard for public administration.

Business registration e-filing started with the Telemaco Project, a Web-based e-filing project for Italy’s Chambers of Commerce. The Project was set up by InfoCamere to simplify the Chambers’ administrative procedures by utilizing Web tools. The goal was to reduce the time and costs required to register new information and facilitate remote interactions with the Chambers of Commerce. 

The Project began at the turn of the Millennium, and a law made electronic filing compulsory starting in 2003. The benefit for companies was immediate: a 30% reduction in costs simply by moving from traditional “in person” filing to e-filing.

Evolution of E-filing in Italy for the Business Register

Telemaco’s e-filing application provided the foundation for XBRL adoption by providing the tools for filing, sending, managing, and storing signed Annual Accounts files.

A 2006 law strongly supported by the tax agency drove applying XBRL to the Business Register, with the aim to get all financial data directly from the official source — the Business Register — in a structured  format and no longer from tax forms. While companies have had to file Annual Accounts to the Business Register and with their tax forms, XBRL will help to reduce administrative burdens for businesses by allowing them to send only once the same financial information.

By law, the Chambers of Commerce must notify the tax authority — in an electronic format — about company registrations, their most significant changes (like closure, liquidation, bankruptcy, changes in company officers and transfers), and financial tax-related information. Business entities must also file their annual accounts with the Business Register in an automatically processable format, i.e., XBRL. (The Chambers of Commerce don’t have the mandate to modify  -- in this case, retype -- e-signed documents.)

In a technical addendum, the law describes the rules of how this would be accomplished, in particular, the taxonomy to be used by all participants of the Annual Accounts deposit process.

The technical addendum was published in the Official Gazette on December 31, 2008, but another step still was required to start the compulsory XBRL filing: the official website where the Italian GAAP taxonomy is published. This requirement was mentioned in the technical decree but left to be defined by the Ministry. This site finally was launched on February 16, 2009. 

On the same day, compulsory XBRL filings to the Business Register began. Because of the timing of this launch, only 5% of the companies were obliged to file in this fashion — almost 95% of companies already had closed their fiscal year before that date.

According to the law, any update to the taxonomy can be made without passing new law provisions, but with the approval of a national accounting experts committee, technical validation by XBRL editors, testing by the developers of accounting software, and integration into the Business Register environment. It is up to the users to check for updated taxonomy versions on the Ministry’s Web site.

Through this effort the Business Register is moving from a static document repository to a “living” electronic register with clear benefits for users and customers. For example, by using automated procedures, the Business Register now can perform the customary quality assurance at a saving of €0.60 per annual account: in 2010, €0,60 x 950.000 annual accounts = €570.000 in savings. In addition, the same quality assurance tests done by the Register are available for free on the Web site so customers can validate their annual accounts before filing. This application reduces errors and substantially reduces the need to re-file annual accounts’ changes.

Another possibility being explored is using the data collected with balance sheets and profit and loss statements to develop new services directed to SMEs, Chambers of Commerce, and financial analysts. A prototype service, the so-called Bext Service, is being used to produce statistics based on aggregated annual accounts from different companies, selected by geographical area, activity code, legal form, number of employees, and turnover.

As more source data comes available, the statistical studies of the Chambers of Commerce will improve on a national scale in a shorter period of time. For example, the Chamber of Bozen published a March 2009 survey of the economic activity in the province that compared activity through 2006. This was produced with an unavoidable delay that — under the new system — no longer will be necessary.

InfoCamere has also transformed annual accounts from 2005–2007 from PDF into XBRL. The XBRL-enriched reports of annual accounts allows the Chambers of Commerce to produce meaningful statistics studies on the evolution of economic activity on a national or on a local territorial basis — a development that is likely to benefit not only the Chambers, but many other areas of public administration as well.

Written by Ashu Bhatnagar     Posted on June 25, 2009

Ashu Bhatnagar is CEO of Good Morning Research, a Softpark company that specializes in building Semantic XBRL technology. The GoodMorningResearch.com machine automates XBRL tagging of Excel data in RDF format with one-click Save As XBRL functionality. Mr. Bhatnagar moderates the Semantic XBRL group on LinkedIn.

Widespread and almost uniform consensus exists on the overarching high-level vision of XBRL and the benefits associated with the concept of XBRL-tagged financial data. However, when it comes to this vision’s implementation, the execution processes, methods, and available software tools are as diverse as the players involved… and there are no clear favorite front-runners.

