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COREP - FINREP - XBRL SGCB COREP - FINREP - XBRL The French Banking Commission approach 15th International XBRL Conference Munich, 6 June 2007 Jean-Luc.

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Presentation on theme: "COREP - FINREP - XBRL SGCB COREP - FINREP - XBRL The French Banking Commission approach 15th International XBRL Conference Munich, 6 June 2007 Jean-Luc."— Presentation transcript:

1 COREP - FINREP - XBRL SGCB COREP - FINREP - XBRL The French Banking Commission approach 15th International XBRL Conference Munich, 6 June 2007 Jean-Luc MENDA Deputy Director, Policy and Research Secrétariat général de la Commission bancaire COREP - FINREP - XBRL SGCB

2 COREP - FINREP - XBRL SGCB 2 COREP- FINREP- XBRL The French Banking Commission approach 1 Project objectives : a european framework 2 Consequences on our IT system 3 Challenge : managing complex taxonomies 4 The French Banking Commission COFINREP project 5 COFINREP : technical choices - XBRL learning curve

3 COREP - FINREP - XBRL SGCB 3 1. Project objectives : a european framework The objectives of Committee of European Banking Supervisors : –Harmonising banking supervision practices in Europe, and developing a common supervisory culture –Reducing unnecessary costs of reporting to the banking supervisors through European convergence In order to fulfill this goal, need for : –The definition of a common framework –A common vocabulary based on the European legislation –A degree of flexibility in order to adapt to national specifics.

4 COREP - FINREP - XBRL SGCB 4 Two european initiatives : –A common reporting for a common solvency ratio (COREP – COmmon REPorting) CRD Directives 14 June 2006: final adoption of Directives 2006/48/CE et 2006/49/CE COREP 13 January 2006: CEBS publishes COREP templates => Adoption of the French COREP project by the Banking Commission 26 March Project objectives : a european framework

5 COREP - FINREP - XBRL SGCB 5 –A common « supervisory financial » reporting for banks consolidated accounts in IFRS (FINREP, FINancial REPorting) European regulation introducing IFRS is directly applicable in Europe European reporting published by the CEBS on 16 December 2005 => Adoption of the French FINREP project by the Banking Commission on 28 June st remittance date for COREP and FINREP 30 June 2007 in France 1. Project objectives : a european framework

6 COREP - FINREP - XBRL SGCB 6 XBRL taxonomies built by the CEBS for COREP and FINREP create a common framework. They include : –A common vocabulary for European supervisors, elaborated on the basis of official European regulations and –A common « grammar » through its « Linkbases ». XBRL allows for a european flexible approach, including national specific elements But XBRL standard must also keep pace with the evolution of business requirements, and the complexity of COREP and FINREP reportings. 1. Project objectives : a european framework

7 COREP - FINREP - XBRL SGCB 7 2 Consequences on our IT system The French Banking Commission decided to make it mandatory for the banks to transmit their COREP and FINREP reports, using the XBRL standard for reasons of efficiency and cost. The working relationship between banks and the BC will change only marginally : The General Secretary of the Banking Commission has provided the banks with the adapted French version of the European taxonomies The financial institutions will transmit their reports (instance documents according to XBRL vocabulary) XML/XBRL, via the usual data transmission means After verification of data quality, anomalies will be restituted to each institution

8 COREP - FINREP - XBRL SGCB 8 2 Consequences on our IT system The Banking Commission decided to go further in the adoption of XBRL/XmL, for the following reasons : First, our present data system, BAFI, is a proprietary one, only used for the exchange of data between the French financial institutions and the Banking Commission/Bank of France BAFI is now a mature system (1993) which was due to evolve in the coming years (very complex legacy in mainframe technology : >1000 programs) Communication with many applications inside and outside and a much parameterised system XmL has become a standard in data transmission which imposes itself in the banking industry

9 COREP - FINREP - XBRL SGCB 9 2 Consequences on our IT system In a first stage, need to run two parallel information systems : COFINREP and BAFI Possible since : Relatively few common data between the new reportings and the present data base COREP and FINREP are new and would have, in any case, needed important and complex developments in the old system This situation will not hinder the supervisors work However, we will need to run data exchanges between both systems

10 COREP - FINREP - XBRL SGCB 10 2 Consequences on our IT systems Financial Institution Information System Prudential and accounting Reporting Bâle II IFRS COREP Instances FINREP Instances SIGNECB Inside applications CB/BDF Accreditation InputOutput Civil statuts data Configuration Accreditation Data Control and management Data mining XBRL Taxonomy management BAFI COFINREP

11 COREP - FINREP - XBRL SGCB 11 2 Consequences on our IT system The second stage : we intend to move on with the rest of the reporting system and to have a single data exchange system with the financial institutions. In order to achieve this, we will have to : –Create taxonomies regrouping all necessary data for supervisors –Add the necessary functionnalities to the new system –Do the same thing with the other data managed by BAFI (statistics data, monetary data….).

