xbrlglobal april 2010

CarveOut HM Ltd.

1905, Lippo Centre, Tower TwoQueenswayHong Kong

Tel: +852 2918 8778Fax: +852 3007 3821

For further details, please contact:

[email protected]@xbrlglobal.com

Corporate aCtionsDTCC’s Don Donahue and SWIFT’s Chris Church on how XBRL can solve an age old problem

XBRL Coming to a Business PRoCess neaR You

Charles Hoffman

Vol 1 • Issue 1 • April 2010

Vol 1 • issue 1 • april 2010

The path taken by a corporate actionannouncement is rarely smooth. Whether it's adividend, bond redemption or merger, thestages between issuer to intermediary toinvestor can see data get dropped, detailsmissed, and investor decisions, delayed.

The solution is clear. A standardised, commonlanguage. One that ensures consistency ofinformation delivery and data integrity from theissuer of a corporate action straight through tothe end user.

Together, Swift, the DTCC and XBRL US arecreating a solution that means less delay oncorporate actions announcements, less burdenon intermediaries, and less chance crucial datawill get missed or misinterpreted.

Which makes a lot more sense.

To find out more, contact Marlene McMahonin our NewYork office:email: [email protected]: +1 212 455 1906

Howsuccessfulprocessingstarts

- and finishes.

For more information on SWIFTand its portfolio, visit swift.com

To join the community debatevisit swiftcommunity.net

Issuer to Investor: Corporate ActionsLess delay. Less errors. Less risk.More sense.

Advert_ISITC_us format_205x270_v5_q7:Layout 1 3/31/2010 10:20 AM Page 1

vol 1 • issue 1 • april 2010 | 1

to give us your input and feedback. We look forward to hearing from you.

Best Regards,

Stephanie LawtonManaging Director, XBRLglobal

We have some heavy hitters in this, our first issue, with interviews from leaders and innovators at SWIFT, the DTCC, and the US

Securities & Exchange Commission. Adding to the debate, we have case studies and practical examples of XBRL, demonstrating its application across different sectors and regions.

Most importantly, now is the time for you all to get involved. This industry publication is designed to further the debate. We look forward to your feedback and support to ensure that every issue of XBRLglobal raises the questions and tackles the issues that count.

So, please enjoy the following pages, and remember to drop me an email ([email protected])

From XBRLglobal

Editor’s message

Welcome to XBRLglobal! This inaugural issue brings together experts from across the financial services industry globally to share, discuss and debate the role of XBRL as the standardised language for global electronic communication of business and financial reporting at all stages of the information value chain. An industry driven initiative to encourage and provide greater transparency of the issues and debates on all matters XBRL related.

| vol 1 • issue 1 • april 20102

Join XBRL US for the XBRL US National Conference

XBRL US National Conference When: November 9-10, 2010

Where: Pennsylvania Convention Center, Philadelphia, PA

Who should attend:Public company preparers•Nonprofit professionals•Government agencies•

Learn how XBRL can help put accountability into practice by fostering transparency. Hear about initiatives ongoing in the nonprofit, government and corporate reporting areas. Find out how you can leverage XBRL for your own business goals.

Key topics that will be covered include:SEC-US GAAP, including XBRL Essentials workshop/training •with a focus on detailed footnote taggingCorporate Actions, securities industry implementation and •harmonization with ISO 20022 Corporate Governance, notice and proxy, executive •compensationNonprofit•Public sector/government•

For XBRL US Members: Please join our members-only ½ day program on November 8, including Annual Meeting, committee meetings and member cocktail reception.

Learn more by visiting http://conference.xbrl.us. Find out about sponsor opportunities by emailing us at [email protected].

nationalconference.indd 1 3/31/2010 3:22:57 PM


The accuRacy oF XBRL-Tagged daTa-assuRance and ReLaTed seRvicesBy Amy Pawlicki, AICPA, USA, Craig Crawford, KPMG US and Jon Rowden, PWC UK

aRound The XBRL woRLdBy Wilson So, Hitachi Consulting

geTTing The message RighTDonald Donahue, The Depository Trust & Clearing Corporation

a game changeR FoRcoRpoRaTe acTionsChris Church, SWIFT

XBRL: coming To a Business pRocess neaR youBy Charles Hoffman, Innovative Solutions, UBmatrix Inc.

a TechnicaLpeRspecTive oncoRpoRaTe acTionsBy LA Orloff & David Hands,The Depository Trust &Clearing Corporation

The XBRL case sTudy -agL ResouRcesBy James Anderson, AGL Resources

impLemenTing TheRecommendaTionsBy Mark Holden, HMRC’sCarter Programme

4

8

11

24

28

34

38

41

45

15

19

8 Around the XBRL World

the XBRL view point

the XBRL vision

the XBRL effect

the XBRL atlas

Europe

United States

Contents vol 1 • issue 1 • april 2010

XBRLgLoBaL ediToRiaL advisoRy BoaRdChair, Michelle Savage, Vice President, Communications, XBRL US (USA)

Ralf Frank

DVFA Managing Director, DVFA Society of Investment Professionals in GermanyDelegate for XBRL and ESG, EFFAS European Federation of Financial Analysts Societies (Germany)

Makoto Koizumi

Senior Consultant, Fujitsu Research InstituteChairman, XBRL International Best Practices Board (Japan)

Gavin Marais

Associate Director and XBRL Leader, Deloitte & Touche Southern AfricaMember, XBRL International Steering Committee (South Africa)

Michael Ohata

Managing Director, Advisory Services,

KPMG LLPImmediate Past Chairman, XBRL International (USA)

Jamie Shay

Head of Standards, SWIFTMember, XBRL International Board of Directors (Belgium)

Ying Wei

Deputy Director‐General, Accounting Regulatory Department, Ministry of FinanceMember, XBRL International Board of Directors (China)

puBLisheREdward Mangles

commeRciaL diRecToRBarry W. Smith

managing diRecToRStephanie Lawton

ediToRiaL & sTRaTegy diRecToRShyamala Padmasola

in-house wRiTeRBecky Merrett

pRoducTion manageRTammy Fung

design & LayouTLEAP Design

geneRaL [email protected]

adveRTisingCompanies interested in discussing sponsorship and/or advertising opportunities please contact your regional editorial representative or [email protected]

puBLisheRCarveOut HM Limited1905, Lippo Centre, Tower TwoQueensway, Hong KongTel: +852 2918 8778Fax: +852 3007 3821

XBRL aT a cRossRoadBy Ralf Frank, DVFA: Societyof Investment Professionalsin Germany

gaining TRacTionWalter Hamscher and Jeffrey Naumann, SEC

FRom TheoRy To agLoBaL ReaLiTyBy Sue Childs, EDGAR Online

puBLisheR’s noTeThe opinions expressed in this publication are not necessarily those of the publishers or of the institutions of the contributing author. Although care has been taken to ensure the accuracy of the information contained within the publication, neither the publishers, authors nor their employers can be held liable for any inaccuracies, errors or ommissions; nor held liable for any actions taken on the basis of the views expressed, of information provided within this publication.

No part of this publication covered by the publisher’s copyright may be reproduced, stored in a retrieval system or transmiited, in any form or by any means by the graphic, electronic or mechanical, including photocoping, without the written permission of the publisher. Any unauthorised use of this publication will result inimmediate legal proceedings.

All rights reserved © 2010


the ACCurACy of XBrL-tAgged dAtA-AssurAnCe And reLAted serviCes20th XBrL internAtionAL ConferenCe, romeviews from pArtiCipAnts in the XBrL AssurAnCe trACk

the XBRL view point

XBrL AssurAnCe trACk ChAir, Amy pawlicki, American institute of Certified public Accountants (AiCpA), usA

As XBRL is adopted for financial and business reporting around the world, there is an increasing focus on methodologies to help ensure the quality of data in the XBRL format. Because judgment is involved in XBRL tagging, there is room for errors, and inappropriate tag choices can hinder the accuracy of XBRL-tagged data. As a result, many groups and organizations are focused on research, education and guidance related to providing assurance and related services on the accuracy of XBRL-tagged data. The Assurance Track at the XBRL Conference in Rome will cover activities under way in the US, Europe and Asia to address the accuracy of

XBRL tagging and provide assurance on XBRL data. Track presenters will discuss their experiences related to assurance and agreed-upon procedure engagements on the accuracy of XBRL-tagged data performed to date. Key issues related to XBRL assurance will be up for discussion, such as demand for XBRL assurance and/or related services, the potential user expectation gap, auditor association and materiality, among others.

Amy Pawlicki, AICPA, USA

vol 1 • issue 1 • april 2010 | 5 vol 1 • issue 1 • april 2010 | 5

the XBRL view point

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The International Auditing and Assurance Standards Board (IAASB) is currently considering many questions as part of its preliminary consultations to determine whether it is necessary and in the public interest to develop a pronouncement or provide additional guidance addressing the use of XBRL.

An IAASB Staff Q&A document issued in January 2010 supports the view that the IAASB’s International Standards on Auditing (ISAs)

Craig Crawford, KPMG US (Chair of XBRL Task Force)

currently do not require that procedures be performed on XBRL-related data as part of a financial statement audit. Before mandating procedures on XBRL-tagged data in the absence of a regulatory requirement, the IAASB will need to conclude that doing so is in the public interest and that the benefits, in particular to end users, justify the cost of doing so.

The IAASB acknowledged in the Q&A that auditors may wish to clarify their association with XBRL-tagged data

in the auditor’s report, by identifying in the auditor’s report what financial

internAtionAL Auditing And AssurAnCe stAndArds BoArd (iAAsB),Craig Crawford, kpmg us Chair of XBrL task force and Jon rowden, pricewaterhouseCoopers (pwC) uk member of the XBrL task force


the XBRL view point

information is covered by the report. Further research on the implications of XBRL for financial statement audits, including consideration of the expectation gap, is being conducted by a research team sponsored by the Association of Chartered Certified Accountants (ACCA) and the International Association for Accounting Education and Research (IAAER).

The IAASB’s targeted consultations to date have identified jurisdiction-specific demand for the auditor to perform agreed-upon procedures (AUP) to address

the completeness, accuracy and consistency of the XBRL-tagged data. The IAASB has a general standard dealing with (AUP) engagements, and the XBRL Task Force recognizes that further guidance on the performance of AUP engagements with respect to XBRL may be helpful.

Further consultations, in particular with users and regulators, are expected to continue throughout 2010. A clear understanding of the needs regarding XBRL-tagged data, in particular as the use of XBRL data grows, will assist the IAASB in determining its way forward.

FRom The paneLisTs

Question: Current standards do not require the auditor to perform procedures with respect to XBRL-tagged data or the process to tag the data. In addition, the auditor’s report does not cover the XBRL-tagged data. Therefore, what do users of XBRL-tagged data (whether true end-users or intermediaries, such as regulators and tax authorities) perceive the level of auditor involvement with XBRL-tagged data to be?

Answer:Akira Matsuo, KPMG, Japan“Normally users perceive auditor involvement as traditional paper-based financial reporting.”

Efrim Boritz, Ontario Chartered Accountants’ Chair in Accounting, and Head of the IT and Assurance areas in the School of Accountancy, University of Waterloo, Canada“Users may assume that XBRL-tagged financial statements have the same level of auditor involvement as the official versions of those statements,

and that the XBRL-tagged versions of the statements contain the same information as the official versions. However, most if not all of our current professional standards do not require auditor scrutiny of electronic versions of those official versions, such as XBRL-tagged financial statements and the process used to create those electronic versions may not result in XBRL-tagged financial statements that are the same as those produced in other formats. In fact, studies indicate that there is a surprisingly high rate of errors and exceptions in the first 400 or so filings by SEC registrants under the SEC’s new regulations that required the largest companies to furnish XBRL-tagged financial statements starting in early 2009.

Also, an electronic filing may contain financial statements, notes, MD&A and other disclosures or certifications with different levels of auditor involvement, if any. Users would not normally be able to guess what level of involvement the auditor had with this information.”

Barbara Majoor, Deloitte, Netherlands“In general you would expect that, once XBRL becomes a more important medium in providing financial information and replaces the ‘traditional’ form of issuing financial information (such as annual financial statements in the Form 10-K or 20-F), true end users, regulators and tax authorities will be looking for comfort and requesting assurance from assurance providers, such as auditors. Although there is no requirement, true end users have some expectations and although auditors have no involvement, true end users will assume auditors have some.”

Question: Would explicit language in the auditor’s report explaining the auditor’s lack of association with XBRL-tagged data serve to reduce the expectation gap?

Answer: Efrim Boritz“Explicit language may help auditors avoid liability, but may not help users

Jon Rowden, PWC UK (Member of XBRL Task Force)


be better to clarify this type of service [rather] than create a new service with a potentially limited lifespan and with a potentially confusing message.

Also, a report on controls surrounding the tagging process will

have inherent limitations and may not provide all the assurance users may want on the completeness and accuracy of the tagged information itself.

