# Neal Hannon and Saeed Roohani - PowerPoint PPT Presentation

1 / 88
Title:

## Neal Hannon and Saeed Roohani

Description:

### Rhode Island Society of Certified Public Accountants. May 17, 2001. 2. Today's Objectives ... complex, structured financial data: e.g., statements, G/Ls. ... – PowerPoint PPT presentation

Number of Views:106
Avg rating:3.0/5.0
Slides: 89
Provided by: gaitherru
Category:
Tags:
Transcript and Presenter's Notes

Title: Neal Hannon and Saeed Roohani

1
The Next Technology RevolutionXML
XBRL
Rhode Island Society of Certified Public
Accountants May 17, 2001
• Neal Hannon and Saeed Roohani
• XBRL Educational Resource Center
• At Bryant College
• XBRL Education Co-Chair
• E-Mail xbrl_at_bryant.edu
• Phone 401.232.6195

2
Todays Objectives
• Overview of XML XBRL
• Show you how this technology makes doing
• Faster
• Cheaper
• Better
• Conclusion

3
Find the best solution to connect the nine points
together with no more than four straight lines
4
Whatassumptionsare you making?
5
If you do not assume that you cannot extend your
lines beyond the imaginary square formed by the
box the puzzle becomes easier to solve.
6
Henry Dudeney was born 144 years ago 10th
April 1857
Dudeney is best known for his publications of
mathematical problems and pastimes, some of
which provoked serious mathematical research
7
Everything that can be invented has been
invented. Charles H. Duell Commissioner of
U.S. Office of Patents,urging President William
McKinley to abolish his office, 1899
8
Dont assume that the lines must pass through the
center of the dots.
9
Dont assume that the line must be thin.
10
Just to prove I can do it with two lines.
11
Dont assume that the paper must be flat.
12
If you rip the paper into nine segments, you can
stack them and poke your point through all at
once.
13
Dont assume that you cannot crease the paper.
14
Dont assume that the lines cannot extend beyond
the edge of the paper.
15
Dont assume that you cannot rip the paper.
16
Is There A Problem?
From Evansville Courier and Press
17
Lets move up the Value Chain
18
Contentwithout Context
Searching for the word Mercury on the Web can
provide search results such as--
Hg
19
• 47, 000 hits, No Help

20
Evolution to Web Services
Program the Web
Browse the Web
Web Services
Web Pages
Text Files
Automation
FTP, E-Mail,Gopher
Presentation
Connectivity
TCP/IP
HTML
XML
21
XML
• XML stands for
• eXtensible
• Markup
• Language
• Universally accepted method of exchanging
information

22
eXtensible Markup Language
• is a meta markup language the World Wide Web
Consortium (W3C) considers a universal standard
for describing both structured data and the
behavior of applications that process the
language.

23
What Is XML?
• XML is a
• platform-independent,
• self-describing,
• expandable,
• standard data exchange format

24
XML is Platform Independent
• Windows
• Unix
• Macintosh
• Mainframe
• Linux

25
XML is Self-Describing
• Example
• July 26, 1998
• Describes the information, not the presentation
• Format neutral

26
XML is Expandable
• Whereas HTML has a fixed set of tags
• , ,
• XML lets you create your own tags

27
How does it work?
• XML gives meaning to information through the use
of tags

Saeed Roohani
Bryant College Chair,
Accounting 29
Caution.. Just because something is ..
Does not mean it is accurate?
28
The XML Puzzle
Industry Specific Vocabularies
XML Document
Company Specific Vocabulary
Core Schema
Transformation Tools
29
How XML Works
How XML Works
Improves the way companies -- and applications
-- share information Enjoys strong industry and
vendor support
30
What is XML?
• What XML is Not
• Not a religion.
• Not the solution to all world problems.
• Not a solution for all electronic commerce
problems.
• Not a solution to all legal-technology problems.
• XML is a Tool
• XML is a Really Cool (Powerful) Tool!
• Like all tools, XML can be used wisely and
unwisely.

