The Role of XBRL in Internal Reporting: XBRL GLXBRL FR Conceptual Overview

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The Role of XBRL in Internal Reporting XBRL
GL/XBRL FR Conceptual Overview

• Eric E. Cohen eric.e.cohen_at_us.pwc.com
• 11th XBRL International Conference
• Boston April 27th, 2005

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XBRL GL FR for Internal Reporting

• XBRL is well known as a tool to standardize
  financial statements, tax returns, and other
  publicly available or external facing documents.
  XBRL is also an important tool for more
  efficient, effective and accelerated internal
  reporting. From XBRL GL, the generic
  representation of transactional information that
  bridges the gap between transactions and
  reporting, to the use of XBRL for Financial
  Statements to represent common internal reports
  that involve summarizations and calculations not
  found in accounting systems, XBRL is a powerful
  tool for internal use as well. From transaction
  to summaries, XBRL meets the need.

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Agenda

• Internal reporting
• XBRL for internal reporting
• Data in internal reporting
• Information concepts in internal reporting
• Working together

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Internal Reporting Three Tracks
Edit reports Ad hoc reports Posting reports Daily
cash/AR/AP Performance
Financial Tax
Segment PII
Personally identifiable information
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In General

• Internal Reporting is
• More detailed
• More frequent
• More varied (less standardized)
• Fewer EDI or Die vendor demands
• Change/up-front costs of standardization without
  pressure from third party
• But more pressures now
• Internal controls - SOx 404
• PCAOB 3, Section 5.c

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Types of Internal Reporting

• Operational and administrative
• Management
• Planning
• Control
• Decision making
• Internal reporting drives
• Procurement
• Staffing and scheduling
• Management and direction
• Cash management
• Preparation for external reporting

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Types of Internal Reporting

• Preparation for
• Financial
• Statutory
• Legal
• Social
• Environmental reporting

Documents and entries
People and organizations
Inventory, supplies, services, processes, measures
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What Makes it Worse?

• Systems are Changing
• New sources
• Online accounting
• Disparate systems
• Traditional non-integrated
• Point of sale
• Job cost
• Branch systems
• Outsourced
• Payroll systems and providers
• New technologies
• Web services
• Requirements are changing
• SARBANES-OXLEY, PCAOB

We have seen a return to third-party processing.
From ADP in the seventies to ASPs in 2005, one
businesss data is being captured on another
businesses computer.
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Old World of Electronic Data Exchange
NEW WORLD
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Old World
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New World
Web services Service-Oriented Architecture Enterpr
ise Services Bus
Facilitated by Standard payload
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XBRL for Internal Reporting

• Benefits of XBRL for external purposes is obvious
• Shared meaning, different vocabulary
• Standards and definitions
• Global consumption
• Machine to machine consistency
• Public From A to B to C
• Is internal different?

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Proprietary Formats XML Alone
Point A
Point B
... Point n1
qbxml
qbxml
smbxml
smbxml
Intacct xml
Intacct xml
SAP
SAP
Peoplesoft xml
Peoplesoft xml
Oracle
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Enter Extensible Business Reporting Language

• XBRL is
• An international consortium of the business
  reporting supply chain
• An agreement on the use of technology to build
  common user dictionaries and express business
  information
• Dictionaries
• Summarized reports
• Detailed information
• MORE THAN DICTIONARIES

XBRL
qbxml
qbxml
smbxml
smbxml
Intacct xml
Intacct xml
SAP
SAP
Peoplesoft xml
Peoplesoft xml
Tax Reporting
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Standards-based Data Interchange
XBRL GL
qbxml
qbxml