Finally, for auditors to be willing to provide a report on controls surrounding the XBRL-tagging process will require that issues related to significance/materiality of deficiencies/weaknesses be addressed and resolved.”

Question: What are the beliefs among different stakeholders (i.e., audit firms, preparers, users/regulators) on whether auditors should perform certain procedures on XBRL-tagged data, or the process of tagging, as a routine part of their financial statement audits in the absence of a regulatory requirement to do so?

Answer: Akira Matsuo “Regulatory requirement should be established.”

Efrim Boritz “I have not done an extensive study of stakeholder beliefs, but my perception, based on

the XBRL view point

obtain the reliable XBRL information that they may wish to use in their decision models. Also, ’waving the white flag‘ to highlight the avoidance of responsibility may be a dubious strategy for the auditing profession to adopt.”

Akira Matsuo“The expectation gap may not be reduced with explicit language in the auditor’s report either.”

Barbara Majoor “Assuming the question refers to auditor’s reports issued with respect to “traditional” financial statements such as the 10-K and 20-F, the auditor’s responsibility is to issue an auditor’s report on these consolidated financial statements. So based on that responsibility, there does not seem to be an expectation gap. However, the expectation gap won’t be solved only by an explicit reference, explaining that the auditor has no involvement.”

Question: Would an auditor’s report on the controls surrounding the XBRL-tagging process result in a meaningful service, given how XBRL-tagged data is used?

Answer: Efrim Boritz “A report on controls surrounding the XBRL-tagging process could be useful in some jurisdictions, but might unnecessarily complicate assurance services and confuse readers of SEC registrant companies that are already subject to SOX 404 reporting. For such companies, users would have to correlate SOX-404-type reports with XBRL control reports and make sense of any interactions between them. This is too much to expect of most users. As noted above, XBRL-tagging controls may eventually be subsumed under SOX 404 reporting, so it would

several interviews and conference presentations, is that financial analysts would like assurance about the accuracy of the tagging. Some regulators would also like assurance, but are reluctant to impose additional costs on companies in the current environment for fear of a backlash and the stifling of innovation.

Some preparers may want the assurance, but may not be willing to pay extra for the assurance services, although others may wish to avoid the embarrassment of furnishing XBRL-tagged information with errors and inconsistencies. It seems that there is some demand by CFOs and audit committees who wish to avoid reputational harm from issuing incorrect or questionable XBRL-tagged information.

Audit firms do not seem to be keen on providing assurance because there is still limited experience with XBRL, and professional standards for such engagements are not well developed, especially in terms of providing guidance on the materiality of errors and exceptions identified by their procedures. Thus, they may perceive more risk than reward in providing such services.”

Barbara Majoor“In The Netherlands there are various stakeholders and users of XBRL tagged data such as banks, tax authorities and Chambers of Commerce, who are supporters of financial information being provided through XBRL. Among some of these stakeholders, there are currently discussions going on regarding to what extent auditors should be involved in providing a certain level of comfort with respect to XBRL-tagged data. In general they prefer the auditors provide some comfort around the quality of XBRL-data and the processes surrounding it.”

“Audit firms do not seem to be keen on providing assurance because there is still limited experience

with XBRL.”


The collaborative effort to create and promote XBRL began in 2000 when a

small group of companies and government agencies got together to build the language, and support its adoption. Over the years, the initiative has evolved and grown to involve about 600 companies and agencies worldwide.

As we get ready for the 20th

XBRL International Conference — aptly named “XBRL: Linking Businesses, Public Regulators, and Citizens” – that will be held in Italy this April, let’s look at how the data standard is being implemented in a few countries that have been particularly receptive to XBRL adoption.

united states2010 marks the second year of the SEC’s XBRL mandate for public company filings in the US. The mandate is being phased in over a three-year period, with the largest accelerated filers having gone first.

The remaining large accelerated filers using US GAAP will begin to submit their financial reports in XBRL for fiscal periods ending on or after June 15, 2010. The final group of smaller reporting companies will begin XBRL filing next year.

The first group of large accelerated filers, now in their second year of filing in XBRL, will be required to detail-tag their footnotes, which

is expected to pose significant challenges. However, I believe this is where the value of XBRL will truly shine. There are data services that plow through footnotes to uncover information that companies try to bury in routine SEC filings. Now this information will be made available to the smallest investor, not just the professional money managers and analysts who can pay for these services. This is indeed an exciting moment in the evolution and adoption of XBRL.

Following its delivery of the XBRL US GAAP taxonomies and Preparers Guide to the SEC, XBRL US — the United States jurisdiction of XBRL International — has continued to push for broader interactive data

the XBRL view point

Around the XBrL worLd…providing an introduction to a cross section of national XBRL initiatives, hitachi consulting‘s wilson so, paints a vibrant picture of XBRL’s increasingly central role in electronic financial reporting globally.


Wilson So, Director, XBRL Solutions Business, Hitachi Consulting

the XBRL view point

adoption. A year ago it began to collaborate with the Depository Trust & Clearing Corporation (DTCC) and SWIFT, the global provider of secure financial messaging services, to implement XBRL for corporate actions announcement processing. By electronically capturing data directly at the point of origin in a standardized format, this effort should deliver the same benefits that XBRL has brought to financial reporting – greater accuracy, reduced risks and costs, and improved transparency and communication between issuers and investors. Other areas that are being looked at for XBRL implementations include non-profit financial activities like grant application and reporting, as well as asset-backed securities.

JapanJapan has distinguished itself by its smooth introduction of XBRL for financial reporting through EDINET, similar to the SEC’s EDGAR. Over 1,200 companies took part in the country’s voluntary filing program, which augured well for the mandate effected in fiscal 2008. About 5,000 listed companies and about 3,000 mutual funds are now submitting filings in XBRL.

Japan is also a leader in adopting XBRL Global Ledger (GL) for internal accounting. The first large-scale implementation of XBRL GL was at Wacoal, integrating 32 of the company’s independent legacy systems across 36 subsidiaries. Japanese labels have been added to XBRL GL taxonomy, and the country’s Ministry of Economy, Trade and Industry (METI) is moving forward on J-SaaS (Software as a Service) that seeks to utilize XBRL GL for smaller companies without large-scale IT infrastructure.

to learn, because it will show whether there is a belief that XBRL will be beneficial to parties other than the government and regulator.

chinaIn the past few years, China has been very pro-active in the adoption of XBRL. It was the first country to formally require XBRL for public company financial reporting in 2004. The two stock exchanges, Shanghai and Shenzhen, have implemented XBRL since 2003. All listed companies submit XBRL tagged financial and periodic reports through the use of a reporting tool developed by the respective exchanges.

From the beginning, each exchange has had its own taxonomy, and these differ slightly. The Shanghai taxonomy is published on the XBRL International website as an ‘acknowledged’ taxonomy. However,

united Kingdom2010 is an exciting year for XBRL in the United Kingdom. For the first time, two government bodies — Her Majesty’s Revenue & Customs (HMRC) and Companies House — have put together a timetable for companies to report in XBRL. It is fair to say the United Kingdom has strongly reiterated its commitment to XBRL, which was in some doubt after the Financial Services Authority chose not to adopt the standard to communicate financial and regulatory information.

Companies House launched a voluntary, audit-exempt XBRL reporting program for smaller firms that has received over 200,000 company accounts. HMRC, the government’s tax agency, is pioneering the use of Inline XBRL for Corporate Tax Returns (CTRs). The use of Inline XBRL by HMRC takes into consideration the need for humans to communicate on a tax return, even though machines are expected to perform the function of identifying ‘a needle in a haystack’ for further investigation of a certain filing. Companies House and HMRC are working together on a single gateway for filing, with April 2011 as the target date for mandatory XBRL filings of CTRs and company accounts.

The upshot is that most financial departments of large UK companies are aware of what XBRL is and know that they will have to report using the format in the next two years. In the meantime, as with any new technology introduction, there is uncertainty over the best way to produce XBRL reports (buy tools and do it themselves, engage a third party, or use the government template). Companies also have a choice between producing the whole financial report in XBRL or doing the bare minimum.

How they choose will be interesting


as far as practical use is concerned, both the Shenzhen and Shanghai taxonomies are utilized by China’s listed companies, with the choice depending on where they are listed. In 2008, a project was initiated by the Ministry of Finance to align the two taxonomies. Led by the China Securities Regulatory Commission (CSRC), the securities industry regulator, a consolidated taxonomy was created in late 2009.

China was also the first country to adopt XBRL for mutual funds: there are about 60 Chinese mutual fund companies that report in XBRL to the CSRC. Starting in July 2009, this information was available for viewing from the CSRC web site. The application of XBRL across additional asset classes and security types, including futures and options, is currently being investigated at the CSRC. The goal is to bring greater transparency to the entire securities industry in China.

The Ministry of Finance is currently studying the broader implementation of XBRL in China, and it has initiated a number of research studies into specific areas with the help of research institutes, listed companies, and financial system vendors. One area of investigation is the integration of XBRL reporting across nine ministries, including those responsible for taxation and statistics.

spainSpain has always been a leader in XBRL development. The Bank of Spain, the country’s central bank, has been a pioneer in using XBRL to collect and analyze information from financial institutions. Helped by the Bank of Spain’s work, the Committee of European Bank Supervisors (CEBS) has

begun using XBRL for Basel II reporting across all 27 member states.

In February 2009, Spain mandated XBRL for financial reporting. Some 500,000 XBRL instances have been filed with the Mercantile Registrars Association of Spain.

Recently, Spain has begun introducing XBRL for annual budget settlements. Across the various levels of government – regions, metropolitan areas, and municipalities – some 17,000 budget settlements are performed in Spain each year. The reporting entities have different computer systems and different workflows; each settlement requires up to 400 rows of information. The implementation is creating a paperless settlement process that is providing more accurate, typo-free information at reduced cost.

netherlandsXBRL has been an integral part of the Netherlands’ “Different Government” program, offering higher quality service with reduced red tape. Building on the success of its XBRL program for local water management, the country introduced the Dutch Taxonomy Project which seeks to reduce the country’s total administrative and reporting

burden by 25 percent. Renamed Standard Business Reporting (SBR) in alignment with a similar program in Australia, the Netherlands is pursuing a comprehensive approach to XBRL reporting that comprises company’s annual accounts, tax filings and business statistics.

conclusionThe adoption of XBRL worldwide is much broader than I’ve described here. However, there is one common thread through all implementations thus far: government mandate has been the major driver behind adoption. Now that a certain critical mass has been reached, the next step is to consider how to leverage the trickle-down effect of all the government implementations to bring adoption of XBRL to the next level. It could be the use of XBRL internal reporting to automate an end-to-end process of financial reporting and analysis that would not only satisfy compliance requirements, but perform internal control and management as well. This is just one example — the pathways are many.

I think it is fitting at this juncture that the XBRL International Standards Board (XSB) has published a Discussion Document to invite comment about the future direction of the XBRL standard. The board has stated three goals – make XBRL easier for developers, more comparable across taxonomies, and easier to consume alone and in combination with other standards. That these three goals remain unchanged after the comment period is not essential. What is important is the opportunity the XSB initiative provides all stakeholders to guide the evolution of the standard, now that XBRL has attracted a much wider base of users.

“...there is one common thread

through all (XBRL) implementations

thus far: government mandate has been the

major driver behind adoption.”

the XBRL view point

vol 1 • issue 1 • april 2010 | 11

getting the messAge rightdoes XBrL hAve A roLe to pLAy in CLArifying CorporAte ACtionspoorly communicated corporate actions are, according to industry research, costing investors millions of dollars every year. chairman and chief executive officer of The depository Trust & clearing corporation (dTcc), donald donahue believes the solution is to capture data on the action directly from the issuer, and in a standardised and transparent format – and that XBRL provides the key.

XBRLglobal: It has been almost a year since you declared your support for XBRL by joining forces with SWIFT and XBRL US. What was the rationale behind this project?

Donald Donahue: As an organisation – and like much of the rest of the industry – we’ve experienced our fair share of problems [see ‘The case for XBRL’]. All too often, the issue is that, with so many cooks stirring the broth it creates errors, risks and exposure. What we believe is that, the more you define the information being presented, and the more you reduce intervention in the middle, the more risk you take out of the process.

With the work that’s been undertaken by XBRL over the past decade, especially on the XBRL US GAAP taxonomy, and with the success XBRL has had in getting people in the market to speak in a structured way, for us it was like a light went on. XBRL US was using precisely the methodology for communicating information into the marketplace that we had been trying to persuade issuers to use on corporate actions. The result is that we believe the collaboration we announced last year will fundamentally change the announcement of corporate actions. We believe it will bring greater

accuracy, reduce risks and costs and improve transparency between issuers and investors.

This partnership between XBRL US, DTCC and SWIFT will promote straight-through-processing (STP) by electronically capturing data directly from issuers or offerors at the point that a corporate action is announced and in a stand ardized format.

XBRLglobal: Has it lived up to your expectations?

