Accounting Information Systems (ACCT 312)

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Accounting Information Systems (ACCT 312)
PowerPoint Presentations
XBRL eXtensible Business Reporting Language
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What is XBRL?

• XBRL is a freely available electronic language
  for financial reporting.
• XBRL provides an XML-based framework that the
  global business information supply chain can use
  to create, exchange, and analyze financial
  reporting information including, but not limited
  to, regulatory filings such as annual and
  quarterly financial statements, general ledger
  information, and audit schedules.
• XBRL is not about establishing new accounting
  standards but enhancing the usability of the ones
  that we have through the digital language of
  business.
• XBRL will not require additional disclosure from
  companies to outside audiences.

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What is XBRL Used For?

• An XBRL-based financial statement is a digitally
  enhanced version of paper-based financial
  statements, which include the balance sheet,
  income statement, statement of equity, statement
  of cash flows, and the notes to the financial
  statements as well as the accountant's report.
• XBRL documents can be prepared efficiently,
  exchanged reliably, published more easily,
  analyzed quickly, retrieved by investors simply,
  and enables smarter investments.
• Other potential XBRL applications include tax
  returns, regulatory filing, general ledger,
  authoritative literature, and management
  reporting.

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Financial Reporting Process Without/With XBRL
Printed Financials
Regulatory Filings
Accounting System
Web Site
Explanatory Text
Tax Return
Third Party Information
Trade Filings
Printed Financials
Regulatory Filings
Accounting System
Web Site
XBRL Documents
Explanatory Text
Tax Return
Third Party Information
Trade Filings
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What are the Benefits of XBRL for Financial
Statements?

• With XBRL, information will be entered once and
  the same information will be "rendered" as
• a printed financial statement,
• an HTML document for a Web site,
• an EDGAR filing file for SEC,
• a raw XML file, or
• a specialized reporting format such as periodic
  banking and other regulatory reports.
• Specific benefits of XBRL include
• Allows users to quickly access the information
  they need
• Permits the automatic and reliable exchange of
  financial information
• Does not require a change to accounting standards
  or disclosure policies
• Eliminates the need to reenter data for different
  users
• Lowers the cost to prepare and distribute
  financial statements
• Allows accountants to quickly and easily
  consolidate and scrutinize internal data for use
  in financial reports
• Enhances transparency of financial reporting

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Who will benefit from using XBRL?

• Companies who prepare financial statements More
  efficient preparation of financial statements
  because they will be created one time and
  rendered as printed reports, on Web sites, as
  Edgar filings, or as other regulatory filings.
• Analysts, Investors, and Regulators Enhanced
  distribution and usability of existing financial
  statement information. Automated analysis,
  significantly less re-keying of financial
  information from one form into another form,
  receiving information in the format you prefer
  for your specific style of analysis.
• Financial publishers and data aggregators More
  efficient data collection lowers operating costs
  associated with custom, idiosyncratic data feeds
  and reducing errors while concentrating on adding
  value to the data and increasing transaction
  capacity
• Independent Software Vendors Virtually any
  software product that manages financial
  information could use XBRL for its data export
  and import formats, thereby increasing its
  potential for full-interoperability with other
  financial and analytical applications.

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Three Requirements for the Successful Deployment
of XBRL

• Creation of a specification that is the same for
  all companies that is consistent from one
  financial statement to another.
• An application that will allow the creation of
  financial statements tagged with XML that
  adhere to the specifications.
• Style sheets which render information for a
  specific or variety of formats.
• XBRL for financial statements will provide
  agreement on the terms used by establishing
  uniform categories for financial data. Yet, the
  system remains flexible to accommodate any
  companys internal environments, processes,
  systems, and even styles.

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Comprehensive XBRL Example

• A comprehensive example is illustrated from
  http//www.xbrlsolutions.com/Public/Demos/Financia
  lHighlights. This demo explains various stages of
  the XBRL creation process
• Data Stores how to assess data stored internally
  to put it in an XBRL format.
• Preparing XBRL how to prepare an XBRL document.
• Validation how to validate the document to be
  sure that it is prepared correctly.
• Publishing how to make the information available
  to the public.
• Styling Information how raw XBRL can be styled
  to make it more useful to humans.
• Reusing how information can be put into a
  different format and reuse without rekeying
  information.
• Analyzing how information can be extracted
  automatically into a spreadsheet model, rather
  than having to rekey.
• Conclusion

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Discussion Questions

• Does XBRL set new accounting standards?
• Is XBRL a standard chart of accounts?
• Does XBRL require additional disclosure?
• Is XBRL a U.S. centric initiative?
• How will XBRL affect the assurance function?
• Does XBRL represent an opportunity for continuous
  auditing?
• Does XBRL make financial information more
  comparable?
• How will the accounting profession be different
  because of XBRL?
• What other XML languages will affect business?