• XBRL FR Views of Data
• A fact
• At a time or for a duration
• In a unit of measure
• For an entity
• Under a scenario
• XBRL GL Data
• A framework
• Based on journal history
• Standardizing representations
• Documents
• Entries
• Parties
• Resources
• Links
• Tax
• and more

smbxml
smbxml
Intacct xml
Intacct xml
SAP
SAP
Peoplesoft xml
Peoplesoft xml
Oracle
Industry transactional XML
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Fills the GAPS between GAAPS
Detail to summary
Intra system
Detail
Accounting recognition/ classification
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Scope and role of XBRL
XBRL GL, the Journal Taxonomy
XBRL Financial Statements
External Financial Reporting
Business Operations
Internal Financial Reporting
Investment, Lending, Regulation
Economic Policymaking
Processes
Investors
Financial Publishers and Data Aggregators
Companies
Central Banks
Participants
Auditors
Trading Partners
Regulators
Management Accountants
Software Vendors
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Data in Internal Reporting

• Consolidations
• Data migration
• Archival
• Data transfer
• Audit Trail

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Basic Challenge Similar Data, But
XBRL GL provides platform for agreed-upon and
well defined list of concepts make sure my
Account and your Account means the same
thing (not bank account or customer account but
GL account.)
Similar Data Account, Amount, Date
Based on XML, XBRL GL is order independent
sharing element names for import/export means
that AccountNo, AccountNumberm Account and
Account will all be express as one common name
applications will know what to expect
inpublishing and consuming data files.
Different Data Dictionaries Field names, field
order System 1 AccountNo, Amount, Date System 2
MonetaryAmount, PostDate, AccountNumber System 3
PostingDate, Account, Value System 4 Date,
Journal, Account, Amount
Different Data Formats CSV ASCII WKS
So many external data formats XML provides a
popular and increasing supported / demanded data
format.
Different Representations for the same concepts
in common data field Journal PJ, Payroll
Journal, Payroll Date 12-31-03, 20031231,
12/31/03
Once you have agreed on data field
standardization, software applications require
agreement on content in many cases. XBRL GL
provides enumerated values to supplement XML data
standards to help in this area.
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XBRL GL Challenges Local Concepts of General
Ledger, Holds More
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Internal Data Exchange
Outsourced Travel and Expense
Non-integrated point of sale
External payroll provider
Subsidiary with separate system
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From Initial Transaction
I N V O I C E
May 2, 2003
Invoice 10037
ABC Sales Corp.
Item Description Qty Extension
1078 Blue Widget 200 2,803.78
1083 Cyan Widget 100 1,402.93
Sub-total 47,592.33 Freight Total 47,592.33
ltdocumentTypegtinvoicelt/documentTypegt
ltdocumentNumbergt10037lt/document Numbergt
ltdocumentDategt2003-05-02lt/documentDategt
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Through ERP System Actual/Virtual
purchase orders
Outsourced procurement
Outsourced e-ordering
PO AP, IM
sales orders
OE AR, IM
items
IM bomp
Off-site fullfillment
Third party payroll
customers
vendors
assets
employees
AR
AP
FA
PR
GENERAL LEDGER
REPORTING
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Facilitating Web Services, Assurance
Mapping 1
Mapping 2
Assure
Assure
Assure
Assure
Assure
Assure
Assure
Spell Check
Shipping Rate Check
Credit Check
Assure?
Logistics Check
Rules and Journalization
Audit and monitoring tool
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Every System as XBRL
Across language Across data definitions Across
file formats
System 3
System 1
System 2
XBRL GL
XBRL GL
XBRL GL
Identificador de la Cuenta Descripción Principal
de la Cuenta Monto Monetario Fecha de
Asignación/Ingreso
Account Number Account Description Entry
Amount Posting Date
Account Description Amount PostDate
accountMainID accountMainDescription amount po
stingDate
accountMainID accountMainDescription amount po
stingDate
accountMainID accountMainDescription amount po
stingDate
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Data and Views
Report Writer
Accounting data
Select information from database(s), including
joins
Report
Formulas create new data fields
Filter the record set
Add headers/footers, conditionals with record
groupings, derived totals based on sorts
Concentration Data Fields
Concentration Information Concepts
Provide visual formatting rules, like cross-tab
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Scope and role of XBRL
XBRL GL
XBRL FR
External Financial Reporting
Business Operations
Internal Financial Reporting
Investment, Lending, Regulation
Economic Policymaking
Transactional Representations
Consolidation
Processes
Investors
Financial Publishers and Data Aggregators
Companies
Central Banks
Participants
Auditors
Trading Partners
Regulators
Management Accountants
Software Vendors
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Information Concepts in Internal Reporting