DD: Realistically, it’s too early to make a judgement. What we do know however, is that the whole issue of identifying and

Donald Donahue, Chairman and CEO of DTCC

the XBRL vision


the XBRL vision

the CAse for XBrLThe following is an extract from a

speech given by Donald Donahue in

New York on 28 May 2009.

All of us who’ve worked with corporate actions over the years probably know a number of horror stories that reveal just how much risk lurks in the shadows of the corporate actions process. Let me share one from my own experience that vividly illustrates the need for “improving corporate actions communication”.

Some years ago, we handled a merger between two companies. Company A was acquiring Company B in a four-for-one stock swap – four shares of Company A’s common stock for each one share of Company B.

As our people – and everyone in the industry – went through the 100-plus page prospectus, we consistently saw the terms “four for one” – on the cover, in the summary, in the detailed description of the offer, everywhere we looked. We set up the merger as a four-for-one exchange. We processed the exchange and credited our participants with their allocations of the new Company A stock. Our participants, in turn, credited their customers and, of course, many of their customers then went out and sold these shares.

We presented our holdings of Company B stock to the agent, and awaited receipt of the new Company A shares.

Now you probably all know what’s coming. When we got the new Company A shares, we received a quantity that equalled three new Company A shares for every Company B share – and we promptly got into a squabble with the agent about the shortfall.

Only after weeks of arguing did it become clear that the terms of the deal were not what we had all thought they were. Company B was actually involved in a number of intellectual property suits at the time of the merger, and had some significant exposure on some of those claims. Company A wasn’t willing to take on that exposure, of course, and so it set up an escrow account against the risk, and funded the account by withholding one of the four shares that were the proceeds of the merger.

The idea was that once the claims were resolved, Company A would distribute whatever remained in the escrow account. But it was highly unlikely that anything would be left over. So Company B shareholders, in reality, would only get three shares for every one they held.

When we went back to the documents, we found, buried, a one-paragraph statement regarding the escrow account and the withholding of the one share. It was the only reference throughout the entire prospectus. Did it satisfy disclosure requirements? At the end of the day, we concluded that it probably did. Did it effectively

communicate to investors and the industry the actual terms of the offer, in a way that eliminated misunderstanding? Absolutely not!

In the movie version, this is where the angry guy with the chain saw appears. In our case, I think the write-off was somewhere north of $1.5 million, and we know the industry collectively wrote off some multiple of that amount.

Talk about a “teachable moment” for risk management! This was when we became zealots about the absolute imperative that information about corporate actions be accurately and completely described in a standardized way by the originator of the corporate action; and be released in a way that is standardized throughout the industry so that the information can be immediately disseminated to all interested parties without further manual intervention.

“The Company A Incident,” was proof that leaving each intermediary individually responsible for interpreting information – and for translating the information into a form that can be communicated to their clients – is absolute lunacy and opens the door wide to risk.

Obviously, the risk in our business is very high. Reducing it should be a top priority. And we have an historic opportunity to begin doing that. We have an opportunity to bring a new tool, XBRL, to issuers, so that they can make their intentions more transparent.

We have an opportunity to save our customers millions of dollars. And we have an opportunity to bring clarity, conciseness and consensus to the often murky and unnecessarily risky business of processing corporate actions. A tall agenda, but a critically important objective.

“We’ve had to be very clear outside

the U.S. that this is a complementary effort – that it is totally congruent with ISO 20022 –

and that we believe this is a huge step

forward.”

vol 1 • issue 1 • april 2010 | 13

the XBRL vision

manufacturing data with respect to corporate actions is fraught with risk for everyone in the industry who touches it.

Obviously, we still have a fair amount of work to complete, especially in defining all the tags. We’re looking at more than 40 US corporate action types, and in each case you have to define the tags, so there is a fair amount of ministerial

work that has to be done. We are also working to ensure the XBRL taxonomy aligns with the existing global standard, ISO 20022, which requires a level of integration that probably has not been done before with XBRL. This level of detail has occupied the best part of the last year.

Adding to the workload, we’re also trying to introduce this outside

the US. This global reach certainly adds a layer of complexity.

XBRLglobal: What has DTCC been doing to raise awareness of XBRL?

DD: One initiative we put in place immediately after the announcement of the DTCC, XBRL, SWIFT collaboration last May was to hold a conference involving all the

parties along the corporate action notification chain. The aim was to look, from an issuer’s perspective, at whether XBRL can solve the STP missing link. We also wanted to demonstrate how XBRL can tag key corporate action event details found within the issuer/offeror’s public disclosure documents.

Over the past year we’ve

continued to work with our partners to share updated information to the various stakeholders via the media and at conferences. We’ve also continued to keep some of the key industry organisations, such as SIFMA (Securities Industry and Financial Markets Association), ISITC (International Securities Association for Institutional Trade Communications) and ICI (Investment Company Institute), informed of our progress.

XBRLglobal: Where have you seen the strongest support? And where are you seeing resistance?

DD: We’ve certainly had early leaders both geographically and sectorally who have embraced XBRL enthusiastically. Equally we’ve had communities that say “ok we understand the concept, but we want to see some detail”. From our perspective, we need to understand what issues different groups are

“From our perspective, at any point they touch the market XBRL can make an issuer’s

communications more transparent.”


the XBRL vision

Developing a Business Case for Corporate Actions and XBRLThree stakeholder groups were formed last year to help develop the ‘Business Case’ for DTCC’s, SWIFT’s and XBRL US’s XBRL strategy.

(1) Issuer Group, including issuers, stock exchanges, transfer agents and financial publishers.

(2) Intermediaries Group, including banks, broker dealers, institutional broker dealers and retail brokers.

(3) Investor Group, mainly focusing on institutional asset managers.

After meeting individually, the groups came together late last year to discuss issues, including:

• The challenges faced by the financial services market

• XBRL’s role in addressing risks/costs associated with these challenges

• What a new process with XBRL would look like

• The challenges in implementing a new process

A draft of the ‘Business Case’ is due to be released to the industry for comment in the second quarter of 2010. Feedback on this draft will be implemented into a finalised document.

To get involved: www.dtcc.com and click on ‘Thought Leadership’ or see http://xbrl.us/i2i/Pages/default.aspx

facing and address these.From an individual standpoint,

the people in the middle who are doing the conversion of information are madly in love with the idea. The receivers of XBRL-tagged data, the investors, all absolutely agree this is a good thing to do. It provides speed and accuracy. The response has been strongly positive.

We do understand, however, that for the creators of the information, who are used to the disclosure requirements that have been in place for the past 75 years, many of them are asking, “why do we have to do things differently?”. Our experience is that some get it right away, while others are more sceptical.

Support from the regulators has also raised the profile. We know the US Securities and Exchange Commission (SEC) had success during the best practice stage for GAAP reporting – even before it made XBRL filing mandatory. We want to see this as well. We need to get market leaders to adopt it as a first step, and then we want to get it to a point where everyone in the market knows this is best practice and standard practice. The experience we gain over the next few years will show us how far we’re going to achieve this.

XBRLglobal: What’s been the response from the clearing houses and regulators in Europe and Asia?

DD: Our impression is that originally

Europe saw the initial XBRL initiative as something that would be competitive with ISO 20022. There was a sense of “here we go again with another new standard”. So we’ve had to be very clear outside the US that this is a complementary effort – that it is totally congruent with ISO 20022 – and that we believe this is a huge step forward, and in

particular a huge step forward for the global financial centres.

Both Euroclear and Clearstream get this. They see that we’re moving in the right direction. They’re aware of the confluence and they have similar needs. I think they’ll adopt a wait and see approach now, but they’ve certainly shown interest.

The issues have been similar in Asia, although we’ve had some very positive feedback from some of our colleagues in China and Japan.

XBRLglobal: Where do you see expansion of XBRL for DTCC?

DD: Is there a natural fit outside corporate actions? Yes, it’s unquestionably a language that can be used for a range of sensitive issues. Anything that can make assets more transparent using XBRL – and there is already a proposal in to expand its usage in relation to securitisations – this is a huge step forward in making people understand the financial assets.

There is clearly a movement towards using XBRL as a way that issuers should communicate with the

“We need to get market leaders to adopt it as a first step, and then we want to get it to a point where everyone in the market knows this is best practice and

standard practice.”

market place. From our perspective, at any point they touch the market XBRL can make an issuer’s communications more transparent. I suspect we’re not even scratching the surface as to where we can scale this to.

vol 1 • issue 1 • april 2010 | 15

when you think of global standards, swiFT is the one that leaps off the page. established in 1973, the global financial messaging network now covers more than 9,000 institutions worldwide. so when the us-based cooperative decides to join forces with XBRL us, the financial community sits up and listens.

XBRLglobal got talking with swiFT’s ceo of americas and global head of securities, chris church, and asked why swiFT was putting its weight behind a relative newcomer in the standards world.

A gAme ChAnger for CorporAte ACtionsswift, dtCC & XBrL Join forCes to soLve An Age oLd proBLem

it’s inefficient. It’s not automated, it’s not standardised and it’s not transparent,” explains Church.

His arguments are backed up by research, including a 2006 study by the Europe-based financial consultancy, Oxera, which valued

C hris Church is a man on a mission, to innovate, standardise, and unite

the industry around a solution to many of the age-old problems with corporate actions processing. That said, his approach is not to preach

the language of taxonomies and tags, rather his fervent belief that XBRL is a key component in the solution. “The problem at hand is that the business of corporate actions is costing the industry hundreds of millions, if not billions, because

Chris Church, CEO of Americas and Global Head of Securities, SWIFT

the XBRL vision


losses on corporate actions worldwide at between US$400 and US$900 million dollars per year. Given that the data is already four years old, the likelihood is that now this is a $1 billion dollar a year problem globally.

“XBRL is about reducing errors, it’s about creating standardised, easy-to-analyse information, it’s about risk management and, most importantly, it’s about ripping cost out of the industry,” Church argues.

Among its many claims, XBRL professes to push information along the value chain in a standardised way. “XBRL captures corporate action data at the source in a much more automated way. You’re getting the information directly from the issuer in a standard format, which allows for reconciliation at various points along the value chain,” explains Church.

What’s in it for me?So it’s all good. But what’s in it for SWIFT, an organisation that calls itself a member-owned cooperative? A little over a year ago, SWIFT, the Depository Trust and Clearing Corporation (DTCC) and XBRL US announced a major alliance. The move put senior members of the SWIFT and DTCC managements on the board of the XBRL US organisation.

The presence of the two heavyweights on the board of the relative newcomer adds serious credibility to the XBRL format.

SWIFT brings to the table more than 35 years of experience in providing technical and business expertise for standards development, and more importantly some argue, can extend the reach of XBRL standards formats through the entire SWIFT community.

“We’re really excited at the prospect of working with DTCC, XBRL US and the rest of the

industry to help solve the problem of corporate actions and deliver value to the industry.

SWIFT will play a key role in providing technical and business expertise for standards development and extending the reach of XBRL standards formats through our entire international community,” says Church.

Church describes the coming together of SWIFT, XBRL US and DTCC, along with the industry, as the Perfect Storm.

“We’re singing from the same song sheet. We’ve taken a united approach. We’re all operating together to move this forward with the focus on solving the problems that the industry is facing,” says Church.

Church points to the global financial crisis of 2008 as the catalyst that brought the alliance together. “We were aligned behind a desire to improve the current system. SWIFT and the DTCC are quite similar organisations. We have similar stakeholders facing similar issues, related to reducing industry cost, increasing transparency and reducing risk so it made sense for us to work together.”

From ideas to practiceThe next step, Church explains,

was to get the broader industry perspective. “We formed a joint working group with the industry. We asked for their views and corporate actions were immediately identified as a problem.”

Church says the industry has given the alliance, also known as Issuer to Investor: Corporate Actions, strong endorsement. “Together with industry support we feel we can crack this. It’s been interesting to see the problem and the genesis coming together. The end result is a solution that is by the industry, for the industry.”

As SWIFT describes itself as a community cooperative, gaining support from its Board was key. “Our Board gave us its full endorsement. They told us, ‘We support you and we want you to focus on this.’”

Church continues: “We had to prove that using XBRL would work for corporate actions. It made

“The problem at hand is that the business of

corporate actions is costing the

industry hundreds of millions, if not billions, because it’s inefficient.”

the XBRL vision

vol 1 • issue 1 • april 2010 | 17

sense to start in the US, but clearly corporate actions are a global problem. So our challenge was to show how XBRL works in practical terms and how it can be applied on an international level.”

Mutually beneficial?Industry bloggers have suggested that the close working relationship developing between SWIFT and XBRL US gives added hope that XBRL will take on the needed additional discipline around taxonomy interoperability, certifications, and tempered change. In return, one blogger says, SWIFT can learn from XBRL as well. “Maybe we’ll see some of the dynamic XBRL approach rubbing off on the SWIFT MT, 15022 and 20022 standards,” the anonymous blogger suggests.

