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3Ps: Plans Production Processes Developing taxonomies for approval by XBRL International John Turner Chairman XBRL International Domain Working Group Member.

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Presentation on theme: "3Ps: Plans Production Processes Developing taxonomies for approval by XBRL International John Turner Chairman XBRL International Domain Working Group Member."— Presentation transcript:

1 3Ps: Plans Production Processes Developing taxonomies for approval by XBRL International John Turner Chairman XBRL International Domain Working Group Member XBRL International Steering Committee KPMG LLP –

2 Planning  Getting the right resources  Framework design  Component creation  Test plans  Review mechanisms 3Ps

3 Getting the right resources  You need a spread of skills and experience to build taxonomies successfully. Only small, very well defined taxonomies are “one person projects”.  XBRL skills are well worth acquiring, but are only part of the picture. You need both XBRL knowledge and accounting/domain knowledge.  Use reference materials available (Accounting standards, example accounts, disclosure checklists) but make sure you have the right to do so.

4 Framework design  XBRL taxonomies are modular - by design.  Use framework design developed by others  You have to if you are extending another taxonomy (eg: IFRS).  You should if you are creating a local GAAP or specialist (regulatory) taxonomy.  A taxonomy architecture defines the framework, drawing from best practice but tailoring to your specific needs.

5 Component Creation  Iterate through the taxonomy – layer by layer.  Use your resources sensibly. Well defined, tractable components of work get done quickly.  Leaving entire chunks of taxonomy development (all the references, or all the calculations) makes for patchy completion, and stretches taxonomy development out.  Track the effort from the start!

6 Test Plans  Remember – whatever you do needs to be tested.  The best way to test taxonomies is to create actual instance documents based on real financial reports.  Document those parts of the test reports that can’t be tagged with your taxonomy.  Decide why those gaps exist and whether they are acceptable.  You also need to carry out FRTA conformance testing. This will get easier over the coming months.

7 Testing/Review mechanisms…  Hold some resources in reserve. Or attract new resources to your cause through the course of your project.  You need fresh eyes to carry out your review.  You may well need additional technical XBRL review at this point as well. The more effectively this work is carried out, the better your taxonomy will be.

8 Production  Using tools intelligently  Collaboration, collaboration, collaboration  Project management  Expanding the resources available to you 3Ps

9 Use tools intelligently…  There is no one taxonomy builder on the market that will do everything. Use several.  XBRL is just XML. Use XML tools as well – for instance to set up your framework DTS.  Ensure that someone on your team can use XSLT or another scripting language, which can do some of the “heavy lifting” work. There is nothing more tedious than changing thousands of balance attributes manually!  Bugzilla and other issue tracking software has a place in your tool kit.  Lots of your most valuable resource (technical accountants) don’t want to see any angle brackets! Use some of the collaboration sites and scripts that are starting to be developed.  Make sure that one of your team is monitoring the XBRL- Spec2 and XBRL-Domain lists to ensure that you are not reinventing the wheel. Use those lists to get help with your technical questions.

10 Collaborate or fail!  You NEED multiple sets of eyes.  You NEED the buy in from your professional colleagues in similar organisations.  You NEED input from accounting firms, accounting authorities, expert preparers within industry  You NEED to get input from a range of disciplines, including IT.  You MUST collaborate, or your taxonomy project WILL fail.

11 Project Management  Experience to date indicates that active project management is the difference between taxonomy development that gets buy-in and taxonomy development that is a chore.  Identify your project manager. That person needs to evangelise, coax, beg, shout and push push push and still roll up the sleeves and get into the detail. Get the best person. Train them where necessary. Don’t let politics get in the way.  Your PM should get plugged into XBRL International to gain the support of his or her peers.  Your PM is your champion. Your most important resource.

12 We know: You need more resource!  We all do.  Here are some suggestions:  XBRL is sufficiently advanced that you can evangelise all the way through the development effort, showing your results to potential new sponsors. Get their commitment to provide money or time to your project.  Use resource you have more intelligently. Hold full day, face to face working sessions. Plan them well. Get lots done!  Get the support of your accounting authorities. The FASB and IASB can’t both be wrong.  Get support from your chamber of commerce. You are building the platform for corporate governance that everybody is relying on.  Get support from your banking community. They are amongst the first to benefit.  Get support from government. You are building a public good.