• When you are working on internal versions of
  external reports
• When your internal report rely on derived fields,
  totals
• Aged receivables
• 30, 60, 90, 90, other buckets
• Combination of XBRL FR for agreed upon derived
  fields and totals and XBRL GL for necessary detail

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Broad Spectrum of XBRL Uses
External recipients
Summarized
XBRL VR
Views of data
Concepts
Related recipients Bank, accountant, regulators
Data fields
Fields of data
Detail
Internal recipients
XBRL GL
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XBRL GL Works With XBRL FR
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Benefits of XBRL for Internal Reporting

• Improves internal management
• Speed
• Detail
• Cost of abilities of applications
• Learn from mistakes, evaluate changes from plans
  early
• Taxonomy - better communication from on top

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Benefits of XBRL for Internal Reporting

• Improves assurance
• Details agreeing or reconciling to reporting
• Internal auditing
• External auditing

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Benefits of XBRL for External Users of Internal
Reporting

• Improves sharing data with banks
• Asset based lending
• Listing of open accounts from customers
• Listing of inventory
• Improves sharing data with acquirers
• Improves sharing data with partners

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Todays Internal Tomorrows External?

• How about
• The same information from its source in greater
  detail - which may be tomorrow's external
  reporting?
• Bringing together internal groups to speak the
  same language?
• Drill down support from external today
• Possible (partial or total) replacement for forms
  tomorrow

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Tomorrows Control Environment
in plain English, which may include trend and
qualitative information and graphic presentations
Deliver real-time XML data stream On demand
Web-services available data
using secure and not-so-secure links
Bring together information from various sources
with all version control, security, etc.
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Beyond Tomorrow Entering New Dimensions with XBRL
Triggers Documents
After-the-fact
Processes Promises Prospects Projections
Predictive
Periodic
X When assurance is delivered Y When tests are
performed Z Hardness of data later
re-assurance? Newer assurance on this item is
available click here
Real-time
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Questions?

• Eric E. Cohen
• PricewaterhouseCoopers
• eric.e.cohen_at_us.pwc.com
• [phone]
• Find out more
• www.xbrl.org
• www.pwc.com/xbrl

lt/presentationgt
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Nows the Time for Real-time
We need to move toward a dynamic model of
current disclosure of unquestionably material
information. Harvey Pitt, Pre-E http//www.sec.
gov/news/speech/spch523.htm

• SEC. 409. REAL TIME ISSUER DISCLOSURES
• Section 13 of the Securities Exchange Act of 1934
  (15 U.S.C. 78m), as amended by this Act, is
  amended by adding at the end the following
• (l) REAL TIME ISSUER DISCLOSURES.Each issuer
  reporting under section 13(a) or 15(d) shall
  disclose to the public on a rapid and current
  basis such additional information concerning
  material changes in the financial condition or
  operations of the issuer, in plain English, which
  may include trend and qualitative information and
  graphic presentations, as the Commission
  determines, by rule, is necessary or useful for
  the protection of investors and in the public
  interest.

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Do You Remember?

• From Highlights of Initial XFRML Steering
  Committee, 10/14/99
• We should have an initial calibration on the
  initial picture framework getting different
  products (financial statements, etc. others along
  the supply chain) working together. We need to
  develop a schematic of the value streams and use
  cases along with objectives and a timeline and a
  concept statement.
• XFRML should have its roots in the "Audit
  Supply Chain." XFRML as technical standard for
  seamless process of exchange across all audit
  processes.
• Our opportunity is to address things
  internationally at the level below the financial
  reporting level since there is more commonality
  at that level.