Church seems to agree that the industry bloggers offer a fair assessment of what he refers to as

a mutually beneficial relationship. “This alliance certainly puts us at the centre of shaping developments in the financial standards arena. By partnering with XBRL US we get to work with the industry to define standards, to shape market practice and to develop solutions. It’s where we want to be.”

“The work XBRL does in facilitating the reporting of public company filings, combined with SWIFT’s expertise and presence in the financial sector, will substantially increase automation in activities such as corporate actions, financial disclosure filings and accounting reports,” adds Church.

XBRL? What?Church has an enthusiasm for XBRL that is not shared by all. According to an UK survey of financial professionals, most notably from the accountancy sector, over 50

percent were not familiar with XBRL. So has SWIFT seen resistance among what is undoubtedly a core stakeholder group?

“The way XBRL is being rolled out, we’re certainly seeing greater engagement from the financial sector. However, we do feel XBRL is a good example of how a standard can cross domains¬–from the financial to the accounting domain. We see strength in leveraging the interest among financial professionals, so we link these two communities,” he says.

“As for raising general awareness, we’ve been working with XBRL US for some time, but until recently we’ve kept a relatively low profile. However, with the SEC now flagging up XBRL and mandating its use for filing returns, the profile has received a substantial shot in the arm,” adds Church.

Winners and losersDespite his exuberance for the SWIFT, DTCC and XBRL US alliance, Church is mindful that some stakeholders are going to come to the table more willingly than others.

“The three primary stakeholders are the issuers, the investors and the financial intermediaries, such as market infrastructures, central depositories and brokers, and we do see benefits to all three groups,” Church explains.

For the issuers, Church argues, there will be a period of perhaps unwelcome change as the information-providing end of the industry moves towards the new format of data tagging and capture. But the result is that they’ll be getting the information to the investor community in a more accurate and timely fashion. There are only a couple of hundred fields that need to be tagged for corporate action announcement, having said that, this is probably the group that

the XBRL vision


About SWIFTSWIFT, an international consortium of over 9,000 financial services firms, industry utilities, and their commercial customers stretching across 209 countries, brings significant expertise and long-term experience in standards development, implementation and migration. They also bring their relationship with ISO and the development of ISO 20022, which seeks to bring harmonization across different standards initiatives. SWIFT’s skills complement the skills demonstrated by the XBRL US organization in driving rapid standards development and adoption, and the development of unique functionality that increases the usefulness of the XBRL data tagging technology.

Key facts• 200,000 corporate action events

are announced each year in the US alone.

• The process is almost entirely manual and prone to errors.

• The DTCC processes 5.8 billion corporate actions each year.

• Industry losses on corporate actions worldwide run about $1 billion dollars per year.

needs the most support. The key, we feel, is that we need to get the tools to the issuers that will allow quicker and cheaper automation. For the smaller operators they may choose to work with, or outsource to, an issuer agent.”

Other stakeholders along the information value chain will be more easily persuaded, Church suggests. “The advantages for the financial firms and other investors are tremendous. They receive the information in a standardised and time efficient way. There is a lot less data scrubbing, a lot fewer

errors, and the advantages on the risk management side are obvious. All this adds to an immediate reduction in cost.”

Church adds, “The XBRL tagged data is standardised, transparent and easy to analyse. These organisations can compare and benchmark tagged data in a like-for-like way. As we’ve seen with our DTCC partner, there are natural synergies.”

Spreading the messageStill in its infancy and despite Church’s enthusiastic appetite for the standard, the success or failure of XBRL for corporate actions is unlikely to be called for some time. Church says SWIFT is prepared for the long haul. “There is still a lot of work to be done. We are rolling out our ISO 20022 Corporate Actions messages in November for those customers that are ready. At the

end of the year, we will kick off a pilot program jointly with DTCC. Given our progress to date, we’re certainly hoping that within the next three years we’re going to see a large level of adoption.”

“If you look on a geographical basis, we’ve had a lot of interest in Japan, as well as from the Mainland China exchanges in Shanghai and Shenzhen. Interestingly in China, because the financial markets are at a different level of development than other parts of the world, we don’t see as much legacy in the older technologies. Countries such as China have the opportunity to leapfrog

a range of technologies and to be leaders in implementing standards like XBRL,” adds Church.

But even among the more mature financial markets – Western Europe, Australia, Canada, South Africa – Church highlights that interest levels are high.

On a sectoral basis, Church believes the development of the XBRL standard has resulted in a linking of the financial and accounting standards. “We’re seeing these two sectors reaching across the corridor and adopting XBRL as their lingua franca. There is a common understanding that we need this standardised language – just as we’ve seen through the expansion of SWIFT – as we build complex and global business transactions.

We’ve seen it happen. SWIFT is a truly global franchise and we’ll be taking this approach to the expansion of XBRL. We need to seed discussions

“Given our progress to date, we’re certainly hoping that within the next three years we’re

going to see a large level of adoption.”

in other countries, and we need to build on our experience in the US and other leading jurisdictions.”

As we bring our conversation to a close, Church remains buoyant. “I spoke of the Perfect Storm. That’s what we have. It’s all these forces coming together around a common industry problem. We think we have a winning formula in SWIFT, DTCC and XBRL US to jump start this program. I am confident we will deliver value to the industry, which will then be replicated across the global financial community.”

the XBRL vision

vol 1 • issue 1 • april 2010 | 19

you may not have heard of XBRL or the semantic web yet, but trust me, you will. while XBRL built its momentum as something that government regulators used in financial reporting, XBRL and the semantic web will become part of and will add significant value to many of your key business processes over the coming years.

The Light BulbPeople ask me all the time about when the light bulb went on over my head and how I came up with the idea which became XBRL. Well, it didn’t quite work that way. Frankly, I don’t know if it ever does really. Maybe it does.

I had spent my entire career as an accountant moving business information, most of the time financial information, from one place to another place, usually in two different business systems, for which I paid good money. Why this task was so difficult was beyond my comprehension. Every business system seemed to have their

own unique approach to getting information in and out; but despite the difficulty and challenges the payoff was good: I could spend more time working out for the triathlons I participated in, rather than work long hours enduring the drudgery of rekeying information into spreadsheets! But it was hard to repeat these process-improvement projects effectively or efficiently. Most business people don’t have the technical skills which I have accumulated over the years. As a result, these process-improvement tasks could be costly in terms of time and money. There was also a limit to the types of processes you could

A s one of those participating in the evolution of XBRL from the beginning, let me explain

why XBRL is both an opportunity for you and your competitors. Let me tell you a little about how XBRL got started, the momentum it has accumulated, how that was generated, and where XBRL is really going, (which may not be where you might think it is going). Standards, such as XBRL, have changed entire industries. We are already seeing the changes XBRL has brought to regulatory and financial reporting. But XBRL is really only the tip of the proverbial iceberg of what is really coming: the Semantic Web.

By Charles Hoffman, Director of Innovative Solutions, UBmatrix Inc, (and credited as “the Father of XBRL”).

XBrL: Coming to A Business proCess neAr you

the XBRL vision


the XBRL vision

attempt to improve economically. Lastly, there were many different ways to solve these problems and there was no standard solution, which was one of the primary contributors to complexity and cost.

In early 1998 when I picked up a book on what XML was (which I had heard of but really did not understand at the time) and read about how several industries were using XML to exchange information there were two distinct things I noticed. The first was that XML was the answer to me getting more time to go on long bike rides. The second was that nowhere in that book was there any mention of the financial reporting industry making use of XML.

No one thought XBRL was a Bad IdeaIt just so happened that a year earlier I had received the AICPA Innovative User of Technology Award for some work I had done in creating what amounted to an intranet packed with information useful to management, for a CPA firm I was with at the time, Knight, Vale & Gregory (now part of RSM McGladrey). To make a long story short, Wayne Harding, who was also a CPA and who nominated me for that award, worked with Great Plains Software (now part of Microsoft). I was telling Wayne about XML and how we needed something like that for financial reporting. He happened to be chairman of the AICPA High Tech Task Force (which really had little to do with high technology, but rather more to do with financial reporting of high tech companies). He invited me to Sedona, Arizona to explain my ideas and show some rudimentary prototypes of XML financial statements I had created to the task force. I did this and two weeks later, Wayne obtained funding from the AICPA to build a

comprehensive prototype to help communicate the idea to some people at the AICPA.

A few months later Wayne Harding, Mark Jewett (an early pioneer in XML, who helped me create pieces of the prototype), and I presented the idea to several people at the AICPA. Everyone thought the idea had considerable merit.

The fact is that in the 10 plus years that I have evangelized about what was to eventually become XBRL, no one has ever really thought XBRL was a bad idea. There were some differences of opinion when it came to how the technology should work and other details, but basically, pretty much everyone agreed we were doing ‘the obvious’ thing that needed to happen.

The First Risk TakersOne of the first early risk takers to try and make the technology work in a real business system, was a member of the U.S. FFIEC (Federal Financial Institutions Examinations Council), the U.S. Federal Deposit Insurance Corporation (FDIC). The FDIC was not the only regulator working to leverage XBRL, but they made a lot of information about their project public. So lots of others around the world were watching what the FDIC was doing and whether they succeeded in

their endeavor to use XBRL to collect information from financial institutions, rather than continue with their proprietary exchange formats. By all measures, what the FDIC achieved was extremely successful and they published information about the benefits they derived from using XBRL.

The success of the FDIC and other projects such as the Dutch Association of Water Boards, brought others to the XBRL table. In fact, some government organizations announced government-wide projects to save money exchanging information with their constituents, using XBRL. First was the Netherlands, then Australia, New Zealand, Singapore and others. Central banks such as the Bank of Spain, the Bank of Belgium and the Bank of France became interested in XBRL. Tax agencies such as the National Tax Agency of Japan began using XBRL.

From the start, everyone promoting XBRL knew that the crown jewel of implementations for XBRL was the U.S. Securities and Exchange Commission (SEC). The SEC had learned about XBRL early and was tracking its progress. They watched the progress of the FDIC project with interest. In 2005, Chairman of the SEC, Christopher Cox, thought that XBRL could help improve their EDGAR public company information database and decided to give XBRL a try. Again making a much longer story short, the SEC ultimately mandated that every public company filing with the SEC, had to submit XBRL, phased in over a three year period. The SEC’s interest was the most ambitious and challenging implementation of XBRL to date. The SEC’s interest in XBRL sparked others’ interest in XBRL.

“Standards like XBRL are fairly

boring, but can have a very significant impact on things

that you may never have thought of.”

vol 1 • issue 1 • april 2010 | 21

“In the XBRL US Labs, we have

the ability to work hands-

on, share ideas, take things

apart and consider different

approaches – and together

we find the best solution.”

L. A. Orloff,XBRL US LabsResearch Fellow

Manager, Product Development, DTCC

Research and development is critical to advancing and implementing world-class standards like XBRL. XBRL US Labs leverages the XBRL US platform, methodologies and people through commissioned research partnerships.

Who are XBRL US Labs research partners?Partners come from business, nonprofit or government circles, providing funding, fellowships and internships. The Depository Trust & Clearing Corporation (DTCC) and SWIFT have provided leadership and support for a collaborative, stakeholder-driven initiative to standardize corporate actions documents using XBRL.

They’re helping to build a more transparent market, by creating technology that is aligned with global XBRL and ISO 20022 standards that is free and accessible to all. SWIFT and DTCC benefit from knowledge transfer gained from their employees working in the Labs as research fellows.

What kind of commissioned work is taken on?XBRL US Labs considers proposals for research topics that address the quality of taxonomies and the harmonization of XBRL with other XML standards. Why become a XBRL US Labs research partner?

Participate in research with a qualified, proven team of XBRL experts.•Acquire knowledge and expertise through direct participation of your staff.•Gain high visibility and association with the specific research •

For more information about XBRL US Labs, visit http://xbrl.us/labs or contact [email protected].

Collaborate and Make Open Standards Happen.Become an XBRL US Labs Research Partner.

labs.indd 1 3/31/2010 3:08:16 PM


Evolution of XBRL, Regulator and Financial Reporting are only a ‘Beachhead’But those with the most interest in XBRL thus far were regulators. Is that what XBRL is, a standard filing format for regulators? Each of the regulators requiring XBRL caused thousands and sometimes millions of businesses to be exposed to XBRL. For example, an early XBRL filer to the SEC was United Technologies Corporation. Their use of XBRL for SEC filings helped them better understand what XBRL could do, so they started using XBRL for other things within their organization. They found, for example, ways to leverage XBRL to improve both their external and internal reporting processes.

Another effect of SEC adoption

is the implementation of XBRL within software products by vendors, big ones, such as Oracle, SAP and IBM, as well as others supporting the generating of those filings in XBRL. Also smaller startups, who had been struggling to create a market, now had their market.

The regulators, who were early adopters of XBRL, made significant investments figuring out how to make XBRL work well, the pieces of XBRL which would be needed, best practices for XBRL’s use, technical infrastructure required, and other things necessary to make using XBRL effective and efficient. All the pieces needed to make XBRL economical for businesses in general were falling into place, a lot of this because of the early risks

taken, resulting in investment by government regulators.