31
Why is XML so Important?
• Portable
• Vendor neutral
• More flexible and easier to use than EDI
• All major software products are becoming XML
enabled
• Defacto standards for data exchange
• Enabling new levels of interoperability

32
XML
• Widely expected to reduce cost of publishing to
the Net by as much as 50.
• And by next year

Gartner Group prediction
70 of all B2B transactions executed on the Web
will be done using XML.
33
Who defines the tags?
• Tags are defined by industry consortiums
• Each industrys standard tags are commonly
referred to as a taxonomy

34
Content in Context (Industry-specific)
Auto Industry

Chemical Industry

Publishing or Mythology

Music Industry

Aerospace

Astronomy

35
Whos Building Taxonomies?
36
Defines Tags
37
XBRL International is gaining strength
• XBRL activities occurring in
• United States
• Australia
• China Hong Kong
• Japan
• Malaysia
• New Zealand
• Singapore
• Taiwan
• Germany
• India
• Ireland
• Netherlands
• Nordic Federation (Denmark, Norway, Sweden)
• South Africa
• Spain
• Switzerland
• United Kingdom

38
XBRL International is gaining strength
• On a Global level through the
• International Accounting Standards Council
• International Press Telecommunications Council
• International Standards Organization
• On a Country Level
• United States
• Australia
• China Hong Kong
• Japan
• Malaysia
• New Zealand
• Singapore
• Taiwan
• Germany
• India
• Ireland
• Netherlands
• Nordic Federation (Denmark, Norway, Sweden)
• South Africa
• Spain
• Switzerland

39
How we are organized US Jurisdictional
40
XBRL Impact
• "The explosive growth of the Internet is not only
changing the way companies conduct their
• it also promises to forever alter the way they
• - CFO Magazine, February 2000

41
XBRL Documents
• XBRL for Financial Statements
• XBRL for General Ledger
• XBRL for Journal Entry Reporting
• XBRL for Credit Reporting
• XBRL for Performance Press Releases
• XBRL for Risk Reporting
• XBRL for Regulatory Filings
• XBRL for Tax Filings
• XBRL for Assurance Schedules
• XBRL for Authoritative Literature

42
Whos Embracing XML now?
• Software developersUsing XML as the core
technology for new products
• Database developers Building XML support into
their products.
• Industry groupsDeciding how information should
be shared.
• Organizations Investigating how to tie their
inter and intra company processes together.

43
XBRL Support
• I would like to see you develop valuation models
that result in consistent, comparable and fair
values of assets and liabilities. I would like to
see you hone specific, but plain English
definitions for the types of information you
believe should be included in public disclosure.
I would like to see you take your XBRL project a
step further, providing account classifications
for companies in common industries. In short, I
challenge you to turn all of this data into
meaningful information for investors.
• - Arthur Levitt, Chairman, U.S. Securities
Exchange Commission
• October 24, 2000, at the Fall Council of the

44
• XML for Financial Reporting
• Enables a dramatic improvement in the processing
of financial reports
• XBRL documents can be
• Prepared efficiently
• Exchanged reliably
• Published more easily
• Analyzed quickly
• Retrieved by investors simply to enable smarter
investments

45
Benefits
• XBRL is
• NOT a new accounting standards but enhances the
distribution and usability of existing financial
statement information
• Enabler and an extension for relational database
functionality for all financial statement
information

46
• Ineffective communication to investors
• Inefficient aggregation and analysis
• Inefficient creation of financial statements

47
Why XBRL ?
• Enable business reporting that leverages the
Internet XML
• Effective access and analysis of business reports
• Improve corporate communications with stakeholders

48
Process BenefitsLowering Financial Reporting
Cost
Who benefits
Printed Financials
• Todays external reporting processes
• Rework and delay
• Ad hoc and non repeatable
• No path forward

Regulatory Filings
Web Site
Accounting System
Tax Return
Explanatory Text
Third Party Information
49
Process BenefitsLowering Financial Reporting
Cost
Who benefits
Printed Financials
• Common interchange format and storage is good
information management practice
• Reduces redundancies discrepancies
• Repeatable processes using tools
• A platform for continuous reporting