For example, let's look at the choice of methods for one of the key steps of the XBRLization process that involves tagging of financial data from a source document with appropriate XBRL tags as predefined in an accepted taxonomy document.

Broadly categorized, the XBRL data tagging processes fall under the following four generic methods:

1. One-Click Automated Data Tagging Method
In an ideal situation, the filers would continue to use their in-house and existing financial reporting tools, including Microsoft Office Excel, and simply click on a button for Save as XBRL. This method of XBRL data tagging would resemble the method when we save a Word document with Save As HTML function for publishing in Web-ready format, or Save As PDF for publishing in a printer-ready format. Clicking on such a button or menu option in an existing software tool would be a nirvana from the usability point of view, because it hides all the complex mark-up details from the user and shifts the arduous and error-prone burden of data tagging from humans to the machine.

Unfortunately, such automated tagging of financial data with taxonomy-defined XBRL tags requires semantic interpretation of data. In other words, it requires computers to recognize financial data almost as well as an accountant trained to interpret matching taxonomy-defined financial metrics. This would be a feat that borders on artificial intelligence and expert systems.

Almost all current knowledge management tools lack the sophistication required to deliver on such a capability. Promising work is being done by researchers in the Semantic Web domain who are actively pursuing knowledge automation tools and technologies. A handful of new patents have also emerged that are pushing the boundaries in this area, but we're still some time away from converting these "bleeding edge" technologies into fully ready-to-use expert systems.

2. Template/Form Based Data Tagging Method
This method involves creating a small set of pre-approved templates which look like online forms. These forms have XBRL tags pre-attached to the data fields which start out as blank spaces that are filled-in by the filers manually entering appropriate data by rekeying or cutting-and-pasting from other in-house reporting tools.

This form-based method has been adapted by a few regulators around the world. The Securities and Exchange Board of India together with Bombay Stock Exchange are among them, having mandated one hundred listed companies to file in XBRL using its CorpFiling system, which uses pre-tagged blank template forms.

The advantage of this form-based system is that the learning curve associated with XBRL taxonomy, selection of appropriate tags, and validation rules is restricted to a select few professionals who design the templates and forms. In theory, this method should be easier for end-user adoption, because it almost entirely hides the complexity and learning curve of XBRL from the filers who actually fill the forms with their data.

In practice, the disadvantages of this one-size-fits-many method are several, including:

• These generic template-based forms rarely map neatly to any individual company’s filing. In order to keep the complexity of the form low, a minimalist approach is taken whereby fewer than one hundred financial metrics are embedded from an available list of over several thousand metrics as defined by US GAAP or IFRS GAAP. Taxonomy extension, by design, is strongly discouraged and company data forced to fit a generic form.
• With growing use, necessity forces the need to increase the number of templates or forms. When these templates' count grow beyond a few dozen, the true fragile nature of these templates takes over, and significant IT resources and costs need to be expanded for managing this environment as a document management system with version controls, access privileges, maintenance, and support.
• The transparency of data with detailed drill-down is negatively affected to such an extent owing to limited metrics being tagged that the data has very limited use for a more sophisticated institutional investor or a sell-side/buy-side analyst.

3. Drag-And-Tag Data Tagging Method
This is a more practical approach, a wizard tool-based method where the filers bite the bullet and commit to educate themselves on the subject of XBRL with reasonable level of understanding. Software tools from several vendors now exist that enable a step-by-step wizard-like process that allows appropriate metrics to be selected from a pre-selected taxonomy list, generally organized in a collapsible tree structure for easy navigation. These selected metrics are dragged and dropped, one at a time, by hand, on the appropriate data in a source document (such as Excel or Word),  thereby creating the XBRL mapping or tagging the data.

While the manual process does sound onerous, it gets better with time when the subsequent tagging exercises are able to reuse the mappings from the previous exercise; this greatly simplifies and speeds up the process. The most important criticism of this process remains the time-consuming, error-prone, manual tagging effort, which can only be outsourced to resources that have skills in both accounting and IT. Ensuring high degree of QA and validation checking becomes a significant part of the effort in this tagging method.

4. Automated Semantic Extraction and Man-Machine Expert System Methods
This method involves machine-automated tagging and is based on semantic extraction of meaningful and relevant tags based on prior training of the system with expert knowledge.