13 Processes: Taxonomy Recognition  Acknowledgement vs. Approval  Acknowledgement workflow  Approval – the workflow  Approval – self-testing against FRTA  Approval – self certification  Approval – legals  Approval – XBRL International actions 3Ps

14 Acknowledgement vs. Approval  Taxonomy recognition is the statement that XBRL International makes about the XBRL technical quality of a taxonomy and conformance with best practices.  Two levels:  Acknowledgement. A statement that the taxonomy is XBRL 2.1 valid. Fairly mechanical. Quick. Required step on way to approval.  Approval. A statement that the taxonomy meets the relevant best practice standards set out by XBRL International. Requires “FRTA” conformance. Requires a range of declarations, including the extent of public review that the taxonomy has undergone. We are starting the first of these now. Fairly complex. Huge improvement – vastly improves interoperability. Slow (at the moment).  XII does not (and will not) make declarations about the way that a taxonomy represents an accounting or regulatory standard. That is for the relevant technical professionals in that domain.

15 Acknowledgement workflow  Remember: Acknowledgement is merely a statement that a taxonomy is XBRL 2.1* compliant.  It involves:  Testing by using at least 2 recognised taxonomy builders  Preparing prescribed documentation  Declaring whether this is a taxonomy under development (on its way to approval) or a taxonomy for use.  Certifying that the relevant tests have been carried out.  Submitting the taxonomy to XBRL Domain for review.  Simple. Fast. Required first step to approval. * Yes. Technically its still possible to get a 2.0a taxonomy acknowledged. But please don’t.

16 Approval workflow: FRTA self testing  At this stage, only for financial reporting taxonomies. Financial Reporting Taxonomy Architecture review.  More than 100 requirements for taxonomy authors, either expressed as MUST or as SHOULD. All the MUST requirements can be automated. SHOULD requirements need to be sampled or otherwise tested to determine conformance.  In particular, good taxonomy documentation is required.  Software that is in the pipeline will make all of this a simpler exercise.  FRTA rules need to be baked into the design, and conformance needs to be considered throughout the build.

17 Approval Workflow: FRTA Self Certification  A range of materials are required, including:  Confirmation that FRTA conformance has been achieved through self-testing.  A summary document that describes the purpose of the taxonomy  Sample instance documents  A report on the way in which the taxonomy project team has ensured that open public review was completed.  A range of (FRTA defined) documentation about the detailed content of the taxonomy.

18 Approval Workflow: Legals  The taxonomy development team has a few key legal obligations to keep in mind. They are:  Free availability. There is an obligation to sign up to the XBRL International copyright agreement for approved taxonomies. They must be freely available (including for extension) to third parties, although the origin of the taxonomy must be preserved. You can’t charge. You can’t restrict usage.  Zero warranties. Its not possible to sue XII or the preparers if the taxonomy turns out not to be suitable for a particular use.  Liability where the taxonomy developers themselves have infringed someone else’s intellectual property rights. Get written permission to use third party materials in developing taxonomies!  Clear?

19 Approval Workflow: XBRL Review  Once taxonomies have met all of these requirements, XBRL International will review them.  Currently we are assessing how difficult that is.  We are hoping that this is something that we can offer for free to member jurisdictions.  Stay tuned for early results.

20 Summary!  XBRL taxonomy development projects are relatively complex.  You need a good project manager.  You need a spread of skills to assist.  You should consider XBRL International recognition for your taxonomy – either at the acknowledgement or approval level. There are some requirements to comply with, BUT this means that the global XBRL community gets higher quality, more interoperable taxonomy.

21 Thanks  Go forth and design your tags!!  Thanks in advance for all your hard work.  Please share your experiences with the community.  Enjoy the journey!  Questions?

22 3Ps: Plans Production Processes Developing taxonomies for approval by XBRL International John Turner Chairman XBRL International Domain Working Group Member XBRL International Steering Committee KPMG LLP –

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