Regulatory Filings
Web Site
Accounting System
Tax Return
Explanatory Text
Third Party Information
50
XBRL Interoperability Multiple Uses
G/L Package
ERP
XBRL
Custom Developed Systems
Other Sources of Information
XBRL
Other Sources of Information
Other Sources of Information
51
XBRL Interoperability Multiple Uses
G/L Package
ERP
XBRL
Custom Developed Systems
Other Sources of Information
XBRL
Other Sources of Information
Other Sources of Information
52
Once Every Event is tagged in XBRL
G/L Package
ERP
XBRL
Custom Developed Systems
Other Sources of Information
XBRL
Other Sources of Information
Other Sources of Information
53
XBRL Working Model Planned Specifications
XBRL for G/L Journal Entry Reporting
XBRL for Financial Statements
XBRL for EDGAR Filings
External Financial Reporting
Internal Financial Reporting
Investment and Lending Analysis
Processes
XBRL for Tax Filings
Investors
Financial Publishers and Data Aggregators
Companies
Participants
Auditors
Regulators
Management Accountants
Software Vendors
54
XBRL not a Transaction Protocol
What it is
• XBRL is merely a format to serialize complex,
structured financial data e.g., statements,
G/Ls.
• Therefore, it cannot replace OFX, ebXML, ANSI
X.12 Trans Set 821, OMG G/L Spec, ...
• Future message sets in those protocols could
include XBRL tagged data if they need to send
financial statements in the message body.
• XBRL provides a framework and an AICPA approved
vocabulary that can be extended to many other
reporting frameworks.

55
XBRL not an accounting standard
• Means of communicating
• Current GAAP
• Current practice
• Flexible standard
• Future standards
• Future general practice

56
XBRL Impact
• "Coming down the road are standards like XML and
XBRL that take data handling a major step forward
from HTML, the current web standard. With these
new standards, plus those for accounting, it will
be possible to scan a universe of corporate data
across the web and extract, say, the chairman's
report for all companies with a certain market
cap, EBITDA, and gearing.

57
XBRL A Fragment of a Raw Data
• Same Raw Data in XML (XBRL) Format

valents" 1,611
1,648

58
(No Transcript)
59
What software sees is the differentiator and
drives benefits (here is an example)
60
Importance of Reporting
What excites the CEO is the ability to know
what the business is doing at any given point in
time, react quickly to market shifts and
competitive threats and remain in tight control
while empowering employees to make informed
decisions more quickly.

John Chambers Cisco CEO
Year End Earnings Release Call August 10, 1999
61
Best Practice
The Virtual Close has, in my opinion, just as
much impact on a companys future success or lack
thereof as the well-published e-commerce area.
John Chambers Cisco CEO
Year End Earnings Release Call August 10, 1999
62
XBRL Impact
• If Europe moves quickly to take up these
standards, it could give them an attractive lead
in the race to accessible and comparative key
data that would stimulate investor interest. It
would undoubtedly spawn a plethora of research
tools that would be useful to both private and
professional investors.
• - Investors Chronicle, August 9, 2000

63
XBRL and the Emergence of e-Standards
• E-Standards are fundamental
• HTML is the standard that enabled the webs first
Big Step
• XML is the webs next Big Step
• Over 200 XML-Based Specifications and Protocols
exist, including
• RosettaNet computer company supply chain and
• OBI - Open Buying on the Internet - retail
e-commerce
• FpML - Financial Products (Derivatives, Swaps,
FX)
• ACORD XML - Insurance industry information
exchange standards derived from EDI.
• UN/CEFAC EBXML
• XBRL is uniquely focused on financial reporting

64
Standard .orgs (reporting vs e)
Accounting / Auditing Reporting
• ASB
• IASC
• FASB
• IFAC
• SEC
• Territory Institutes
• W3C
• OASISUN/CEFACT (ebxml)
• xml.org
• RosettaNet
• ACORD

CPAs participate / lead in these
65
The range of what is under development today...
Horizontals (Infrastructure) there are others..
HR
CRM
XBRL is uniquely focused on business reporting
Etc.
CHEMX
ACORD
FpML
ANX
RosettaNet
Verticals (Industry Supply Chains) there are
others.
66
Customers
Suppliers
67
68
Key XBRL Components
XBRL - What
• XBRL / XML Specification (XBRL.org)
• Global architecture/technology
• XBRL hierarchical vocabulary (jurisdiction/industr
y)
• Dictionary of terms by jurisdiction/industry
sector
• Style Sheets (preparer)
• XBRL enabled tools (market)

