The Next Technology Revolution XML XBRL by sus16053

VIEWS: 11 PAGES: 88

									 The Next Technology Revolution
     XML            XBRL

Neal Hannon and Saeed Roohani       Rhode Island Society of
 XBRL Educational Resource Center      Certified Public
       At Bryant College                Accountants
  XBRL Education Co-Chair                May 17, 2001
       E-Mail: xbrl@bryant.edu
        Phone: 401.232.6195                                   1
     Today’s Objectives
• Overview of XML & XBRL
• Show you how this technology makes doing E-
  Business:
  – Faster
  – Cheaper
  – Better
• Conclusion


                                                2
Find the best solution to connect the nine points
   together with no more than four straight lines
       without lifting your writing instrument.
      What
assumptions
are you making?
If you do not assume that you cannot extend your
 lines beyond the imaginary square formed by the
    box the puzzle becomes easier to solve.
          Henry Dudeney
was born 144 years ago – 10th April 1857

                Dudeney is best known for his
     publications of mathematical problems and pastimes,
    some of which provoked serious mathematical research
“Everything
“that can be invented
“has been invented.”


           Charles H. Duell
           Commissioner of U.S. Office of Patents,
               urging President William McKinley
                       to abolish his office, 1899


                                                     7
Don’t assume that the lines must pass
  through the center of the dots.




                                        8
Don’t assume that the line
      must be thin.




                             9
Just to prove I can do it with two lines.




                                            10
Don’t assume that the paper must be flat.




                                            11
 If you rip the paper into nine segments,
           you can stack them
and poke your point through all at once.




                                            12
Don’t assume that you cannot
     crease the paper.




                               13
         Don’t assume that
the lines cannot extend beyond
       the edge of the paper.




                                 14
Don’t assume that you
        cannot
    rip the paper.




                        15
Is There A Problem?




                                     16
 From Evansville Courier and Press
           Let’s move up the Value
                   Chain
Transactions   Data   Information   Knowledge   Decisions



Transactions   Data   Information   Knowledge   Decisions



Transactions   Data   Information   Knowledge   Decisions



Transactions   Data   Information   Knowledge   Decisions

                                                            17
Content—without Context
Searching for the word “Mercury” on the Web
can provide search results such as--




                      Hg
                                              18
• 47, 000+ hits, No Help




                           19
                   Evolution to Web Services
                                                     Program the Web
                                 Browse the Web

                                                    Web Services
                  Text Files
                                                      Automation
                                   Web Pages

                 FTP, E-Mail,        Presentation
Innovation




                   Gopher
                  Connectivity
                    TCP/IP            HTML              XML
             Technology                                                20
              XML
XML stands for:
 eXtensible
   Markup
     Language

Universally accepted method of
exchanging information
                                 21
eXtensible Markup Language
• ……is a meta markup language the
  World Wide Web Consortium (W3C)
  considers a universal standard for
  describing both structured data and the
  behavior of applications that process the
  language.



                                              22
         What Is XML?

• ―XML is a
  platform-independent,
  self-describing,
  expandable,
  standard data exchange format




                                  23
XML is Platform Independent
•   Windows
•   Unix
•   Macintosh
•   Mainframe
•   Linux



                              24
    XML is Self-Describing
• Example:
  – <DATE>July 26, 1998</DATE>
• Describes the information, not the
  presentation
• Format neutral



                                       25
      XML is Expandable
• Whereas HTML has a fixed set of tags
  – <H1>, <B>, <PRE>
• XML lets you create your own tags
  – <sugary-substance>
  – <Shakespearean-character>
  – <cash-equivalent>



                                         26
                 How does it work?
          • XML gives meaning to information through
            the use of tags
          <Customer>
           <Name>Saeed Roohani</Name>
           <Company>Bryant College<Company>
           <Title>Chair, Accounting</Title>
           <Age>29</Age>
          </Customer>
Caution.. …Just because something is <tagged>.. Does not mean it is accurate?
                                                                                27
         The XML Puzzle
                             Industry Specific
               XML             Vocabularies
             Document
                             Company Specific
 Core                          Vocabulary
Schema
             Transformatio
                   n
                 Tools