At the same time, more and more business users are realizing that XBRL is more than a standard data exchange format for providing financial information to regulators; it is much, much more. The ability of XBRL as an information exchange standard is only one by-product of XBRL’s real role as a global standard approach to modeling business semantics. These early uses of XBRL for regulatory reporting helped to see the true value of XBRL as part of the Semantic Web.

And as financial reporting was blazing an XBRL trail, people began realizing that the two middle letters of XBRL, ‘BR’ stood for Business Reporting. Financial reporting was only the beginning.

the XBRL vision

vol 1 • issue 1 • april 2010 | 23

Charles Hoffman, a certified public accountant, is credited as being the Father of XBRL. He is author of the book XBRL for Dummies (Wiley) where he shares his 10+ years of insights gained from working with and learning about XBRL with business readers. [After graduating from Pacific Lutheran University in 1982, he began his accounting career as an auditor for what was then Price Waterhouse. Charlie worked in both public accounting and in industry as a financial officer for 15 years.] In 1997, Charlie was recipient of the AICPA Innovative User of Technology Award and was named one of the 100 influential people in the accounting profession by Accounting Technology magazine. In 2006, he received the AICPA Special Recognition Award for his pioneering role in the development of XBRL. Currently, Charlie is the Director of Innovative Solutions for UBmatrix Inc, and maintains a blog about XBRL at http://xbrl.squarespace.com.

Financial Reporting Blazing Trails on the Semantic WebThe financial reporting industry began standardizing their metadata in the 1970’s, long before the Web or the Semantic Web were even glimmers in Tim Berners-Lee’s eyes. At that time there were something like 80 different sets of financial reporting standards being used around the world. International Financial Reporting Standards (IFRS) was created to better share financial information in a world economy that was becoming more global in nature. Today, most countries have already started using IFRS or converging their local financial reporting standards with IFRS.

IFRS and XBRL were a match made in heaven from the beginning: IFRS providing the semantic metadata, XBRL providing the way to get a

computer to understand and use that semantic metadata.

XBRL has rightly been called one of the most successful Semantic Web metadata formats. The SEC’s implementation of XBRL and their requiring IFRS to be used to file with the SEC, is changing financial reporting. The paper-based locally created financial reporting rules are giving way to the globally agreed upon IFRS, using the globally agreed upon XBRL syntax, enabling the creation of one global capital market.

Remember, it is XBRL, for ‘Business Reporting’. There are lots of other business domains, which will duplicate what is being achieved by financial reporting and the work of the U.S. SEC and other government regulators who have been experimenting and evaluating XBRL. Many others are also realizing benefits such as those realized and published by the FDIC. That is one reason XBRL has been easy to justify.

Boring Standards that have a Big ImpactStandards like XBRL are fairly boring, but can have a very significant impact on things that you may never have thought of. Consider the shipping container and how that standard impacted not only shipping, but how ships were constructed, where ports were located and the improved efficiency of the entire transportation network including rail and trucking. Or consider the Universal Product Code (UPC) and how a simple barcode impacted the retail market, saving money annually and impacting the entire retail supply chain.

More recently and more closely related to technology, consider how the standard JPEG

digital photo format impacted photography or how the MPEG standard impacted the music industry. In late February, the Apple iTunes store celebrated its 10 billionth download of songs. Apple in the music business? Who would have thought.

And I won’t even get into standards such as the PC, TCP/IP, HTML, HTTP, XML, and the many other technical acronyms which enabled the creation of the global network we now call the Web and will call the Semantic Web, and how all that is rewriting how business gets done. It is not really important to understand how all these technical things work. We are living the impact every day. And we are not done yet.

We will know when XBRL has succeeded because you will stop hearing about it. It will silently exist, deeply hidden within your business systems, serving the need of our 21st century global economy. That day is quickly approaching.

the XBRL vision


How did you personally get involved in becoming an XBRL US Labs Research Fellow?

LA: Having a background in Corporate Actions and ISO messaging, I joined as a subject matter expert to help create the XBRL corporate actions taxonomy.

When did you first start working in the Lab?

LA: I started in February 2009.

What is DTCC’s role in the financial service industry and what is your role at DTCC?

LA: The Depository Trust Company, or DTC, a subsidiary of DTCC, is the U.S. central securities depository which clears and settles the vast majority of trades in

A teChniCAL perspeCtive on CorporAte ACtions

a conversation with dTcc’s La orloff, manager, product development, who spent a great deal of time working in the XBRL us Lab and was named as the first XBRL us Lab corporate action Research Fellow, and david hands, director, product development at dTcc talk about their experiences working with XBRL us Lab on the XBRL taxonomy for corporate actions.

U.S. securities. Therefore, DTCC plays an integral role in providing market efficiency to the U.S. financial services industry. As the primary registered holder of U.S. securities, acting on behalf of banks and broker/dealers, DTC has the responsibility to process corporate actions announced by publicly-held companies. Currently, DTCC is undergoing a Corporate Action System Reengineering initiative to further enhance our processing capabilities. An integral part of this initiative is to move away from proprietary data files and communicate to clients based upon ISO global standardized data messaging. I work as an analyst to develop the business data model, from which we will generate ISO messaging within this initiative. We are using the same model to develop the XBRL Corporate Actions Taxonomy.

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when the financial services industry agrees to retire ISO 15022. Unlike ISO 15022, ISO 20022 is a business-model-based standard process for the development of messages for the international financial services industry that can support different messaging syntaxes, including XML.

How did you map XBRL to an electronic messaging standard and how did that differ from mapping XBRL to US GAAP? Tell us more about the corporate actions taxonomy and how it differs from US GAAP?

LA: The two taxonomies are different with regard to size and structure. However, the interesting point is that the XBRL corporate action taxonomy started from a data messaging base that has already been created and used by the financial services industry throughout the globe. Add in some additional data elements that are specific to DTC and the U.S. market and we end up with a comprehensive list of data elements, and their relationship with each other, that we needed to apply to XBRL.

Going back to the question, the Corporate Action taxonomy is composed of roughly 200 elements; however, it is complex in hierarchy to facilitate easy navigation for the issuer. It has built-in multiple entry points. Depending upon how the user responds to queries related to the entry points:

(i) Corporate Action Event Type (e.g. merger, dividend) (ii) which country is the security listed in(iii) what type of security it is (e.g. Equity, bond) and lastly (iv) whether the security holder must make elections to receive a consideration

How long have you been at DTCC?

LA: 7 years. I worked in the Corporate Action IT division, Derivatives Product management and now Corporate Action Product Management.

Approximately how many hours per week do you spend at the Lab?

LA: It varies. The doors are always open. Almost 24/5 with my California-based colleagues. At the beginning, when we had to think it out, model and create a proof of concept, I spent every day in the lab for 2 months solid. Now I would say, I average 1-3 days a week as necessary. There is flexibility.

What has your experience been like working in the Labs office with the research and development team at XBRL US?

LA: It is an excellent research and development space. The Corporate Actions Taxonomy has been a challenging and interesting task. What has really helped is to have the ability to come to the lab and work hands on – come up with a good idea, share that idea, sometimes take things apart or consider a different approach, all to arrive at the best solution. It has always been a productive, collaborative dialogue, an exchange of ideas, a process of discoveries, and helps us lay the groundwork for further possibilities, beyond data processing.

What is the XBRL US workbench that you use to build the taxonomy and what kind of tools do you use in your development, e.g., software for taxonomy building?

LA: We use the taxonomy management tool, the same one

that was used for GAAP. We also use other commercially available tools.

Can you explain ISO messaging?

David: With the new platform for corporate actions, we are implementing the ISO 20022 standard’s Corporate Actions messages to communicate announcements, receive elections and send payments messages with our participants and clients.

What is the ISO messaging standard and how did it evolve?

David: The International Organization for Standardization (ISO) coordinates the development of global standards for a diverse range of products using specific ‘technical committees’. Since May 2009, there have been 208 technical committees covering more than 18,000 standards, working with 161 national standards bodies. For example, the financial services industry operates under Technical Committee 68 (TC68). The first iteration of interbank messaging standards for corporate actions was issued in 1984 under the standard known as ISO 7775, followed by ISO 15022 in 1998. In January 2010, SWIFT, in its official ISO role as Registration Authority (RA) for the ISO 20022 standard, released the first version of the corporate actions messages in the ISO 20022 standard. Over the next few years, the ISO 15022 and ISO 20022 standards will co-exist, until a point is reached

the XBRL effect

“XBRL US Labs is an excellent research

and development space.”


David: Data can be parsed out of XBRL instance documents, or converted on the fly and imported as an ISO message. As both ISO 20022 and ISO 15022 need to co-exist for a period of time, they share the fundamental data elements, structure and usage (as defined by National Market Practice Groups, as well as a single global group), therefore, I would expect the financial community will be able to understand and consume either the ISO 20022 or XBRL versions.

Will they have to adapt their systems to accommodate it?

David: To some degree yes, but it really depends on the organization, and it will not involve anything more than adding another ISO standard data feed. Over the years, the financial community has developed a global standard, following ISO and country-specific market practices for data exchange in the Corporate Actions process. As I mentioned, we formed a taxonomy based on this standard, and incorporated it with XBRL flexibility, to provide usability and easy access/transformation of the text passages into a structured form. This was all achieved by means of simple document data tagging, thus enabling the reach to the issuer community, and ultimately connecting us all through speaking the same language.

What do you anticipate happening when the taxonomy goes out for public review? Is it important that others contribute their expertise during the public review?

LA: The taxonomy will reside in a repository and will be viewable via the taxonomy review tool, available on the XBRL US website and on the

David Hands, Director, Product Development, DTCC

The user will only see the elements that are appropriate for a specific scenario. On average there will only be 20 – 40 elements per event. Issuers will be guided through to the particular event scenario and presented with the list of elements that applies. Depending on the software method used, data can be either tagged in the source document, dragged and tagged into the template, or used to populate the template. This is then reviewed, validated and filed.

Will issuers be able to use the same software that they use for US GAAP reporting? Are there tools on the marketplace now that they can use?

LA: Yes. We are working with several software vendors. To name a few: XBRL Cloud, Clarity, Fujitsu.

How can the taxonomy be used to create an ISO message and who uses the ISO message?

David: Both the taxonomy and ISO messages are XML based. The Corporate Action taxonomy includes ISO message elements and associated logic. In addition, a style sheet (XLT) is publicly available to execute message conversion (rearrange elements) from an XBRL instance to an ISO 20022 Corporate Action Notification Message, in a matter of seconds.

ISO messaging, in the current version ISO 15022, is used widely by banks, brokers, central securities depositories, data vendors and the like, throughout the globe to communicate corporate action events and other information.

How will intermediaries and investors be able to use the XBRL data produced?

LA Orloff, Manager, Product Development, DTCC & XBRL US Lab Corporate Action Research Fellow

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joint DTCC/SWIFT/XBRL US web page created for this initiative which we call ‘Issue to Investor’. We will also have a version of an XBRL creation tool available so that users can experiment with actually tagging a document. The public comment period is usually 3 months, and comments about the taxonomy can be submitted online. These comments are then reviewed by the XBRL US Project team.

Who has provided input to the taxonomy so far?

LA: Many standards and market practice organizations have provided valuable input indirectly through discussions on the DTCC and data model and the ISO messaging standards: SWIFT of course, the U.S. National Market Practice Group (ISITC), SIFMA-AMF and others. Ultimately, it is absolutely essential to get input from every party: issuers, intermediaries, investors, as well as data vendors, software vendors, regulators, and advisors.

TAXONOMY EXTENSIONS:Is it important to make extensions available to issuers? How important is it that the taxonomy has a support and maintenance program? How would you anticipate it changing/evolving over time? What kind of extensions might issuers create?

LA: Absolutely. One of the beautiful things about XBRL is that it is able to self evolve, refine itself through its extensibility and model structural flexibility in a very short period of time. The support and maintenance program is essential to keep enriching the taxonomy, adapting and responding to industry changes. I think issuers will use extensions

for footnotes, as well as additional information they would like the shareholders to receive when making an investment decision, or anything that needs to be directly communicated to the shareholder.

How would these extensions be used to improve the taxonomy?

LA: Over time, extensions may become elements enriching the taxonomy, as well as ISO 20022, for example making it a communications and analytics tool and not simply the information required for processing through intermediaries.

Why use XBRL? Why not just XML?

LA: A problem can be solved in many ways. The trick is to find the most effective solution for everyone. XML is a leap from positional file reporting that is still used in automated processing. In flat file records, a computer recognizes data elements based on where they are located in the record, and then uses the mapping logic in the program to understand it. Any modification requires invasive surgery to the system with coding and testing on both sides of the communication. XML provides a solution by having a schema – a context map with most of the logic outside the code. It is a good solution, however there is still dependency on the context – it matters where the data is located in the file. XBRL is a completely revolutionary approach that is ‘context independent’. Context is applied to data – not data to context. Thus it does not matter where it is located in the file. You simply point to the data element, ‘attach’ the context and a computer can read and process it.

the XBRL effect


the XBrL CAse study - AgL resourCesXBRL has provided greater peace of mind and transparency to the reporting process at agL Resources. James anderson, manager, Financial Reporting, agL Resources, talks to XBRLglobal about their experience as an early adopter and the resulting benefits the company already enjoys, as well as the opportunities for the future.