12 COREP - FINREP - XBRL SGCB 12 3 Challenge : managing complex taxonomies Banking Commission decided to create and manage in- house the French versions of COREP and FINREP taxonomies COREP: about 800 entities concerned 19 templates and about data (facts) FINREP:about 80 entities concerned 42 tables (27 templates ) about data Final users : 280 supervisors and inspectors Team of 4 taxonomy managers

13 COREP - FINREP - XBRL SGCB 13 3 Challenge : managing complex taxonomies Creation of the French versions on the basis of the European taxonomies All the labels of concepts coming from the European taxonomies translated into French Creation of a limited number of French specific concepts (with an English and French label) Internal validation of the taxonomies with the help of our tools (formalism and standards)

14 COREP - FINREP - XBRL SGCB 14 3 Challenge : managing complex taxonomies COREP and FINREP taxonomies were available at the end of september : FINREP => end-september COREP => 6 october R h

15 COREP - FINREP - XBRL SGCB 15 French versions of COREP and FINREP : FINREP => version for discussion (0.1) published on the Banque de France website on 26 october version january approved version 1.0 : 5 february COREP => version for discussion (0.1) published on 1st december version january approved version 1.0 : 5 february Challenge : managing complex taxonomies

16 COREP - FINREP - XBRL SGCB 16 3 Challenge : managing complex taxonomies Taxonomy editing tool delivery, getting started and training TAXONOMYTAXONOMY First draft European taxonomies 01/2006 Launch Taxonomy extensions Final version european Taxonomies & Beginning of French taxonomies 09/2006 French taxonomy definitions Validated taxonomies Taxonomies available for the professional public 10/ /2007 Project management and supervision Taxonomy finalization Professionals Feed back

17 COREP - FINREP - XBRL SGCB The Banking Commission COFINREP project SCOPE – French taxonomies management (VERSIONING) – Data reception management – Digital signature of the instance documents – Authorisations and reference data management – Controls of received instances – Reminders in case of anomalies or late data transmission – Synthesis and reporting according to the needs of the supervisors – Interface with the others systems of BDF – Automatisation of the processes PORTALV1PORTALV1 PORTALV2PORTALV2

18 COREP - FINREP - XBRL SGCB The Banking Commission COFINREP project Global conception Launch 06/2006 Portal V.1 Project management and supervision Validation 07/2006 Go live Portal V1 Go live Portal V2 PORTALPORTAL Portal V.2 01/200806/2007

19 COREP - FINREP - XBRL SGCB The Banking Commission COFINREP project Choice of a generic software : –very short deadlines –use XBRL as far as possible Legal process for open tender : –Open tender : 7 december 2005 –Emission of specifications : 3 february 2006 –Choice of solution : may 2006 Chosen software meets 60% of users requirements in the basic version 40% of specific developments taken in charge by the supplier Supplier team (5 to 10 people), internal IT team (4 to 6)

20 COREP - FINREP - XBRL SGCB The Banking Commission COFINREP project Main challenges Dealing with very complex taxonomies, using dimensions extensively (new standard 1.0 created for COREP) Lack of maturity of existing softwares, in particular taxonomy editors, not always compatible Training offer is still very limited Lack of formulae standard, which makes it compulsory to develop in-house business rules The question of versioning management is urgent and should be a priority for the months ahead

21 COREP - FINREP - XBRL SGCB 21 The added XML header: why? Electronic signature + To be able to sign multiple instances + So that habilitation testing are not XBRL dependent + For better « on the fly » performance on instance reception - Added consistency tests Note: the XML schema of the header is available at: 5 COFINREP : technical choices - XBRL learning curve