One of the many new and emerging examples of this method includes OpenCalais from Thomson Reuters, which automatically creates rich semantic metadata for the submitted content in less than a second. Using natural language processing, machine learning, and other methods, Calais analyzes the document and finds the entities within it. Calais goes well beyond classic entity identification and returns the facts and events hidden within the text as well. However, it is not clear if Calais will remain focused on tagging unstructured text, such as business news, or will it also be used for XBRL tags for company filings as well.

Similarly, the World Wide Web Consortium (W3C) defines the Semantic Web as a vision for the future of the Web, in which information is given explicit meaning, making it easier for machines to automatically process and integrate information available. The Semantic Web will build on XML's ability to define customized tagging schemes and RDF's flexible approach to representing data. The first level above RDF required for the Semantic Web is an ontology language, named OWL, to formally describe the meaning of terminology used in Web documents. While machine-automated ontology development tools are an area of advanced research activity and not yet ready for commercial production, early results show sufficient promise that manual tagging of XBRL tags is likely to be a short-lived practice.

In summary, in answering which tagging method is best of all, it seems that over the next few years all of the above methods will be in use at the same time and serve different needs of different users. In the long run, however, machine-automated tagging technology should mature enough to become the primary XBRL tagging method.   

Written by Dr. A.S. Ramasastri     Posted on June 22, 2009

Dr. A.S. Ramasastri is an Adviser to the Reserve Bank of India (RBI). He has been coordinating the implementation of XBRL-based data submission by banks to the RBI. The views expressed in this blog are that of the author's and not necessarily those of the Reserve Bank of India.

Looking back now, I think that the idea of XBRL at the RBI originated sometime in 2001 as a way of disentangling a very complex system of data collection from commercial banks.

The process we went through reminds me of an Indian mythological story. In order to destroy an enemy, the Lord Vishnu comes in the form of Vamana, a very short boy, but grows Himself to cover the universe – in exactly three steps

We conquered our data collection demon in a similar three steps.

Step 1 (2001)
About 20 departments of the RBI located in 20 locations receive 250 “returns” from around 200 commercial banks.  These returns  — which are received on  a daily, fortnightly, monthly, quarterly, or in some cases, annual basis -- represent data for about 70,000 bank branches.

India has a widely varied economic picture, with different degrees of technology adoption by banks. Modes of communication between the RBI and the commercial banks have been to a great extent dictated by the individual levels of technology adoption.

In 2001, we took a survey of the commercial banks about the mode in use and their preferred mode for submitting returns to the Reserve Bank. The results of the survey revealed that the banks were prepared to adopt a Web-based solution. From this, we developed the concept of a single electronic submission window.

Step 2 (2004)
We successfully implemented a Web-based submission system for a fortnightly return. The commercial banks enter the data or upload an XML file on the Web which, in turn, is pushed to all users within the RBI. Called the On-line Returns Filing System (ORFS), this system reduced time-lag and considerably increased data quality.

Owing to its popularity with both the RBI and commercial banks, the scope of ORFS steadily expanded. As ORFS started to grow, we also began to realize two major limitations:

(1)   Data discrepancies across the returns occurred because many of the returns have common elements.  While they are supposed to match, or at least close enough, there was still enough variability to make the information inconsistent.
(2)   ORFS was visualized only as a data-pushing channel, with no back-end processing, query, and analytical tools. This created a longer-term limitation on the effectiveness of the system.

We had to find solutions to these problems.

Step 3 (2007)
When we looked around, we found that eXtensible Business Reporting Language (XBRL) had been developed to provide solutions to such problems. XBRL taxonomies can serve as standards in data submission, and reporting tools of XBRL can help in providing reasonably good query and analysis facilities. We also found that regulators in a few other countries, including central banks, have started adopting XBRL-based solutions. With the objective of adopting XBRL for return submission by commercial banks, the RBI formed a High Level Steering Committee (under the chairmanship of a deputy governor) that chartered a pilot survey for studying the feasibility of adopting an XBRL-based data submission system.

After considering the views of the commercial banks, the Committee decided to adopt an XBRL-based data submission system in a phased manner. Five returns were considered for the first phase, the important ones being Basel II data reporting system (officially called RCA-II) and financial statements; of these, the first one is already live and others are in the final stages of implementation.

As in the legend, our dwarf effort in 2001 has grown substantially and is influencing India’s adoption of XBRL in all the spheres of financial reporting. The initiative by the RBI probably invigorated efforts surrounding XBRL implementation by other stake holders. Specifically, India's securities market regulator SEBI is in the process of mandating XBRL data submission of quarterly results by major listed companies. On initiative from the accounting standard body ICAI, India now has its provisional XBRL-India jurisdiction. 