James Anderson, Manager, Financial Reporting, AGL Resources

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vol 1 • issue 1 • april 2010 | 29

thorough analysis of each financial statement – with an eye on any potential US GAAP convergence with IFRS and determined this was the right time to change any line item descriptions on our financial statements, so that those line items were as close to the taxonomies as possible. We then identified the taxonomy extensions that were required. Our peer group hadn’t done much research (although this has changed a great deal since 2007); however, our involvement in the XBRL US organization did provide an avenue to share ‘war’ stories, and see how others were accomplishing their objectives.

Bottom line, we determined that the size of our company (our market capitalization didn’t

exceed the initial $5 billion for phase 1 filers) should not preclude us from getting started with planning our interactive reporting. Our voluntary filings have been a nice luxury as we prepared for mandatory filings. It allowed us to work out the kinks before the pressure of mandatory rules kicked in.

Also ensuring that we had adequate validation tools was extremely important. Acceptable tools and procedures not only added to our review of our data, but affords our Controller and CFO comfort with our submissions as well. We utilize Excel renderings and a ‘viewer’ that allows us to see the interactive data in a similar format that would be shown on the SEC’s website.

AGL Resources’execution timeline:

• Feb. - May 2007: XBRL project planning & training

• August 2007: Joined SEC’s Voluntary Filing Program

• September 2007: 2nd Qtr. 2007 financials furnished via XBRL (83 days after quarter-end & 44 days after Form 10-Q)

• November 2007: 3rd Qtr. 2007 financials furnished via XBRL (47 days after quarter-end & 15 days after Form 10-Q)

• December 2007: Joined XBRL US Voluntary Filing Program Team

• February 2008: Fiscal 2007 financials furnished via XBRL (43 days after year-end & 6 days after Form 10-K)

• May, Aug. & Oct. 2008: 2008 interim financials furnished via XBRL (avg. 31 days after quarter-end & concurrent with Form 10-Q)

• Oct. 2008 & Feb. 2009: Along with financials - footnotes submitted with block text

• September 2009: Early adopted interactive reporting rule

• June 2010: Level 1 tagging required for Phase 2 filers

• June 2011: Levels 2 – 4 tagging required for Phase 2 filers

Why was AGL Resources one of the first movers for the SEC’s Voluntary Filer Program for using XBRL for US GAAP Reporting?We have always felt it to be beneficial to be ahead of the curve when it comes to external reporting initiatives and felt it wasn’t a matter of ‘if’, but ‘when’ would it be mandatory. Additionally, getting the learning curve behind us well in advance of our first mandatory submission was great for our peace of mind, as we ensure our compliance with the SEC’s rule. This allowed us ample time to communicate to our senior leadership and auditors about our project plan and to get all stakeholders onboard.

During our planning, back in 2007, we went through a very

the XBRL effect


We expected the first filing would take the longest, with the most amount of preparation. Beginning in September 2007, our first XBRL submission – was submitted 44 days after the filing of our Form 10-Q. Our second XBRL submission in November 2007 occurred about 2 weeks after the filing of our 3rd Qtr Form 10-Q; and subsequently all of our interim submissions in 2008, 2009 and 2010 were done concurrent or on the same day as our Forms 10-Q /10-K filing. So from six weeks after our HTML filing, to two weeks, to concurrent – each subsequent XBRL submission was faster than the last. Through our repetitive efforts, a more efficient submission schedule evolved.

Have there been any long term advantages for AGL Resources? That is still an incomplete answer. We are looking forward to the

SEC’s expanded use of interactive reporting as it pertains to the proxy. These expanded uses will continue to broaden the reach of XBRL within the investment, analyst and corporate users. Additionally, as more companies get their disclosures on file, it will allow more historical and comparability uses by the

investment community. At AGL Resources, as we plan for levels 2 – 4 tagging, which is required in June 2011, we don’t want those tagging procedures to be a bolt-on initiative to our existing ledger system. This is expected to result in more efficient reporting efforts.

Does AGL Resources manage this process internally or outsource? What have been the advantages and disadvantages? What external resources were most useful to you and why?We do all HTML and XBRL SEC filings internally. In 2002, we decided to bring the HTML conversion and filing tasks in-house. This was done primarily for three reasons. Firstly, we are saving approximately $100,000 annually (2003 prices) in filing fees, compared to less than $3,000 in software renewal fees. Secondly, and probably more importantly, we have gained ‘control’ of the steps and are definitely able to implement last minute disclosure changes more efficiently. Finally, it has required that we own the details and not outsource the ‘how-to’ component. We can speak much more effectively about the mechanics. Accordingly, when we decided to join the

“We have found advantages in doing the vast majority of

the work in-house.”

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vol 1 • issue 1 • april 2010 | 31

as we implemented our interactive reporting initiatives. Additionally, this hasn’t resulted in any different types of talent needing to be requested when filling job openings. However, we are still determining our next steps when the next levels of tagging become mandatory. It isn’t clear if we will need more headcount – perhaps even a dedicated person tasked with XBRL compliance.

Have you seen or will you be using XBRL for your General Ledger reporting? Have you found any other internal processes that could see value out of utilizing XBRL? Have you seen the value of bringing together AGL Resources’ global offices by implementing XBRL? We haven’t used XBRL for general ledger reporting. Going forward, as discussed earlier, and as we continue our planning for the remaining tagging levels, we do expect our interactive reporting to become more integrated with our systems. I have discussed XBRL with some of our other departments, such as the treasury and investor relations, who can more effectively pull our historical data into various modeling spreadsheets. This will eliminate a lot of manual effort. The conversation continues….

How has the level of support for XBRL GAAP Reporting grown in the last couple of years? As more companies start filing, I think its benefits will become more apparent. It will allow for more comparability both by analysts and investors. Additionally, it will become more ‘mainstream’ and I predict will replace HTML as the method that the SEC currently accepts information from registrants.

voluntary filer’s program in 2007, it was a natural extension of our existing core responsibilities to perform the interactive reporting in-house. The same advantages for HTML apply to XBRL.

Last year, prior to our early adoption of the interactive reporting rule, we discussed our plans with PricewaterhouseCoopers (PWC) – our auditors – and they indicated their preference for involvement with our interactive reporting, which is a courtesy review.

Lessons learnt at AGL Resources through the process? What have you seen as the advantages / disadvantages as compared to managing the process internally?For us, the old adage, ‘practice makes perfect’ certainly has held true. We continue to work through enhancements with our procedures. Incorporating interactive reporting within your

quarterly reporting checklist does take some adjustments. We continue to keep our CFO, Controller and auditors informed. As described above, we have found advantages in doing the vast majority of the work in-house. We haven’t stopped our efforts to engage our industry on the benefits of XBRL, which we see as a way to broaden our understanding of the ways to expand the use of this reporting tool and its use by the investment community. In the last two years, along with our work with XBRL US, we have participated in American Gas Association and National Investor Relations Institute forums.

How has XBRL changed the way AGL Resources reporting is structured. More resources, less resources, different resources?We have not added any additional headcount over the last three years

the XBRL effect


XBRL US is the standards organization that built the US GAAP Taxonomy by bringing together accountants, standards organizations, technologists, regulators, and analysts to create an industrial-strength taxonomy and the tools to analyze public company XBRL filings, including a common set of rules to identify and correct over 6,000 potential inconsistencies in public company XBRL filings.

We analyzed hundreds of XBRL filings and uncovered thousands of errors related to the use of the US GAAP Taxonomy. Now you can run this same set of rules automatically against your XBRL financials to identify and correct potential issues before you send them to the SEC. It identifies potential problems such as incorrect signs, missing concepts or concepts used inconsistently with the XBRL US GAAP Taxonomy. XBRL Consistency Suite provides a roadmap on how to best use the XBRL US GAAP Taxonomy so that you create consistent, high-quality XBRL data. Software that performs SEC Edgar Filing Manual validation will be included in the Suite. The XBRL Consistency Suite also includes analytical tools that can be used before you begin developing your XBRL documents to provide industry best practice:

Identify concepts used and extensions created by your peers by accessing a database of all SEC •submissions in XBRLLeverage pre-created extensions for recent accounting standard changes made after the 2009 •Release of the XBRL US GAAP Taxonomy

To learn more, visit http://csuite.xbrl.us or contact us at [email protected].

Identify and correct thousands of potential problems in XBRL–formatted financial statements with XBRL Consistency Suite.

Identify and correct...P Data inconsistencies

P Incorrect signs + -

P Missing concepts

P Formatting errors

XBRL Consistency. Sweet.

csuite_spread.indd 1 3/31/2010 12:48:25 PM

vol 1 • issue 1 • april 2010 | 33

XBRL US is the standards organization that built the US GAAP Taxonomy by bringing together accountants, standards organizations, technologists, regulators, and analysts to create an industrial-strength taxonomy and the tools to analyze public company XBRL filings, including a common set of rules to identify and correct over 6,000 potential inconsistencies in public company XBRL filings.

We analyzed hundreds of XBRL filings and uncovered thousands of errors related to the use of the US GAAP Taxonomy. Now you can run this same set of rules automatically against your XBRL financials to identify and correct potential issues before you send them to the SEC. It identifies potential problems such as incorrect signs, missing concepts or concepts used inconsistently with the XBRL US GAAP Taxonomy. XBRL Consistency Suite provides a roadmap on how to best use the XBRL US GAAP Taxonomy so that you create consistent, high-quality XBRL data. Software that performs SEC Edgar Filing Manual validation will be included in the Suite. The XBRL Consistency Suite also includes analytical tools that can be used before you begin developing your XBRL documents to provide industry best practice:

Identify concepts used and extensions created by your peers by accessing a database of all SEC •submissions in XBRLLeverage pre-created extensions for recent accounting standard changes made after the 2009 •Release of the XBRL US GAAP Taxonomy

To learn more, visit http://csuite.xbrl.us or contact us at [email protected].

Identify and correct thousands of potential problems in XBRL–formatted financial statements with XBRL Consistency Suite.

Identify and correct...P Data inconsistencies

P Incorrect signs + -

P Missing concepts

P Formatting errors

XBRL Consistency. Sweet.

csuite_spread.indd 1 3/31/2010 12:48:25 PM


impLementing the reCommendAtionsThe uK’s tax and customs authority, hmRc (her majesty’s Revenue & customs) is implementing XBRL, and mark holden, director of hmRc’s carter programme, highlights the rationale and benefit that the organisation is already seeing.

the XBRL effect

vol 1 • issue 1 • april 2010 | 35

I am delighted to be able to contribute this article about the way HMRC is moving forward with

our Corporation Tax online service and XBRL and I thought it might be useful to start with some background to what we are doing, and why.

In 2005, the Government asked Lord Carter of Coles to lead a review into HMRC’s online filing services. Lord Carter was asked to advise on measures that would increase take up of key online services for Self Assessment, VAT, PAYE (Pay As You Earn) and Corporation tax (CT). He was also asked to make recommendations about a timetable for implementation that would be manageable for our customers, but that also realised the benefits of online filing as soon as was practicable. In March 2006 Lord Carter produced his report containing 29 recommendations in total, all of

tremendously proud that we were able to bring this service in early, which was also something that Lord Carter recommended HMRC should do with all new services.

A move to XBRL provides far greater flexibility than exists with the document format our staff have to work with now, which is typically in PDF, online in HTML, or even worse on paper! It is still an essential part of our day to day work that our people are able to read accounts and computations and so we decided to use inline XBRL (iXBRL). This variant of XBRL is ideal for us, because apart from making XBRL readable by humans, it also guarantees that the layout and presentation of the information is preserved so that it looks exactly the same to the author or the person receiving it, regardless of whether it is viewed online, or printed off.

The move away from paper or PDF’s to interactive data using XBRL provides us with some obvious benefits. XBRL is far more flexible than static content and at the moment, if our staff want to analyse or compare data over a number of years or across connected companies, this would invariably involve them inputting considerable time and effort as they review papers or struggle with comparisons on screen with PDF’s. We will be introducing software soon that will allow them to read the iXBRL data on screen and manipulate and annotate that information as they see it on their computer. Once our XBRL

Mark Holden, is the Director of HMRC’s Carter Programme, which has been tasked with implementing the recommendations made in Lord Carter of Coles 2006 report on HMRC’s Online Services

which were accepted by Government. One of the recommendations

made for business tax was that all companies should be required to file their company tax returns online, using XBRL and make payments electronically, for returns due after 31 March 2010. Following consultation we agreed to push back the original deadline to after 31 March 2011 to allow businesses more time to prepare. In January this year, new legislation came into force which means that for accounting periods that ended after 31 March 2010, company tax returns must be filed online from 1 April 2011 and the accounts and computations which form part of the return, must use the iXBRL format, and payments made electronically.