22 COREP - FINREP - XBRL SGCB 22 5 COFINREP : technical choices - XBRL learning curve #ContrôleProcess stopProductionSimulation 1 In case of a COREP instance, check that the value of the option in the header is properly set to « consolidated » or « social »yesXX 2XBRL 2.1yesXX 3Aggregations and dimensionsyesXX 4Calculation linksnoXX 5Uniqueness of key (entity, date, taxonomy) in instanceyesXX 6 Coherence of entity between header and instanceyesXX Existence of entity in databaseManual verificationXX 7 Coherence of date between header and instance yesX Existence of date in database 8 Coherence of taxonomy between header value and instanes schemarefyesXX Validity of the taxonomy and the reported dateyesXX 9 Coherence of currency between header value and instance declaration (iso4217 only)yesX Validity of currency for the entity (database).yesX 10 Is type COREP or FINREP expected for entity Manual verificationX COREP only: is entity authorized for the option declared in the header (consolidated, social) COREP only: is entity authorized for the approach value in the header, and the values present in the instance. (standard, foundation, advanced). Manual verificationX COREP only: is the date of the reporting in the instance coherent with the entitys status - Mars, June, September and December for large groups - June and December only for small groups Focus on: Control and storage of an instance

23 COREP - FINREP - XBRL SGCB 23 - Taxonomy published - Intances workflow - Taxonomy creation - Instance management Instance Document BACKEND Taxonomy Financials institutions (submitters) Databases servers Corporate Directory Server: BAFI … Instance Document Instance Document Instance Document Instance Document Receipt Management Reception Management Taxonomies INTRANET EXTRANET Taxonomy control Taxonomy Mistakes/Errors Taxonomy management Control and storage Amounts ctrl. BAFI/COFINREP Comparision Reporting synthesis Conception Reporting calculation Reporting Extraction COFINREPReporting Errors Reporting synthesis Reference data management Habilitations Taxonomy Instance Document 5 COFINREP : technical choices - XBRL learning curve

24 COREP - FINREP - XBRL SGCB 24 5 COFINREP : technical choices - XBRL learning curve A.The test platform: a compatibility check The platform opened up in the beginning of March. Within one month we received 4 instances Instances were mostly FINREP Result : 3 instances: 100% public taxonomy valid. The last instance failed taxonomy validation, but was successful on the second emission 3 out of 4 had no CL error, but only one succeeded the private taxonomy tests.

25 COREP - FINREP - XBRL SGCB 25 5 COFINREP : technical choices - XBRL learning curve B. The performance test Done with over 800 instances. Instances with every fact combination filed. Not a real life scenario. Difficulty encountered: evaluate the target performance.

26 COREP - FINREP - XBRL SGCB 26 5 COFINREP : technical choices - XBRL learning curve C. Questions to answer before building your IT Precision and decimals (9453 decimal= -3 )+ (9454 decimal= -3) + (9453 decimal= -3) = decimal=-3 We imposed decimal=0 for monetary Items and decimal=4 for pures Need for a tolerated variation in CL, more precise than the use of decimals (needed: ) Units and scale Although most existing system work with Kilo-Euros in the BDF, money scale is not part of the XBRL. We work with Euros, but will have to convert when exporting data to other existing application.

27 COREP - FINREP - XBRL SGCB 27 5 COFINREP : technical choices - XBRL learning curve Missing/duplicate facts Missing facts can make certain Calculation Links to no be check (especially with total) Duplicated facts will interfere with calculation links, and possibly any control or restitution framework This is why, it was decided that missing or duplicate fact were to be detected by COFINREP. The financial agents will be warned of these problems, and will be asked to correct this. Instances size impact Long item names, namespace ids, unit ids, dimension name…. increase size of instances Increase processing time of an instance For example: replacing all ids/names in an instance by numbers => more than 60% size gain

28 COREP - FINREP - XBRL SGCB 28 5 COFINREP : technical choices - XBRL learning curve Added control framework The need of: - inter-instance controls - controls with other data source (data bases, flat file…) - conditional or complex controls - Periodic controls (A test only done a particular month or frequency) Might require to build some configurable control mechanisms. Automated restitution: functional/technical barrier on data errors Not everyone understands fact names, contexts, dimensions and hypercubes. We need to translate, for example, a Calculation error in a way that an accounting personnel will easily understand.

29 COREP - FINREP - XBRL SGCB QUESTIONS ? Secrétariat général de la Commission bancaire SGCB


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