Ais Chapter 9

Front 1

XBRL

Back 1

eXtensible Business Reporting Language

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What is XBRL?

Back 2

XBRL is an example of business exchange technology, which has appeared on many AICPA top technologies lists over the years. The basic purpose of XBRL is to facilitate information exchange, particularly financial information between all kinds of organizations, regardless of the hardware and software platforms they use individually.

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XBRL is to financial statements as

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HTML is to web page development. It is a much broader language.

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As an accountant how will you use XBRL?

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As an accountant, you will likely be called upon to convert standardized financial statements into XBRL format; you may also have to interact with IT professionals in organizations about this important new standard.

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According to the XBRL international website XBRL is:

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a language for the electrionic communication of business and financial data which is set to revolutionize business reporting around the world. It provides major benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and rleiability to all those involved in supplying or using financial data. XBRL is being developed by an international non-profit consortium of approximately 250 major companies, organizations, and government agencies. It is an open standard, free of lisence fees. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world.

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Accounting is often referred to as

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the language of business. Like most languages it has some special terms that should be mastered. Such as depreciation. In the same way that accounting requires special language so does XBRL

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Depreciation

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The periodic allocation of an asset's cost to the periods that benefit from its use.

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5 terms you need to know before looking at XBRL:

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1. Extensible
2. Specification
3. Taxonomy
4. Namespace
5. Instance document

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Extensible

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In otherwords, the XBRL language is "able" to be extended. The same is true about English. Think about words and expressions we use today that hadn't been invented before a decade ago: WiFi, Ipod and the like. In the same way English grows and changes, users of XBRL can add new ideas and phrases to the basic XBRL without changing its fundamental purpose, structure, or existing terminology. The original creators of the language could not possibly have anticipated every term needed by every organization over the course of even a few years--let alone a longer period.

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Specification

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Think of a specification as a particular (specific) example of a large group. For example, CA is a specification of the USA. XBRL is part of a larger group of languages referred to as XML (eXtensible Markup Language). One common feature of all XML specifications is their "extensible" nature; another is their use as "markup" languages. XML consists of a series of descriptors added to various kinds of info that help users make sense of info. As a specification of XML, XBRL is focused on descriptors of business reporting information--most often, accounting information.

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Taxonomy

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Broadly speaking, a taxonomy is a way to organize knowledge. The table of contents is a taxonomy. If someone asked tou about the info contained in a balance sheet you would likely describe it as "assets, liabilities, and equity." Those 3 elements of the financial statements are a taxonomy--they are a way of grouping items together for ease of presentation and discussion. XBRL is made up of several taxonomies which, for the most part, are focused on specific industry groups. For example, the terminology that describes financial information in a manufacturing firm (such as material, labor, overhead, WIP) has significant differences from financial information in a government entity (fund, encumbrance).

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Namespace

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If you were reading and came across a word you don;t know you'd probably look in a dictionary to find its meaning. A namespace is like an XBRL dictionary. Remember X stands for extensible. So if someone invents a new XBRL term they have to let others know what it means. The meaning (definition) of the new term would reside in a namespace. Namespaces have internet addresses (URLs) just like webpages.

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Instance document

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An instance document is a specific example of a properly tagged XBRL information. For example, a publicly traded company like Microsoft might mark up its balance sheet with XBRL tags. The balance sheet, then, would be an instance document.

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What kind of complexity is there in an AIS?

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1. organizations can have significantly different structures and titles in their chart of accounts
2. Every accoun in the system has its own balance
3. The balances can be measured in hundreds of world currencies
4. Some of the numbers in the system reflect results for a period of time (revenues) while others reflect posiotion at a point in time (assets).
5. The numbers in the accounting system can be produced iwth or without IT.

Front 15

Let's dissect the pieces of the name XBRL to understand it more clearly.

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1. XBRL is extensible. If XBRL wasn't extensible users would be stuck with whatever labels its creators built into the language.
2. XBRL is for business reporting. it is specifically designed to tag and transmit financial information-- the kind produced by an AIS.
3. XBRL is language it has its own rules regarding things like syntax and punctuation.

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How does the XBRL website define taxonomies?

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The dictionaries used by XBRL. They define the specific tags for individual items of data (such as net profit) Different taxonomies will be required for different financial reporting purposes. National jurisdictions may need their own financial reporting taxonomies to reflect their local accounting regulations Many different organizations, including regulartors, specific industries or even companies, may require taxonomies to cover their own business reporting needs.

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How does the KPMG define instance documents?