69
Key to our Success
• Market driven model
• Start simple, be inclusive
• Members support XBRL
• Members do not compete on the framework
• Build structure systems to support open
community market development

70
Steps in Technology Acceptance
Acceptance
Simplification/Tools
Taxonomy
Visionaries
71
Financial Institutionsand their Users
• SMALL BUSINESS provides FINANCIAL INSTITUTION
with their information in XBRL and receives loan
approval in less than a day instead of two
daysor two weeks.

Average Time for Loan Processing1.75 days
90 time spent on Mechanics
With XBRL?
More Time for Analysis Better Analysis Less
Risk
Or
Mechanics
Analysis
Mechanics
Analysis
Mechanics
Analysis
Mechanics
Analysis
Process more loans in the same amount of time
72
XBRL Working Model Supply Chain Beneficiaries
Today XBRL for Financial Statements
External
Internal
Investment
Processes
Processes
Financial
Financial
and Lending
Operations
Reporting
Reporting
Analysis
Financial
Publishers
Companies
Investors
Participants
Participants
and Data
Aggregators
Management
Auditors
Regulators
Partners
Accountants
Software Vendors
73
Benefits to Today's Users
• 1. Reduce cost of analyzing and reporting
financial information
• 2. Increase speed and efficiency of business
decisions
• Enhance the distribution and access of existing
financial statement information
• Increase and enhance analysis

74
Benefits
• 1. Reduce cost of analyzing and reporting
financial information
• 2. Increase the speed and efficiency of business
decisions
• 3. Enhance the distribution and usability of
existing financial statement information

75
Example Cost Reduction
• International Subsidiaries
• Large multi-national corporation uses XBRL to
quickly rollup, analyze and publish the
financial statements of numerous subsidiaries
• in different countries
• with different languages
• using different GAAP
• on different computer systems

76
Benefits
• 1. Reduce cost of analyzing and reporting
financial information
• 2. Increase the speed and efficiency of business
decisions
• 3. Enhance the distribution and usability of
existing financial statement information

77
Example Efficient Decisions
• Major mutual fund company feeds XBRL-ized
information to customers to differentiate their
funds as more objective and reliable investments
• An investor uses XBRL to compare the financials
for a range of companies
• Belonging to different revenue levels
• Located within an industry sector
• Along multiple analytical criteria

78
Benefits
• 1. Reduce cost of analyzing and reporting
financial information
• 2. Increase the speed and efficiency of business
decisions
• 3. Enhance the distribution and usability of
existing financial statement information

79
Example Credit
• Loan Approval
• Small Business provides Bank with their financial
information in XBRL and receives loan approval in
1 minute instead of 2 days
• Credit Approval
• Company approves customer credit request with
automated assessment processes facilitated by
XBRL
• Line of Credit
• Company provides capital markets with financial
information in XBRL and receives expedited line
of credit

80
XBRL Taxonomies Under Development
App to fin rep
• Commercial and Industrial Companies, US GAAP -
Published
• Federal Departments, US
• Mutual Funds, US
• Financial Institutions, US
• Commercial and Industrial, IASC
• Commercial and Industrial, German GAAP
• Bank Call Reports - FDIC

81
How Do You Get There?
Needs Assessment
Training Education
Implementation
82
XML Shortcomings?
Not a replacement for integration and middleware
tools
Lots of Hype, not a solution for everything
There are many different standards among
industries
Standards still evolving
But, you cant wait while the standards evolve.
83
84
• www.xbrl.org - Student Competition
• web.bryant.edu/xbrl
• www.ebxml.org
• www.w3.org www.xml.org
• www.rosettanet.org
• www.ibm.com/developer/xml
• www.microsoft.com/industry/biztalk

85
Final Thought..
• Change is not what it used to be..
• Change has become a process its become a
permanent part of the external environment

86
Summary
• FASTER
• BETTER
• CHEAPER
• Our profession will have to follow technology
and record business activity in an real-time
mode.

87
Concluding Remarks..
Embrace Change or Die!
88