HMRC was already working on enhancements to the CT online service that would allow us to receive

accounts and computations in XBRL, rather than the more cumbersome PDF which was typically used to attach them to the online submission of the return. We successfully introduced our new CT Online filing service in November 2009, on time and within budget. This new service allows companies to file their Company Tax Returns using iXBRL for their accounts and computations. At this point in time, companies can still choose to send their accounts and computations by attaching PDF’s but we are now working hard to encourage companies to try this service as soon as they can, rather than wait until the last minute. I am

the XBRL effect

“A move to XBRL provides far greater flexibility than exists with the document

format our staff have to work with now,...”


data starts to build up, we will be able to perform all those analytical tasks with relative ease, and to a far greater extent than we can by hand. This has obvious benefits by way of HMRC staff being able to focus their minds on higher value activity and of course is a much better use of our resources, but it also means that we will be able to make more accurate interventions with companies, that will save not only HMRC, but also the company, time and money.

For many companies and professionals, iXBRL was something of an unknown quantity and understandably they had reservations and concerns about how they might cope with the changes they were facing.

We have worked very closely with software developers and there are already some products on the market that can deliver the return in a fully iXBRL compliant way, but we

know that many developers plan to bring new products to market in the coming months and that will mean that companies and professionals alike have a range of options

available to them, so that they can select the best solution for their circumstances. Just as importantly though, this means that we are able to reassure our customers that they do not have to worry about iXBRL because the software will do the work for them. We have also introduced free HMRC software in the form of a downloadable

application that can be used by companies with less complex affairs, to send their company tax return to us in the correct format, and again, customers that use this software,

don’t have to worry about iXBRL.Another of Lord Carter’s

recommendations was that HMRC should work with Companies House to provide a joint filing facility. In September 2009 both organisations issued a joint statement about this to reinforce their commitment (see www.hmrc.gov.uk/ct/ct-online/joint-filing-statement.htm) and we

the XBRL effect

“We recognised early on that many of the country’s largest companies would have

particular needs and that we would have to adopt a different strategy to make sure we

gave them the support they wanted.”

vol 1 • issue 1 • april 2010 | 37

have agreed that we will both adopt the same iXBRL format so that the accounts prepared for HMRC will also be acceptable to Companies House. The HMRC Corporation Tax online service will be extended later this year so that it can be used to submit accounts to both organisations and more details about that will be published on our website in due course.

We have also worked with representative groups and professional bodies and this work has meant that we have been able to address concerns, answer questions and provide reassurance as we move forward together towards April 2011. It would be wrong to suggest that it’s all been plain sailing of course, but we do have a very open and honest relationship and I take a great deal of pride in the way that we are able to discuss things in that sort of environment and then work towards addressing the issues we have to deal

with. This work is now paying real dividends because we have been able to provide reassurance on a number of key issues, not least that for two years following April 2011 we will take a sympathetic view of anyone who has made a reasonable attempt to fulfill their obligations, and it’s progress like this that encourages continued support for our task.

We recognised early on that many of the country’s largest companies would have particular needs and that we would have to adopt a different strategy to make sure we gave them the support they wanted. This is partly because those companies usually have their own in-house or bespoke software solutions and this wouldn’t be something that would be addressed by commercially available software products. There are other factors of course, such as group accounts or how multi-nationals with a UK presence are affected. Over

the last few months, we have hosted a series of events up and down the country designed to help large businesses. We have been able to advise companies about many of the things they should be thinking about, from how to tag XBRL components to what changes they may have to make to their internal processes so that the various different departments involved in the preparation of a Company Tax Return are all working together. We are fortunate in HMRC to have a large business service and the customer relationship managers there provide an excellent way for us to continue to support large businesses and handle their questions on an ongoing basis.

It’s not just about speaking to professionals and other representatives though. We have also worked hard to make sure that everyone who needs to know is aware of the changes that are coming. In August last year, we wrote to nearly half a million companies to tell them about the changes, and we also wrote to nearly 50,000 agents. We wrote to those companies and agents again recently and we have updated the guidance and information on our website extensively over the last six months or so. It is very important to us that people get the key messages early, so that they have enough time to prepare for the changes and we plan to do some research later in the year to make sure that we are succeeding in that task!

I do hope that you have found this article interesting and that you can see that despite the challenges, we are committed to help and support our customers in this journey. Further information about the changes and what they mean for companies can be found on our website at www.hmrc.gov.uk/ct/switch-online.htm

the XBRL effect


XBrL At A CrossroAdthe XBRL atlas | Europe

Global adoption of XBRL is at a crossroad. The speed of adoption of XBRL has slowed

and XBRL has reached a threshold, beyond which incremental adoption gains won’t help anymore. The benefits of XBRL need to be driven home across the globe to affect widespread adoption in a short period of time. One theory is that for this to happen we either need a strong pull from the end-users or consumers while a second theory is that one reason for the slow-down in adoption is the tendency to re-invent XBRL and how it is implemented in each market anew. Currently, there are more than 130 implementations of XBRL around the globe and they vary significantly in terms of domain of business, maturity, complexity and depth of adoption. While some implementations are truly “in- production” others are only at a pilot stage. Also, some implementations are based on small taxonomies with a few hundred elements, while others straddle several areas of accounting and reporting, requiring their project staff to maintain large and complex taxonomies. However, with the exception of a few implementations (which I will discuss later), most XBRL projects around the globe, interestingly, have one commonality: the consumers /users of XBRL and the Instances filed, are by and large, absent.

As the Managing Director of DVFA, an industry association of investment professionals in Germany, and the delegate to XBRL representing EFFAS (the European Federation of Financial Analysts Societies), I have been personally involved with XBRL for more than Ralf Frank, Head of DVFA and Board member of EFFAS

vol 1 • issue 1 • april 2010 | 39

Europe | the XBRL atlas

were to initially offer a “stripped down” version of their large-scale products, it would help them learn the market, position them as leaders and give them a head-start on what will be an enormous opportunity in just a few years.

Without this kind of software, it will be hard for us to see any strong pull from the user community for a long time to come. However, let’s not mix up the symptoms with the root

cause. My first theory is that this kind of software is not available, due to the fact that the conceptual design of the majority of XBRL projects around the globe, have not yet engaged users as a necessary ingredient to the success of the project.

Imagine the predominant supply chain in the current XBRL project as an oil exploration company, which is strictly in upstream business: it digs for oil (Instances) and captures the oil in large tanks (data storage). Distribution to users is not part of its business model. An integrated oil company’s business model – the Exxons and BPs of this world – have both operations, upstream and downstream. If applied to XBRL implementations: Instances are collected from filers and made

accessible to users. The majority of XBRL adoptions we know of today, are strictly upstream, N:1-type, implementations. Typically, a group of filers is mandated to file their financials into a central server. End of story. (Regulators keep assuring me that there are users, e.g. compliance analysts, but again: downstream it appears differently.)

There are two noteworthy XBRL implementations, which were designed and put into practice with users in mind: the SEC Mandatory Filing Projects and the Corporate Actions Projects, both of which are US/American adoptions. While I do not have any data on the use by investment professionals of Instances from the SEC Mandatory Filing Program, I am aware that the materiality of the filings is sufficient, in terms of ‘universe of companies’ and ‘underlying taxonomy’. In conjunction with the Corporate Actions project, (a partnership between The Depository Trust & Clearing Corporation, SWIFT and XBRL US), we see the kernel of a family of investor-oriented XBRL applications emerge, financials being ’bread-and-butter‘ data for investors and corporate action information being the call to attention.

Thinking of these two projects leads me straight to my second theory. In a global economy, one would assume that there isn’t a large difference between markets of a comparable size or in cultural proximity. This per-se gives us reason to assume that statutory filing in, say, India is sufficiently comparable to statutory filing in the Netherlands. The number and size of companies, as well as the dominant industries, may differ, the regulatory requirements may vary in scope or detail; but the underlying supply chain design will be comparatively

eight years – for obvious reasons! Investors, financial analysts, rating and credit analysts are all heavy consumers of companies’ financial statements. Many of these consumer groups, which are the constituents of both DVFA and EFFAS, share the perception that financial and business reporting urgently needs to overcome the paper paradigm (called so by Bob Eccles and Mike Krzus in “One Report”) and move into an Internet-based era that is digital, easy to use etc. It is no surprise to find potential users of XBRL become very enthusiastic, once they are shown what XBRL can really do. However, it must be remembered that professionals in financial markets are also heavy users of data applications, such as Bloomberg, ThomsonReuters, Compustat or FactSet. They are sufficiently well-served already and would expect XBRL to be a ready-to-use technology. So, what is stopping them from using XBRL? Here’s a hint: try to count the number of off-the-shelf, out-of-the-box XBRL software packages for users that integrate with omnipresent Microsoft Excel spreadsheets and come at a price of say $ 350 — max. You could count the number of such applications with the fingers on one hand!

Though I understand business models of software companies, I am also aware that selling individual software bundles to investment professionals is not exactly a money-spinning business, unless you sell to a mass market, which might never be the case with the XBRL user-market. Software providers in the marketplace today would be well-served investigating the opportunities with XBRL, which holds tremendous promise as XBRL implementations like US GAAP reporting move forward. Even if they

“..the conceptual design of the

majority of XBRL projects around the globe, have not yet engaged users as a

necessary ingredient to the success of the

project.”


the XBRL atlas | Europe

similar. Moreover, global capital and the financial markets are highly integrated. They typically follow a Western, Anglosaxon-oriented way of disclosure, reporting and investment or credit analysis. Investment professionals around the globe may come from very different cultural backgrounds, but what they typically share is a common set of approaches to the valuation of companies, and certainly a common set of tools. This is not to say that investment professionals around the globe are all alike. Rather, you would expect to find many more similarities in approaching company valuation between a fundamentally oriented equity investor in Brazil and the US, than you can expect to find between a quantitative analyst and a hedge fund manager in the same markets. Still, there is a more or less globally accepted way of analysing

investments. It is quantitative, it is based on financial modelling and it consumes plenty of data.

Let me raise a contentious proposition (which some distinguished readers might reject immediately): If the dominant culture

in financial markets is Anglosaxon and the US is one of the largest, (if not the largest) capital market in the world – then why should we strive to have different XBRL implementations in the other regions of the world? Why should we decide to take the long way home, invent our own XBRL supply chain, go through the cumbersome

process of hosting large groups of accounting experts, technicians, programmers and stakeholder representatives? Shouldn’t we be looking at customising the SEC Mandatory Filing Project’s design into the European, Latin American

or Asian markets? Shouldn’t we be customising the Corporate Actions project to fit other markets and link them all together globally?

Capitalising on the steep learning curve made in the US marketplace in customising processes, applications and using the well developed IFRS taxonomy, would be my strong suggestion to ensure the rapid expansion of XBRL around the globe. Likewise, if some markets, such as Japan or Spain, have implementations that offer opportunities for customisation in other markets, we should seriously look into the options. XBRL should be harmonized with other data standards and their technological formats. It is not so much XBRL per-se, but the process of standardisation that XBRL can fuel, which ultimately matters.

We have reached a tipping point.The spread of innovation requires a critical mass of users. This in turn typically requires starting with the largest markets and aiming for a spill-over effect into other markets. XBRL adoption is a global movement. Analysts of data have a critical stake in XBRL implementations around the world. It’s time for a call to action to end users to get engaged and to software companies to ensure that tools are available to help them do so.

“XBRL adoption is a global movement. Analysts of data have a critical stake in

XBRL implementations around the world.”

vol 1 • issue 1 • april 2010 | 41

United States | the XBRL atlas

gAining trACtionfrom the eurekA moment, to heAvyweight supporters

From a slow burn to a rapid rise, XBRL is set to take the world by storm. and, in what most will admit is a rare example, the push is coming not from the industry, but from the regulators. XBRLglobal caught up with XBRL innovators, walter hamscher and Jeff naumann to ask how it all started, what it’s doing, and where it’s heading.


the XBRL atlas | United States

XBRLglobal: Creating and implementing a global standard is no mean feat. When did XBRL have its eureka moment?

Walter Hamscher (WH): Frustration is the mother of invention and, back in 1990, I was lamenting that the only source of financial data coming from the SEC was via EDGAR, and it was all in text. I had a team working on artificial intelligence programmes and they were successful to a degree at extracting data from text. But it was becoming increasingly apparent that what we really wanted was for companies to publish reports as data in the first place. We also realised that unless we had the AICPA (the American Institute of Certified Public Accountants), regulators, companies and analysts on board getting agreement on a standard language would be impossible and our project would go nowhere.

Then in 1999 I heard, quite by accident, that the AICPA had started this project and that Charlie Hoffman was involved. I was astounded because they had already managed to get some of the parties to the table that we’d been eyeing in the early 1990s. This piqued my interest and I started working on the standard that year. By April 2000 we had the first specification out. We were, as the phrase went, “on Internet time.”

