XBRL: Intelligent Business Reporting Chapter 9 ACCOUNTING INFORMATION SYSTEMS The Crossroads of Accounting & IT Chapter 9 XBRL: Intelligent Business Reporting Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Who is the Father of XBRL? Meet Charlie Hoffman. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Charlie Hoffman Can you imagine coming up with an idea to revolutionize financial reporting and then working on it for years until it becomes widely accepted? In 1998, Charlie Hoffman, an accountant for a small accounting firm in Washington state, conceived the idea of XBRL for preparing, analyzing, and communicating financial information. He saw the opportunity to adapt the programming language XML used for websites to create a new programming language for intelligent business reports, eXtensible Business Reporting Language (XBRL). Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Charlie Hoffman Charlie, who has become known as the “Father of XBRL,” received the 2006 Special Recognition Award from the American Institute of Certified Public Accountants (AICPA) for his contributions to the development of XBRL. At the time Charlie received the award, XBRL was used on six continents (AICPA, 2006). Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

What is XBRL? XBRL (eXtensible Business Reporting Language) is used for digital financial reporting around the globe. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

What is XBRL? XBRL adds electronic tags to each financial amount with a description of the data. The electronic tags are metadata: data about data. The tags describe the data, such as company name, time period, account title, and currency. Example: metadata can identify the number 100 as advertising expense for the month of January 2011 for a specific company. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

What is XBRL? XBRL programming code adds tags to provided data about the data (metadata) in the financial reports. Notice that the tags specify the unit of reference in Euros. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

What is XBRL? XBRL has the ability to tag numerical and nonnumerical data. quantitative (financial) and qualitative (nonfinancial) data XBRL facilitates the integration of both financial and nonfiancial data, such as for sustainability accounting. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Who Uses XBRL? XBRL is used by: stock exchanges companies governmental and regulatory agencies banks and banking regulators financial and investment analysts accountants preparers reviewers users of financial information. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Who Uses XBRL? Some companies realized XBRL can also be used to generate intelligence for internal decision making. Fujitsu uses data tagging to facilitate data analytics for business intelligence purposes. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Where Is XBRL Used? XBRL is being used around the globe for digital reporting purposes. Europe, Asia, and the Americas see XBRL used by organizations and governmental entities to facilitate financial reporting and analysis. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Where Is XBRL Used? XBRL is now mandated by stock exchanges in China, Japan, Singapore, and South Korea. In Japan, companies such as Fujitsu and Wacoal, have started to use XBRL for internal management applications. China is using XBRL for data mining in addition to risk profiling and communication of financial information. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Where Is XBRL Used? Europe was faced with regulating 25 different central banks with different regulations and different languages. XBRL was implemented by BASEL II to standardize and streamline the work of European banking regulators. In the United Kingdom, XBRL is used on a voluntary basis for tax reporting which will become mandatory in 2011. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Where Is XBRL Used? Canada has implemented a voluntary XBRL filing program. In the United States, the FDIC is using XBRL for some bank reporting. All U.S. publicly traded companies are required to use XBRL for SEC filings by June 2011. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Why Use XBRL? automates data exchange XBRL: complies with reporting regulations simplifies and streamlines financial reporting increases transparency improves data quality. automates data exchange XBRL makes the data interchangeable across formats, software applications, and platforms. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Why Use XBRL? Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

When Is XBRL Used? XBRL has been compared to product bar codes (product info in digital form). Bar codes could be added: After the can was manufactured (bolt-on barcode) or During manufacturing (integrated barcode). Bolt-on Barcode Integrated Barcode Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

When Is XBRL Used? XBRL bolt-on tagging adds data tags after reports are created. XBRL integrated tagging tags data during information processing. XBRL integrated tagging may require an XBRL database, a special type of database that stores both data and metadata. XBRL Bolt-on Tagging XBRL Integrated Tagging Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

How Does XBRL Work? XBRL Essentials include: Taxonomy Instance document Elements Schema Linkbase Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

