ACG 5405Introduction to XBRL

Networked

• What does it mean to be networked?– It means the ability to pass data

between software applications across a network

– It requires standardized communication protocols

– It requires an agreement between the sending & receiving applications

Connectivity

• What is the primary problem with networking/connectivity?– Software applications that do not

understand each other … therefore special interfaces must be designed & maintained, etc.

– And humans have different understandings and views of data and information produced by the applications

Electronic Business

• Electronically exchanging information and linking business processes, individuals and organizations

• Transactions completed more quickly, more efficiently, and more effectively

• Eliminates paper trail (eventually)

Electronic Data Interchange (EDI)

• Computer-Computer• Business Data• Direct processing• Standardized

– ANSI X12• US and Canada

– EDIFACT• International

EDI Components

Electronic Data Interchange Set

XBRL: What is it?

XBRL (Extensible Business Reporting Language) is a royalty-

free, open specification for software that uses XML data

tags to describe financial information for public and private

companies and other organizations. XBRL benefits all

members of the financial information supply chain by

utilizing a standards-based method with which users can

prepare, publish in a variety of formats, exchange and

analyze financial statements and the information they

contain.  The world's leading accounting, financial,

government and software organizations are involved in the

adoption and use of XBRL in the U.S.

What was accounting like before XBRL?

• Accounting Cycle– Journal, Ledger, Trial Balance, Financial

Statements– Debits and Credits

• Text based!• Manual input, manual

interpretation, Re-entry of data for each separate use

XBRL

• X– eXtensible

• B– Business

• R– Reporting

• L– Language

• Vocabulary based on XML– Extensible Markup

Language– Rules for describing

data

Who is behind XBRL

• Securities Exchange Commission– Public filings are currently voluntarily filed in XBRL

format– Mandatory public filings coming soon...– Interactive Data!

• AICPA– Efficiencies to the accounting profession– Re-use of data without manual re-entering

• XBRL International– Non-profit Organization– Creates Standards

• XBRL U.S.– Charged with creating US GAAP taxonomy

XBRL Milestones• April 1998

– XBRL is conceived by Charles Hoffman, a CPA with the firm Knight Vale and Gregory in Tacoma, Washington

• October 1999– AICPA hosts first meeting

• July 2000– Spec 1.0 is released and International organization created

• February 2005– SEC creates voluntary program for reporting XBRL financial data on EDGAR

• September 25th 2006– SEC’s chairman Christopher Cox announces contracts totaling $54 million ... To

• Modernize and Maintain the EDGAR Database to Use Interactive Data• Complete XBRL Code Writing for U.S. GAAP Financial Statements• Create Interactive Data Tools for Investors

• September 2006– XBRL US, the United States jurisdiction of XBRL International, spins off from the XBRL

committee of the AICPA. • September 25th 2007

– SEC’s chairman Christopher Cox announces the completion of all development work on data tags for financial reporting in accordance with U.S. generally accepted accounting principles

• October 9th 2007– SEC’s chairman Christopher Cox announces the creation of a new office within the 74-

year old agency to lead the transformation to interactive financial reporting by public companies

– ... the new office is the agency-wide disclosure modernization program

XML in Business

• What if you need to move information from one business application to another within your organization?

• What if you have data in a number of different databases that you frequently need to integrate, compare, share internally?

• What if you need to share information with trading partners & others outside your organization?

• XML provides the necessary rules, syntax & structure to make it possible!

XML

• How can you appropriately structure information exchanges so that they can be seamless & efficient?– There are 2 parts to the solution:– 1) Metadata – adding data about the data

… data that gives the data more meaning – 2) Agreement on structure of the data

being shared … an agreed upon vocabulary defining the rules the metadata must follow• In addition, the solution must be general

enough to be able to be applied universally!

XML

• Extensible Markup Language• Markup?

– Data being exchanged• Sent from computer-to-computer (intra and inter-

organizationally)

– Defining the data• Enclosing the data with descriptions of what the

data is– <> Tags used to enclose data

• Used to create Vocabularies– Standardized sets of tags (kind of like EDI)– XBRL is one such vocabulary

XML Concepts • Prolog

– the first line of any XML based document– <?xml version="1.0" encoding="UTF-8"?>

• Element– A Tag set (the tag name, its attribute and data)– Root Element

• Contains (or encloses) all the other elements– Parent Element

• Contains other elements– Child Element

• Enclosed by Parent element

• Attributes– used to modify or clarify the data in an element

• <elevation>130</elevation> • <elevation measureUnit = “meter”>130</elevation>

Element Hierarchy

<tourGuide><city>

<cityName>Belmopan</cityName><adminUnit>Cayo</adminUnit><country>Belize</country><population>11100</population><area>5</area><elevation>130</elevation><longitude>88.44</longitude><latitude>17.27</latitude><description>Belmopan is the capital of Belize</description>

<history>Belmopan was established following the devastation of the former capital, Belize City, by Hurricane Hattie in 1965. High ground and open space influenced the choice and ground-breaking began in 1966. By 1970 most government offices and operations had already moved to the new location.

</history></city>

</tourGuide>

Root ElementParent Element

Child Elements

XML Rules

• The first line of an XML document must contain the prologue.

• The main theme of the XML document – the root element - must enclose all the other elements in the document.

• Every element must have an opening tag <> and a closing tag </>

• Elements must be properly nested, that is you close the tag that was opened last – think of tags as using a LIFO convention or more properly a LOFC Last Opened First Closed convention (though it doesn’t have quite the same ring to it).

• Elements can have attributes.– Attribute values are enclosed with “ ” and can have no

spaces.

The XBRL Structure

• Tags– Description of what data is

• <Assets>1000</Assets>

• Attributes– Meta-data (data describing data)

• <Assets bType = “debit”>1000</Assets>

• Relationships– Is something described as <Inventory>

related to <Assets> ?

XBRL – Lets put it all together

• Instance Document– Contain tags describing data

• Schema– Contains the definition of the tags

• LinkBases– Contains relationships between tags

• Taxonomy– Combination of Schemas (defining

elements) and LinkBases (relating elements)

Types of LinkBases

• Presentation– How to organize output

• E.g. what tags make up Current Assets

• Calculation– How related tags are summed (+ or -)

• Definition– Different tag names are related for the same thing

• Inventory and Merchandise Inventory

• Reference– A tag element and the standard reference (FASB) for an

element

• Label– Machine Readable to Human Readable

• CashAndCashEquivalents = Cash and Cash Equivalents

XML Elements

<?xml version="1.0"?>

<Inventory> <InventoryItem>

<Name>Basketball</Name><IdNumber>12345</IdNumber>

<Cost units="USD">12.50</Cost><RetailPrice units="USD">25.00</RetailPrice>

</InventoryItem>

<InventoryItem><Name>Football</Name><IdNumber>23456</IdNumber><Cost units="USD">9.00</Cost><RetailPrice units="USD">18.00</RetailPrice>

</InventoryItem> </Inventory>