XBRLglobal: Outside the hardcore of the development team, how did you start to gain traction in the market?

WH: It’s really important to set XBRL’s development within its historical context. This was the height of the internet bubble and everyone thought that everything was possible. There was an almost unimpeachable faith in technology. With this level of belief and support

we were able to make rapid progress and we quickly followed up the first standard with a revised version.

Things were moving rapidly. At the time Mark Schnitzer said it was going to take about five years for the standard to attract the SEC and about another five years for it to become mandatory. Interestingly, his prediction was remarkably accurate.

XBRLglobal: I’d like to look at those past ten years in more detail. We all know what happened to the internet bubble. So what was it that kept XBRL afloat and moving forward?

WH: The excitement that we generated back in 2000 was really fuelled by the fact that people embraced XBRL. But our challenge was to get past the excitement and take XBRL into real situations. We needed to keep the momentum high

Jeffrey Naumann is assistant director in the Office of Interactive Disclosure at the US Securities and Exchange

Commission. Jeff advises new initiatives related to disclosure, including the implementation of ‘interactive data’ in SEC filings. Prior to joining the SEC, he worked for the American Institute of Certified Public Accountants where he was actively involved in the development of XBRL. This included working with the accounting community, software vendors and other companies on the development of the technology specification and managing the development of U.S. GAAP financial reporting taxonomies.

XBrL – from those in the know …

Walter Hamscher is responsible for the specification, design and testing of the SEC filings that use XBRL taxonomies.

He is a former Chairman of the XBRL International Steering Committee, where he led and assisted with XBRL planning, design, execution and implementation. Walter was a taxonomy architect on the XBRL US project to develop a US GAAP taxonomy, and was responsible for quality control in the COREP (Common Reporting) taxonomies project of the Committee of European Banking Supervisors (CEBS) and is the architect of its multidimensional structure.

vol 1 • issue 1 • april 2010 | 43


and to get it out into the international arena. So we launched projects in places where it was simply easier to

get things done. Singapore is a prime example. You’re able to get leaders in a room and they can take action, especially in areas of technology. So we had some early successes in places like Singapore, Hong Kong, Australia, and Japan and this created an international momentum.

Then we had someone like SEC Chairman, Christopher Cox, who came along as a visionary and who had a bigger plan for what financial

reporting should look like. Luckily XBRL fitted into Chairman Cox’s vision.

At the same time, we’d gathered

a lot of evidence from overseas projects that XBRL was a good idea and had the right level of support. So, it was this combination of factors – the quality of the technology and these early advocates – that moved us forward.Jeff Naumann (JN): Cox certainly took the initiative, but even before him, Chairman Donaldson had recognised the potential.

The SEC could see these

successes around the world and realise that you could take a market standard and deploy it in a variety of market conditions, and that there were already specifications in place. You didn’t have to build it from the ground up. It was very appealing.

WH: I’d support that. The level of traction we saw in Asia and Europe meant we had some excellent advocates for the standard. The Bank of Spain is a great example. These were leaders and advocates who didn’t simply come along for the ride, they actively engaged and joined us. This is a really important thing to understand. What we were seeing were people in leadership positions who had a vision into which XBRL could fit. The focus was never on XBRL as a standard. The momentum was driven by XBRL as a solution. All of the leaders – the visionaries

“You don’t have to look too far ahead to see a sizeable expansion in the use of

XBRL just from the rules already adopted by the SEC.”


– that we worked with, had been working on a bigger project into which XBRL offered a solution.

XBRLglobal: Looking at XBRL from a technical standpoint. Why do you think it has gained traction so rapidly?

WH: When I look back – and I look at other standards that have been less widely adopted, or have failed to gain traction – the difference is that this didn’t start off as a language for regulators. It wasn’t mandated. It was collaboration, a partnership; it was about seeing the language as a solution to the kind of real problems that people were facing.

Then once things started moving forward, we obviously saw it take hold in some important areas. The banking regulators have been key in driving this forward. They saw the quality of the data and it really spoke to the likes of the FDIC [Federal Deposit Insurance Corporation].

XBRLglobal: What impact, if any has the global economic crisis had?

WH: Ironically, I think it has awakened XBRL’s competitors in the standards arena to the value of an international technical standard for reporting.

JN: Regulators in the US and Europe will be doing more. In terms of data focus, there’s a growing awareness of the role that technology standards play in enabling data management and decision making.


XBRLglobal: How flexible is it? Is XBRL designed to be adapted by different users, or does it risk losing its global compatibility if users start to tinker with it?

WH: It’s an interesting balance. XBRL already has several layers of vocabulary, but the fundamental issue remains that, if a regulator in Mongolia begins publishing XBRL, you need to know that a programmer in South America could open that document and load it into their system. You need to maintain this base layer of compatibility when you’re building a global standard.

XBRLglobal: What, if anything, have you learned from your detractors?

JN: We don’t get many detractors and I tend to think that those who shy away from it do so because they don’t fully understand it. So education is a key factor. XBRL is going to grow both through interest from the industry in the efficiencies it offers, and clearly via regulators mandating that companies have to use it for certain core business processes.

XBRLglobal: And looking ahead …

JN: You don’t have to look too far ahead to see a sizeable expansion in the use of XBRL just from the rules already adopted by the SEC. We’re still in the early stages of our implementation. However, we’ll quickly go from 500 companies to over 10,000 companies all using XBRL, and also add all mutual funds and credit rating agencies. This expansion is going to raise the bar substantially. You’re also seeing a great deal more XBRL appearing on the internet. It enhances HTML, and we’re going to see more web-orientated applications that will expose it to ever more people.

“I tend to think that those who shy away from it do so because they don’t fully understand it. So education is a

key factor.”

vol 1 • issue 1 • april 2010 | 45


how XBrL wAs CreAted And how it is evoLvingit took ten years of gestation before an XBRL taxonomy was ready to survive the real-world reporting requirements of the u.s. capital market, but now it’s the law. over 12,000 public companies will soon be submitting their financial information to the u.s. regulatory agency (the sec) as computer-readable XBRL data.

A s the public database of U.S. and global business information grows,

it becomes rich content for application development – from analytic software capable of bird’s eye and ant’s eye views, to methods of building web pages with both HTML and XBRL to accommodate human and machine readers. Not even the proud developers of the data standard for business information can predict where XBRL goes from here – any more than the early developers

from theory to A gLoBAL reALityBy sue childs, svp Business development and marketing, edgaR online



allowing the document to be accessed and redistributed through multiple applications without manually re-entering. It was a CPA, Charles Hoffman, who realized that XML could revolutionize financial statements, transforming them from frozen documents into an interactive database. The information could then be shared online, automatically recognized and used by other computer systems -regardless of the system that was used to generate a report! Just as impressive, the information could always be tracked back to its source. This degree of detail and transparency was unprecedented.

Hoffman convinced the AICPA to support further development and

of HTML could have envisioned the robust, multimedia, globally connected semantic World Wide Web of today.

As a major developer of XBRL, EDGAR Online offers an inside perspective of how the theory of XBRL became a reality, and therefore how it is likely to evolve in the near future.

At the core of XBRL is the taxonomy, a dictionary of accounting terms. Each term is associated with a clear definition that everyone can see and that accountants agree on. The theory was that each term would have its own computer code, similar to a ‘bar code’, which could be tagged onto the text or numbers in a financial report, therefore making the tagged data computer readable. If a company didn’t find the exact tag they needed for a particular item in their own business report, they could extend the list by adding a new term and definition. Others could see the tag and choose to use it as well. The ability to extend the taxonomy is why the data standard was called XBRL, for eXtensible Business Reporting Language.

The reason XBRL was developedXBRL started with a dedicated volunteer group, consisting mainly of accountants. They weren’t thinking of federal or global regulators, they were thinking of how to end the nightmare of cutting and pasting, so that various office systems could communicate.

By the 1980s, hundreds of software applications had sprung up to address specific business operations. But each

system worked in isolation, in the accounting department or the inventory department, or the human resources department, or the investor relations department. None of the systems could share the data they used, or the reports they produced. All the information they created was ‘frozen’ in a document or on the screen. Any other department that wanted to use the data would have to start from the beginning, and re-key selected data.

The problem was not unique to the financial industry and a solution was emerging called XML (extensible markup language), which used ‘tags’ to identify each piece of information in a document,

vol 1 • issue 1 • april 2010 | 47


the charter members were inspired by the challenge of turning theory into a reality: What if a piece of business information, once entered into a computer anywhere, never needed to be retyped as it moved through the business supply chain?

As Deborah Doane, a vice president at EDGAR Online, describes “the initial effort of the charter members of the XBRL International consortium to create the necessary taxonomy, was brainstorming an initial list

of about 500 tags. These were terms used by the three most common financial reports: Income Statement, Balance Sheet and Statement of Cash Flows.”

To test the taxonomy, EDGAR Online’s development team applied the tags to approximately 1,000 actual financial statements that businesses had filed with the SEC and which were available in the public EDGAR database. The results were an eye opener. So many gaping holes were discovered in the preliminary

taxonomy, that the group changed its development process.

The group started again, this time by identifying the terms most commonly used by this representative group of filers, and honing the definitions of each. This required both an analysis of the common terms (everyone reports revenue or cost of goods sold or receivables) along with the need for terms that only one company would use (such as Xbox or iPhone).

The group started with commercial and industrial companies, (the largest segment of the capital market), but they soon realized that the tags often weren’t appropriate for other industry sectors. Banks, for example, don’t have revenue, they might have interest income, or certificate of deposit returns. Savings and Loan companies are different again from commercial banks. More terms were needed for other types of companies, such as real estate or oil and gas.

“While XBRL development continued in the US, it was Asia and Europe that first

embraced the data standard.”

Sue Childs, SVP Business Development and Marketing, EDGAR Online



This was a lesson in patience, tolerance and collaboration, that could only be fueled by idealism and obsession on everyone’s part. There was no financial reward, little prestige and few promotions to be gained from working on something most bosses didn’t understand.

EDGAR Online donated the intellectual property of the new taxonomy to the not-for-profit consortium, and it remains an open standard. But in the process, the company realized a new business opportunity. Rather than wait a decade for the global financial community to adopt the standard, the company took the huge SEC database of historical and new business reports and translated them into XBRL, offering the value-added business information and online applications for financial analysis, powered by interactive data.

Various iterations of the taxonomy were released, for use by the growing number of pioneering public companies who participated in the SEC’s voluntary filing program. Meanwhile, the XBRL organization was growing in international membership and as a result, XBRL US split off to focus on a US GAAP taxonomy. Other countries and regions worked on their own, while XBRL International continued to promote worldwide acceptance - and to make sure everyone’s taxonomies kept to a global standard. Unless XBRL was a universal language, all this effort would lead back to the start point, with yet another system that could only communicate with itself.

But while XBRL development continued in the US, it was Asia and Europe that first embraced the data standard. For China and Japan it was a way to get around difficult language problems and

attract western capital investment. Countries in the European Union developed a broad array of government-wide and cross-border applications. By adding XBRL tags to their financial reports, national banks, multinational corporations and private companies could easily and inexpensively share consistently structured XBRL data online.

By the time XBRL was ready for testing by the SEC, it had grown to more than 15,000 terms. The list of tags now accommodates the reporting needs of public companies, whatever size, whatever industry sector, and whatever unique story they need to disclose.

Ready for actionNo one outside the XBRL community understood what the release of the 2009 taxonomy represented in terms of human dedication – they only understood that they now had to use it to comply with the new SEC reporting rules.

As expected, the majority of the first wave filers (approximately 500 of the largest public companies) chose to use an outside resource to

translate their financial reports into XBRL tagged data, for submission the SEC. Most companies who chose to tag their own XBRL reports tended to be companies already heavily involved in the technology, or who had already developed internal expertise during the SEC’s 5-year voluntary trial period. (Companies can still file voluntarily, before they are required to do so under the phased-in mandate.)

The major vendors that can help companies prepare XBRL versions of their reports include the likes of EDGAR Online, Rivet Software, Clarity and others. Companies that want to purchase XBRL software and learn how to manually tag their own reports can explore Fujitsu, Rivet, and EDGARizer. A complete list of vendors and solutions is maintained on the US XBRL website: http://xbrl.us/vendors/Pages/default-expand.aspx

Going forward, the taxonomy is being expanded to handle not just the financial portion of business reports, but the detailed information found in the Notes of Annual and Quarterly reports (10-Ks and 10-Qs).

As companies become more fluent in XBRL, and more software applications are developed by the marketplace, the prediction is that it will be used for internal reporting, not just for external reporting.

The expectation is that managers will begin to see the added value provided by XBRL data, in terms of speed, accuracy, cost and its ability to communicate online across companies’ various silos, departments, software platforms and geographical locations (just like the web). XBRL will become the ‘killer app’ for all types of business reporting – in line with the original vision behind XBRL.

“As companies become more

fluent in XBRL, and more software

applications are developed by the marketplace, the prediction is that it will be used for internal reporting,

not just for external reporting.”

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