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A business report in XBRL that provides information in context, complying with definitions set down in a taxonomy and one or more extension taxonomies. For example, a companies financial statements might be published as an instance document in compliance with US GAAP commercial an dindustrial taxonomy. Quarterly, half yearly, weekly, or hourly business reports also tak the form instance document.

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Many XBRL taxoomies are _____ but 2 ______ they are ______ & ______.

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Many XBRL taxonomies are country based but two taxonomies cut across national borders the international financial reporting standards taxonomy and the global ledger taxonomy.

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IFRS taxonomy

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The purpose of IFRS GP is to allow for profit organizations to prepare XBRL tagged financial statements based on International Financial REporting Standards.

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What does the global ledger taxonomy do?

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The global ledger taxonomy allows the representation of anything that is found in a chart of accounts, journal entries, or historical transactions, financial or nonfinancial It does not require a standardised chart of accounts to gether information, but it can be used to tie legacy chartso f accounts and accounting detail to a standardized chart of accounts to improve communication within a business."

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What is tagging software for?

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The use of tagging software doesn't eliminate the need to understand the purpose, nature, and structure of XBRL. Rather, tagging software is a tool that helps organizations tag their documents more efficiently than they could with manual coding.

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XBRL helps rganizations in 2 major ways.

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1. it allows more effecient data collection and reporting. ALl the info comes into a controller's office with appropriate XBRL tags and it could be collected and summarized quickly and easily, then reported to both internal and external statkeholders in a very short itme.
2. XBRL facilitates data consumption and analysis. Using XBRL, our corporate controller can collect data and report information much more quickly and easily--leaving more time for analysis and interpretation.

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ORGANIZATIONAL BENEFITS OF XBRL

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1. Save costs by preparing data in one form and automatically generating many outputs. Comopanies will no longer have to re-key
2. Consolidate results across divisions and subsidiaries with uch greater speed and reliability.
3. Improve acuracy and reliability of financial data.
4. Focus effort on analysis, forecasting, decision making, rather than laborious tasks in gathering, compiling, and preparing data.
5. Achieve quicker and more efficient decisions.
6. Make more efficient use of internet in communicating with investors.
7. Improve investor relations through provision of more trnasparent and user friendly information.
8. Simplify the procss and reduce the costs involved in regulatory reporting to tax and other authorities.
9. Obtain quicker responses from counterparties, including banks and regulators
10. Free themselves from proprietary systems and software which are difficult and costly to replace.

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ACCOUNTANT BENEFITS OF XBRL

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1. Obtain rapid and reliable data on company financial performance.
2. Greatly reduce effort and costs in gathering and analyzing data.
3. Simplify and automate tasks.
4. Focus effort on alalysis and value added work
5. Make better use of software to improve efficiency and speed.

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CIA triad

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we want to ensure that data are confidential, have integrity, and are available when needed.

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What are the risks organizations face when using XBRL?

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1. XBRL moves data within information systems electronically. Therefore the data are subject to theft, loss, and manipulation the smae way all electronic data is.
2. XBRL tagging while not complex is detail oriented. So, the coding process is subject to the risk that humans will make errors in coding.
3. Since XBRL is so technology dependent, we must also consider the risk of hardware and software failure in an XBRL environment.

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Risk - Compromised data

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daily data backups
firewalls
mandatory password changes
"strong" password requirements
Password protected access
virus protection software

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Risk- tagging errors

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electronic tagging (as opposed to manual)
independent review after tagging (by internal auditors)
oeriodic user training

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Risk-hardware and software failure

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disaster recovery plan
physical security (eg. locked doors, alarms)
Uninterruptible/backup power supply

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Risk- Inappropriate/missing authorizations

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Internal audit review of selected transactions
Periodic user training
Up to date procedures manuals

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Risk - selection of an inappropriate taxonomy

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Periodic review and approval of taxonomies used
centralized approval process for taxonomy additions

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What are XBRL tags enclosed in?

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Brackets

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What does every tag have?

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Every tag has both a beginning such as <ifrs-gp:AssetsHeldSale contextref='Current_AsOf" U-Euros"decimals="0">, and an ending, such as <ifrs-gp:ASsetsHeldSale>

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What are elements of an XBRL tag?

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Elements of an XBRL tag include capital letters within a label, such as "AssetsHeldSale". We refer to that style as camelCase

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Each XBRL tag includes what information?

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1. The taxonomy used. For example ifrs-gp
2. The element name from the taxonomy such as "AssetsHeldSale"
3. Time data-Since we're looking at a point in time.
4. Currency data such as what currency is being used.
5. Number of decimals to display.