While the data collection demon has not been fully destroyed, he has certainly been humbled…and we anticipate a full victory in the near future.

Written by Geoffroy de Urtasun and Guillaume Fénelon     Posted on June 16, 2009

Geoffroy de Urtasun is Consultant at THEIA Partners, a consulting company based in Paris, helping banks, investment firms, and financial departments to set up and maintain their business and regulatory information supply chains. Guillaume Fénelon is Business Development Director at Infogreffe, the computer platform for French registers.

The first XBRL project in France has been COFINREP, launched by the Bank of France as a national implementation of the European reporting frameworks COREP and FINREP.

XBRL’s implementation in France continues with the development of a new global banking regulatory reporting regime called SURFI, complemented by the business register platform Infogreffe, which uses XBRL for companies’ financial statements.

SURFI Regulatory Reporting to the Bank of France
Within the French territory, the Banking Commission, hosted by the Bank of France, is in charge of supervising banks and investment companies. The Commission expects from financial institutions that they periodically transmit various risk and accounting statements on their activity.

These institutions are required to produce reporting in three frameworks: COREP, FINREP, and BAFI. COREP and FINREP are based on European inspiration, while BAFI reporting includes information necessary for local risk and accounting supervision per French rules as well as monetary indicators for European Central Bank statistics.

Begun in 1993, BAFI has undergone an important overhaul: the SURFI Project. SURFI — Système Unifié de Reporting Financier / Unified System of Financial Reporting — aims to ensure continuity in supervision while simplifying institutions’ reporting burden by rationalizing the circuits of collection and using the XBRL reporting standard.

By using streamlined taxonomies to reduce the required volume of reports, SURFI aims to encourage institutions to concentrate more on the reports’ contents, and enable them to devote more time to analyzing their regulatory indicators. The quality of the reports will be reinforced and the supervisory system may become more accurate.

Currently, French financial institutions have started their own projects to prepare to send their first SURFI reports in July 2010. This again raises the importance of XBRL for the banking sector, already used to produce quarterly COREP and FINREP reports.

XBRL Filing to Infogreffe
Infogreffe is the electronic platform for the 135 French registrars. It leads various dematerialization projects to facilitate access to official data and juridical services: Infogreffe proposes a notification service concerning the establishment of companies, and changes or deletions have been filed electronically since 2007.

As well, Infogreffe recently has developed a filing service for companies’ annual accounts (financial statements) using XBRL.

The project started in late 2007 using the XBRL France (local jurisdiction) taxonomy for French Annual Accounts (“taxonomie comptes annuels”) based on the General Accounting Plan. This taxonomy has been enhanced with company identification data and information added by the registrars to obtain TCA-G and TCA-GI taxonomies — respectively used for the deposit and the publication of French Annual Accounts by Infogreffe.

Since this project was based on XBRL, it went well and fast. After only one year, the French companies’ 2007 financial statements can be downloaded as XBRL instances from the Infogreffe website. Work is now in progress on further developments of taxonomies for other types of annual accounts like banks and insurance companies, and to include consolidated statements and additional fiscal information.

Infogreffe has prepared an Internet portal for electronically filing annual statements. Moreover, Infogreffe is making offline software available to produce annual accounts in the XBRL format.

Guillaume Fénelon comments:

On the Infogreffe website, visitors can find companies’ legal information. Additionally, moving forward, Infogreffe also proposes dematerialized electronic deposit for formalities like registrations and annual statements on an additional portal. Through both of these portals, XBRL becomes the standard of reference for displaying elementary financial information.

Until now, the annual statements were digitized with copies or an extract of some key figures. Now,

With XBRL, the digital statements become more and more detailed. New elementary data items can gradually be compared with each other, and some other legal information will be included, like the identity of the company, or preferential rights and pledges.

The initiative gives rise to the first interactive database of French companies’ legal and financial information.

In June 2009, XBRL projects for accounting software companies are about to start. And each company now can send its annual account reports using XBRL and analyze financial statements from its clients and partners with this technology. XBRL, which had appeared in France through two large regulatory projects (and driven through international initiatives like SEC reporting) now is spreading to every French company.

Please note these useful links:
The SURFI Taxonomy (project in French)
The TCA-G taxonomy  
The TCA-GI taxonomy