<inventories balance> 100000 </inventories balance> Taxonomy A taxonomy is like a dictionary which defines the XBRL tags used for specific data items. <inventories balance> 100000 </inventories balance> The opening tag is: <inventories balance> The closing tag is: </inventories balance> Note that the opening and closing tags are identical except the closing tag contains a forward slash (/). Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Taxonomy A taxonomy standardizes the tags used. Examples of taxonomies: XBRL Global Ledger taxonomy US GAAP taxonomy International Financial Reporting Standards (IFRS) taxonomy Global Reporting Initiative (GRI) taxonomy Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Instance Document An instance document contains specific amounts for a taxonomy at one instance. For example, an instance document might contain income statement amounts for Wacoal for the year 2012. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Instance Document First, the taxonomy is selected, such as XBRL Global Ledger taxonomy. Data is used from the company database. The taxonomy and data are used to create an instance document. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Elements Different types of elements: Data elements are numeric or non-numeric facts. The 100,000 is a data element that is a numeric fact. Context elements explain the context in which the data appears. Unit elements define the unit of measure, such as Euros or US dollars. A period element defines the time period, such as 2012. An entity element defines the company or entity, such as Wacoal. An identifier element is a unique identifier for the element, such as an account number. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Elements Inventory XBRL statement balance <ifrs-gp:Inventories contextRef=”Current_AsOf” unitRef=”U-Euros” decimals=”0”>100000</ifrs-gp:Inventories> From the tags we can tell the following: 1. The IFRS taxonomy is used. 2. The context in which inventory appears is Current As Of a specified date. 3. The unit of measure used is Euros. 4. No decimal places are used. 5. The amount of inventory is 100,000. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Schema The schemas define which elements are related to a particular taxonomy. A taxonomy contains one or more schemas. Example: United Technologies might use the US GAAP taxonomy and the schema would specify that the unit element was US dollars. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Linkbase XBRL linkbases define relationships between data. An XBRL taxonomy contains one or more linkbases. Types of linkbases to define relationships: Definition links define different kinds of relationships between elements. For example, Zip Code is the Postal Code used in the United States. Calculation links define basic validation rules. For example, assets equal liabilities plus stockholders’ equity. Presentation links define how the elements are presented. Label links define the labels used in the document. Reference links define the relationships between the elements and the external regulations or standards, such as IFRS (iasb.org). Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

XBRL Essentials XBRL taxonomy consists of one or more schemas and linkbases. Data is used from the company database. The XBRL taxonomy is used with the company’s data to create an XBRL instance document. Note that the instance Document includes both data and the metadata tags. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

XBRL Essentials This figure was created using Altova XMLSpy Copyright 2003-2010 Altova GmbH and reprinted with permission of Altova. XBRL software tools, such as those provided by Altova, UBMatrix, SAP, and Rivet, convert data into XBRL instance documents using the selected taxonomy. Some firms choose to outsource the XBRL function, sending data to outside firms to convert the data into instance documents. Other firms choose to insource the XBRL function, tagging and storing the data in-house. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Sample XBRL Documents Altova is one XBRL software available. The Instance Document can be exported to Excel or shown in HTML. Notice how the Instance Document in Design View shows the tags. Figure 9.14 Sample XBRL Instance Document in Altova Design View This figure was created using Altova XMLSpy Copyright 2003-2010 Altova GmbH and reprinted with permission of Altova. Figure 9.13 Sample XBRL Instance Document in HTML This figure was created using Altova XMLSpy Copyright 2003-2010 Altova GmbH and reprinted with permission of Altova. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

Study Less. Learn More. Make Connections. My Connection Study Less. Learn More. Make Connections. Exercise Use the Internet to find a company, country, or regulator that uses XBRL. Summarize how XBRL is used. Does it use bolt-on tagging or integrated tagging? Does it out-source or in- source XBRL tagging? Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall