10 things a young cpa should know about xbrl

February 2010XBRL for Young CPAs

10 Things a Young CPA Should know about XBRL

Conor O’Kelly BComm, FCA, M.Sc

Vice Chair, XBRL InternationalDublin, Ireland 25th

Feb 2010


1.

What is XBRL?

2.

What are the benefits of XBRL?

3.

Adoption Drivers

4.

XBRL and IFRS

5.

The Evolution of the Web and Its Impact on Business Reporting

6.

Technology Best Practices and the Annual Report

7.

Finance 3.0 and Mobile Computing

8.

Developments in UK and Ireland

9.

Key Readiness Challenges

10.How do I join the conversation?

10 Things a CPA Should Know About XBRL


1. What is XBRL?

XBRL is a language for the electronic communication of business and financial data. It provides benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data.

XBRL stands for eXtensible

Business Reporting Language. It is one of a family of "XML" languages which is becoming a standard means of communicating information between businesses and on the internet.

XBRL is being developed by an international non-profit consortium of approximately 600 major companies, organisations and government agencies. It is an open standard, free of licence fees. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world.

February 2010XBRL for Young CPAs4

All stakeholders in the financial reporting supply chain are now engaged in the discussion on XBRL including governments, regulators, preparers and consumers of business information.

CPAs awareness in the Americas, Europe and Asia is increasing amongst the preparer community who must now develop engagement strategies.

1. What does it mean for me?


2. What are the benefits of XBRL?..

Reduction in the administrative burden (i.e. cost) of providing data to Government

Streamlined process of passing/aggregating data across different

internal departments, offices or business units of a company.

Increased interoperability of finance applications:

Connect disparate accounting packages together more easily (especially across different accounting areas)

Increase the ability to switch software providers in the future

Increased ability to change providers of filing services (where used) driving increased competition for business and lower charges.

Better interaction with the banks for loan applications and risk

systems:

Bank loan businesses money and request financial information at the inception of the loan and throughout the loan cycle

Improved data quality (less errors due to less manual intervention).

Avoidance of fines for non-compliance with a mandatory request to provide data.

For business…

Source: OECD Forum on Tax Administration: Taxpayer Services SubGroup

Guidance note Standard Business Reporting July 2009http://www.oecd.org/dataoecd/36/52/43384923.pdf

http://www.oecd.org/dataoecd/36/52/43384923.pdf



Accounting practices that make their money from cut & paste of data should be warned that the writing is on the wall. Their days are

numbered ...”

Mark Tobin, Taxation Partner, Deloitte Melbourne Australia.

•

Cut costs of tax preparation, tax calcs, tax effect accounting by 25 -

33%

•

Better analysis of client information•

Less time spent on ‘data drudgery’•

Reduce Costs, Speed Cycle Times and Improve Accuracy•

Improved staff engagement and satisfaction•

Applying a taxonomy based approach drives new services such as:•

Web based benchmarking and Business Intelligence•

Online Accounting and STP for CompliancePeter William, CEO Deloitte Digital

XBRL-enabled workflow in tax department


3. XBRL Adoption Drivers

Economics ◦

EU Action Programme

to reduce admin burden by 25%

◦

Compliance efficiencies / effectiveness –

SBR programs

converge towards global standards through the IMF, FSF, the Basel committee and G20 processes.

IFRS Adoption and GAAP convergence

Capital Market Transparency –

US SEC Mandate, European Commission, China CSRC

Alignment in Regulatory Consistency

Integration with other standards-

ISO, W3C, Swift, OECD


The Basel Committee on Banking Supervision provides regular cooperation on banking supervisory matters designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices. Ensuring

capital allocation is more risk sensitive; Separating operational risk from credit risk, and quantifying both; align economic and regulatory

capital more closely to reduce the scope for regulatory arbitrage.

•XBRL Adopted by US FDIC for US Banking Quarterly Call Reports

•Feb09-

Committee of European Banking Supervisors (CEBS) published work plan outlining priority activities to establish the framework for harmonised supervisory reporting by 2012, in conjunction with CEIOPS. Priority activities includes developments to both the COREP (COMmon

REPorting) and FINREP (FINancial

REPorting) taxonomies.

•Oct2008 Reserve Bank of India launch XBRL Basel II reporting for

Indian Banking Sector .

•Emerging Basel II XBRL projects in South America, Chile, Brazil,

Argentina, Colombia, Mexico and Asia

3. XBRL Adoption Drivers-

Basel II Banking Supervision


January 2007: Commission presents Action Programme (AP) for reducing administrative burdens on businesses in the EU by 25% in 2012. It is part of its Better Regulation strategy.

AP is endorsed by the European Council which agreed to a 25% reduction target for burdens originating in EU law and invited Member States to “set national targets of comparable ambition.”

The EU reduction target covers Community legislation and related national transposition measures.

A 25% reduction of AB in the EU could yield €

150 bn

in the medium term (an increase of EU GDP of 1.4%).

The project will take 18 months. The project started in Sept 2007.

The results reviewed by the European Council March 2009.

EU Action Programme for Reducing Administrative Burden

http://ec.europa.eu/enterprise/regulation/better_regulation/docs/gjk_actionprog_170108.pdf


Europe: Reducing Administrative Burden


Oct2008-

EU President Barroso

appointed High Level Group on Financial Supervision in EUaiming to promote e-gov

and identify best practices in IT use in order to enable the EU to contribute to international and multi-national initiatives. The group are encouraging the Commission (and Member States) to consider a ‘pull model –

once only’;

European Parliament (EP) resolution of 21 May 2008 –

a call for the EC to encourage Member States to harmonise the classification of financial information and promote the use of new technology, such as XBRL;Council meeting of 7 November 2008 –

aiming to promote common standards between financial centres, more transparency and comprehensive information systems, and reformed multilateral surveillance.

26 January 2009 -

EC announced plans to revise the operational framework and decision-making processes of the Committee of European Securities Regulators (CESR), Banking Supervisors (CEBS) and Insurance & Occupational Pensions Supervisors (CEIOPS ). Seeking to safeguard financial stability by improving supervisory co-operation, the decision also proposes provide direct funding to those committees and to key international financial reporting and auditing standard-setting bodies, namely the IASC Foundation, the European Financial Reporting Advisory Group (EFRAG) and the Public Interest Oversight Body (PIOB). The proposal is now in the co-decision procedure for approval by the EP and the Council.

XBRL Europe endorses the position of FEE regarding the setting up of “harmonised rules”

and specifically the “fundamental review of the Basel 2 rules”

and the extended use of the IFRS (comment N°25)


Europe, Market Regulation

High Level Group on Financial Supervision in EU –

De Larosiere

Report (Feb 2009)http://ec.europa.eu/internal_market/finances/docs/de_larosiere_report_en.pdf


3. XBRL Adoption Drivers- US Securities and Exchange Commission

Requires submission of XBRL-formatted financial statements and financial statement schedules via an ‘XBRL Exhibit’

for annual, quarterly filings and registration statements (and via posting XBRL Exhibit on corporate website)‘Disclosure neutral’

Phase-in, however early adoption is permitted:

Domestic and foreign large accelerated fliers using US GAAP with

a worldwide public float of greater than $5 billion (at Q2 of most

recent completed fiscal year) -

beginning with a periodic report on Form 10-

Q, Form 20-F or Form 40-F containing financial statements for a fiscal periods ending on or after June 15, 2009.

Remaining large accelerated filers using US GAAP –

beginning with a periodic report on Form 10-Q, Form 20-F or Form 40-F containing financial statements for a fiscal period ending on or after June

15, 2010.

All remaining smaller domestic filers as well as foreign private

issuers using IFRS –

beginning with a periodic report on Form 10-Q, Form 20-

F or Form 40-F containing financial statements for a fiscal period ending on or after June 15, 2011.

http://WhiteHouse.govhttp://USA.govhttp://Recovery.gov

http://data.gov/


Multi-agency program to reduce the reporting burden by 25% or more by:

•removing unnecessary/duplicated information from govt forms•adopting a common reporting language, based on international standards and best practice providing business with a single secure online sign-on to the agencies involved•utilising business software to automatically pre-fill government forms•providing an electronic interface to enable business to report to government agencies directly from their accounting software, which will provide validation and confirm receipt of reports-making financial reporting to government a by-product of natural business processes.

Emerging as a governmental compliance best practice in: - Govt of Netherlands SBR Project- State Controllers Office, State of Nevada- Danish Commerce and Companies Agency (DCCA),-

Govt of New Zealand SBR-

Govt of Australia –

Dept Treasury- Singapore SBR- Government of Ireland eGov

policy- Government of Poland- United Kingdom HMRC/Companies Hse

joint filing- Ministry of Corporate Affairs India-

European Commission driving SBR “joint filings”

projects in EU countries-

Belgium, Denmark, Ireland, UK, Estonia, Lux, Poland, Italy

3. XBRL Adoption Drivers – Standard Business Reporting (SBR)


By 2011 every listed company in China, Japan and the US will have to report to its securities regulator using XBRL. A very significant number of financial institutions in EU member states must report

in XBRL for supervisory purposes.

Every company in Spain, Belgium, Singapore and Denmark either produces its annual accounts in XBRL or will do so by 2011.

Within the next 12 months, every business in Australia and the Netherlands will be able to file its tax, statistics, and accounting returns in XBRL.

In 2011, every UK company will file its financial statements to the tax regulator using Inline XBRL. The IASCF has made XBRL taxonomies available for the accounting standards that are approved for use in 110-120 countries.



4. XBRL and IFRS

Countries seeking convergence with the IASB on pursuing adoption of IFRSs

Countries that require or permit IFRSs

UKCA

ESUS

AU

NZ

IE

JPKR

BE

VZ

CO

BR

AR

PT

RU

SG

HK

NOSE

PL

FI

ITCN

IN

LB

CZ

UA

LUIAS B

AE

NL

TR

MY

MTCH

FR

SI

HU

AT

Established XBRL

Jurisdictions

Provisional XBRL

Jurisdictions

XBRL Projects

Ongoing

DE

DK

ZA

RO


4. XBRL and IFRS

Sept2009: published for public comment an exposure draft of the IFRS for SMEs

Taxonomy. The Taxonomy is a complete translation of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) into XBRL (eXtensible

Business Reporting Language).

Sept2009: Release of IFRS Taxonomy 2009 labels in Dutch

Aug2009: Release of IFRS Taxonomy 2009 labels in Italian

July 2009: Release of IFRS Taxonomy 2009 labels in FrenchJan2009 the IASC Foundation released the near final version of the IFRS Taxonomy 2009 for public comment.

26 Feb09 -released its IFRS Taxonomy Module Manager (ITMM) for open source.

Feb2009 the IASC Foundation released the simplified Chinese translation of the complete label linkbase

for the IFRS Taxonomy 2008,

Jun2009: released new support materials for the IFRS Taxonomy 2009 and Arabic and Spanish translations


4. What does it mean for me?Context rich US GAAP and IFRS GAAP XBRL taxonomies issued by FASB and IASB including calculation, presentation, reference (GAAP) and language link-bases will supplement and may replace traditional paper bound volumes and become the de-facto standards for electronic business reporting.

These taxonomies will become embedded into ERP systems, data warehouses, accounting systems and desktop reporting toolsets to produce XBRL financial reports.


5. The Evolution of the Web and Its Impact on Business Reporting


..how we consume business data is changing with technology and consumer media trends


..Web2.0 reduces time to market lead time for financial reporting


Web2.0 and Social Media are widely used in business networking, sharing information and building business relationship…but it lacks semantic intelligence


Web 1.0


Transparency accountants XML XSLT adoption emerging nations align analysis analysts assurance auditors audit-

committee benefits semantic-web G20 codification committee AJAX company complex contact copyright CFO corporate data

XSB download dynamic IFRS enterprise exchange

Finance 3.0 executives extensible fasb filings financial forms-free GAAP SOA hosts http iasb ima improves

india industry information stylesheet interactive international XII internet investors ireland webservices mobile language licence

global RSS Atom Cloud-Computing Offshore Outsourced GAAP versus IFRS US-GAAP

Crowd-sourced Realtime Assurance XBRL OpenSource Social- Media CSR sustainability XHTML interoperability standards

convergence



Technology is transforming the dialogue we have we our stakeholders. Traditional distribution channels for business reporting are being replaced with interactive digital media.

The current generation of web based financial reporting is being replaced by XBRL-enabled semantic web


6. Technology Best Practices and the Annual Report


XBRL tagged data will underpin the financial statements, be context rich, interactive and offer enhanced user experience along with reduced cost to produce.

Internal XBRL taxonomies developed by Internal Audit will drive analytics-driven business intelligence and telemetry , incorporating calculation and disclosure rules, materiality thresholds and corporate governance requirements. This will provide a toolset for continuous control measurement and real-time auditing which is embedded into the rest of the enterprises business reporting model.

In this way XBRL will lower audit (internal & external) costs by

providing the CFO with a risk model incorporating corporate governance, operational controls, regulatory compliance and GAAP

based financial reporting



7. Finance 3.0 and Mobile Computing

February 2010XBRL for Young CPAs37 24 February 2010

Web3.0, semantic web, XBRL and will be a disruptive force within business reporting and continue to drive transformation within the finance department and CPA firms in the coming years.

Mobile applications will begin to store your XBRL data in the cloud as opposed to on the mobile device, and the applications will become more powerful as processing power is also offloaded to the cloud.



United Kingdom

From April 2011, all companies are required to make a Company Tax Return will have to:

-

file their company tax returns online for all returns delivered after 31 March 2011 for accounting periods ending after 31 March 2010, using a specified XBRL data standard for accounts and computations and pay their Corporation Tax electronically.

-any returns filed online with accounts and computations sent as Portable Document Format (PDF) attachments –

all returns delivered after 31 March 2011 for accounting periods ending after 31 March 2010, must be filed using a specified XBRL (iXBRL) data standard for accounts and computations.

The filing and electronic payment requirements are defined in the draft regulations and directions, which provide further detail on a number of areas within the regulations, on the HMRC website.

https://online.hmrc.gov.uk/information/faqs/corporationTax?faqid

=eng.faq.largecompanies.faq.faqct068&affinitygroup=

8. Developments in UK and Ireland

ÉireIrish Government endorses adoption of mandatory electronic filing along with XBRL financial statements.

Companies Registration Office (CRO) and Revenue Commissioners to work closely together and to engage with accountancy bodies to produce a cross-agency result which can be replicated by other Government agencies.

The High-level Group also suggests that companies file accounts once through XBRL

DETE believes that by introducing a simultaneous return date to CRO and Revenue, by phasing in mandatory e-filing, including accounting data in XBRL-format, and by ensuring that agencies can cross-access data, the burden on Irish business will be considerably reduced.


8. What does it mean for me?HM Revenue & Customs (HMRC) is implementing Lord Carter's recommendations to increase online filing which were accepted by Government at Budget 2006.

The recommendations include compulsory requirements for businesses to file their Company Tax Returns online and to make Corporation Tax payments electronically.

These regulations amend the Income and Corporation Taxes (Electronic Communications) Regulations 2003 (S.I. 2003/282, amended by S.I. 2005/3338). These amendments will provide new compulsory rules for Corporation Tax as follows:

•online filing of Company Tax Returns using XBRL standard for all returns delivered after 31 March 2011 for accounting periods ending after 31 March 2010

•electronic payment of all Corporation Tax liabilities after 31 March 2011


9. Key Readiness Challenges.

Raising awareness-

understanding XBRL and what problem it solves

Implementation Options –

time spent planning your implementation project will save time later

Selecting Software-

XBRL is an evolving technologies. Software options are varied and evolving quickly

Mapping Data –

the mapping of data to taxonomies needs to be understood and practiced

Visualising the Data-

different regulators may require different options to make XBRL human-readable

Quality Assurance-

a blended skill-set of technology , XML languages and financial knowledge is required to ensure quality of your filings-

build your team accordingly



1.

Get involved early

2.

Understand what XBRL is and how it will impact you

3.

Build the right team

4.

Evaluate your strategies

5.

Embrace technology as a change agent

6.

Understand the overlaps between accounting skills and technology


10. How do I join the conversation?


About the Author

Conor O'Kelly is 1st Vice Chairman of XBRL International, the non-profit consortium of over 600 members developing the XBRL Standard and a member of the XBRL International Board of Directors.

He is the past Chairman of XBRL Europe, the consortium of European XBRL Members , past Chair of XBRL Ireland and represents Ireland on the International Steering Committee of XBRL International.

He is a Fellow of Chartered Accountants Ireland with an MSc in IT Management . He has twelve years background in global IT managed services outsourcing, global project management and strategic IT business planning with Hewlett Packard and Ericsson.

Mr. O'Kelly is a past member of Council of Chartered Accountants Ireland.

10 things a young cpa should know about xbrl

Economy & Finance