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XBRL for Internal Reporting XBRL International Conference Boston April 27, 2005 Neal J. Hannon Director, XBRL Software Development Allocation Solutions, Inc. Barney School of Business, University of Hartford
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Internal Reporting Externa l Financi al Reporti ng Business Operations Interna l Financi al Report ing Investme nt, Lending, Regulati on Processes Economic Policyma king
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Nature of Internal Reporting Purposes Planning Control Decision making More detailed More frequent More varied; less standardized More difficult to justify up- front costs of consistency More pressures now Internal controls - SOx 404 PCAOB 3, Section 5.c SOx 409 Credit: Eric Cohen
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While many corporations have succeeded in addressing the reporting issue of the 1990s, they must focus on the 21st century reporting issues. They need more leading indicators to enable them to anticipate challenges. Robert Kugel, Ventana's VP & Research director, financial performance management
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Building Blocks Journal entries Account, amount, date, description Parties/agents Customers, vendors, employees Source documents Document number, dates, file location Resources Inventory, services, fixed assets, KPI Mappings to and between Accounts, Classifications, XBRL reporting taxonomies
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Data-Centric Model Premise: Improvements in computer processing, storing and reporting power are now permitting a more direct look into the lifeblood of the enterprise, data. Data in an XML-enabled environment is no longer constrained by computer platform or the functional software that created it. Adding meta-data provides not only mobility for data, but provides the basis for continuous reporting and continuous data assurance.
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Business Data Various formats, Structures, Platforms Governance Application Integration Layer XML, Web Services, X-link EII, XBRL-GL Sarbanes-Oxley Compliance Continuous Audit Forensic Accounting Internal Auditing External Auditing Business Reporting Scorecarding KPI’s Board Audit Committee SEC Reporting Budgets Monthly reporting Desk-top Management Data-Centric Approach To Enterprise Reporting Real-Time Reporting Exception reporting BAM
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Phases of Development: XBRL Reporting Phase I - Today Phase II Phase III Using XBRL for SEC filing; XBRL-GL for internal Data gathering (Wacoal); Data Analysis (Edgar-Online) Government reporting (APARA, FDIC, etc.) Feeding XBRL-GL data to business Internal and external reporting, SEC filing, Sarbanes-Oxley compliance, KPI’s, Scorecards, internal audit Open, Dynamic Real-Time Reporting, Continuous Auditing, Real Time Analysis from stakeholders both inside and outside
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Phases of Development: XBRL Reporting Phase I - Today Using XBRL for SEC filing; XBRL-GL for internal Data gathering (Wacoal); Data Analysis (Edgar-Online) Government reporting (APARA, FDIC, etc.)
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Wacoal: XBRL GL Auto Journalizing System Copyright 2004 Hitachi XiRUTE
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From Edgar-Online:
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Phases of Development: XBRL Reporting Phase II Feeding XBRL-GL data to business Internal reporting, SEC filing, Sarbanes-Oxley compliance, KPI’s, Scorecards, internal audit
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Impact on Control Environment 1.Manual 2.Periodic 3.Physically connected to Internal data store 4.Segregated in each business unit/redundant costs 5.Reactive/untimely 6.Opaque/ deep in organizational processes 7.Less secure 1.Automated 2.Persistent 3.Embedded in data process flows - Optimized 4.Integrated within enterprise processes/cost effective 5.Proactive/timely 6.Visible/transparent 7.More Secure Today Taxonomy Driven The outcome is to move controls further up the quality curve. Credit: Walter Hamscher
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XBRL-GL Can Help Here And Here Automated Control Monitoring
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Transaction data Multiple departmental Excel spreadsheets Senior Management Consolidated spreadsheets for management 2000 elements= 6500 spreadsheets (this is not a typo) SQL Current Management Reporting – Insurance example ACORD XBRL GL ACORD XBRL GL ACORD XBRL GL W. Hamscher
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Transaction Data Multiple Departmental Excel Spreadsheets Senior Management Consolidated spreadsheets for management SQL Current Management Reporting ACORD XBRL GL ACORD XBRL GL ACORD XBRL GL W. Hamscher
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Subsidiary ERP’s Senior Management Supplemental information aggregation Controls Control located with data or in supplemental manual processes Current Management Reporting
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Services architecture leveraging taxonomies Transaction and or subsidiary Data Senior Management Viewing and aggregation for department & management XBRL Web Services Controls ‘Wrap & Map’ ACORD XBRL GL ACORD XBRL GL ACORD XBRL GL W. Hamscher
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Phases of Development: XBRL Reporting Phase III Open, Dynamic Real-Time Reporting, Continuous Auditing, Real Time Analysis from stakeholders both inside and outside
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XML derivative transactions Traditional data item Explanatory labels (tags) Identity, units, source, etc. Control labels E-signatures, sequence numbers, invisible markers, Control signals
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Financial-related Web Services in the future (the universal data bus) Audit Servic e Accounting bots and services Selective Layered Reporting Fraud detection Service Financial Analytic Services ERP Other Assurance Services
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Stale, erroneous, and opaque information Ultimate drill down to the transaction levels of all related parties !!!! Business report a living thing dependent on intrinsic business process rhythms In case of doubt give data not models or aggregates Disclose the time-series bases of aggregates and estimates Credit: Miklos Vasarhelyi
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Neal J. Hannon Director of XBRL Software Development for Allocation Solutions, Inc. XBRL Editor: Strategic Finance Magazine University of Hartford Email: neal.hannon@allocationsolutions.comneal.hannon@allocationsolutions.com Hannon@hartford.edu Phone: 401-769-3802 or 860-768-5810
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