                                                 28
How XML Works
                How XML Works




   Improves the way companies -- and applications -- share information
               Enjoys strong industry and vendor support
                                                                         29
         What is ‘XML’?
• What XML is Not
  – Not a religion.
  – Not the solution to all world problems.
  – Not a solution for all electronic commerce
    problems.
  – Not a solution to all legal-technology
    problems.
• XML is a Tool
  – XML is a Really Cool (Powerful) Tool!
  – Like all tools, XML can be used wisely and
    unwisely.
                                                 30
    Why is XML so Important?
• Portable
• Vendor neutral
• Readable data format
• More flexible and easier to use than EDI
• All major software products are becoming
  ―XML‖ enabled
• Defacto standards for data exchange
• Enabling new levels of interoperability



                                             31
              XML
• Widely expected to reduce cost of
  publishing to the Net by as much as
  50%.

• And by next year …

                  Gartner Group prediction
 70% of all B2B transactions executed on
 the Web will be done using XML.

                                             32
  Who defines the tags?
• Tags are defined by industry consortiums
• Each industry‘s standard tags are commonly
  referred to as a taxonomy




                                               33
“Content in Context” (Industry-specific)
    Auto Industry             <CAR-MODEL>

Chemical Industry               <SYMBOL>

    Publishing or
      Mythology                  <GOD>

   Music Industry               <RECORD-
                                 LABEL>
       Aerospace              <PROGRAM>

      Astronomy                <PLANET>

                                            34
Who’s Building Taxonomies?
Accounting   Advertising Architecture
Automotive Banking         Communication
Economics    Education     E-Commerce
EDI          ERP           Financial
Healthcare   HR            Insurance
Legal        Music         News
Publishing   Real Estate   Retail
Science      Software      Supply Chain
                                           35
Defines Tags
               36
XBRL International is gaining strength
• XBRL activities occurring in—
   –   United States
   –   Canada
   –   Australia
   –   China & Hong Kong
   –   Japan
   –   Malaysia
   –   New Zealand
   –   Singapore
   –   Taiwan
   –   Germany
   –   India
   –   Ireland
   –   Netherlands
   –   Nordic Federation (Denmark, Norway, Sweden)
   –   South Africa
   –   Spain
   –   Switzerland
   –   United Kingdom
• And on a global level through the—
   – International Accounting Standards Council
   – International Press Telecommunications Council
   – International Standards Organization
                                                      37
         XBRL International is gaining
                  strength
•   On a Global level through                   •   On a Country Level:
    the—
     –   International Accounting Standards          –   United States
         Council                                     –   Canada
     –   International Press                         –   Australia
         Telecommunications Council                  –   China & Hong Kong
     –   International Standards Organization        –   Japan
                                                     –   Malaysia
                                                     –   New Zealand
                                                     –   Singapore
                                                     –   Taiwan
                                                     –   Germany
                                                     –   India
                                                     –   Ireland
                                                     –   Netherlands
                                                     –   Nordic Federation (Denmark,
                                                         Norway, Sweden)
                                                     –   South Africa
                                                     –   Spain
                                                     –   Switzerland
                                                     –   United Kingdom
                                                                                       38
How we are organized – US Jurisdictional
Working Group        Chair

Communications       Christy Reichhelm (Microsoft)
Domain               Sergio de la Fe (KPMG)
Education            Neal Hannon (IMA, Bryant College)
                     Jenia Gorfunkel (S&P)
Liaison              Zach Coffin (KPMG)
                     Liv Watson (Edgar Online Inc)
Specification        David Vun Kannon (KPMG)
                     Luther Hampton (e-Numerate)
Strategy             Louis Matherne (AICPA)
                     Mike Willis (PwC)
Tools                Eric E. Cohen (PwC)
Web site             Geni Whitehouse (Navision)
Process              Mike Willis (PWC)
Object               Gary Gannon                         39
         XBRL Impact
 "The explosive growth of the Internet
         is not only changing the way
    companies conduct their business,

    it also promises to forever alter the
        way they communicate business
                          performance.‖
- CFO Magazine, February 2000
                                            40
          XBRL Documents
•   XBRL for Financial Statements
•   XBRL for General Ledger
•   XBRL for Journal Entry Reporting
•   XBRL for Credit Reporting
•   XBRL for Performance Press Releases
•   XBRL for Risk Reporting
•   XBRL for Regulatory Filings
•   XBRL for Tax Filings
•   XBRL for Assurance Schedules
•   XBRL for Authoritative Literature
•   XBRL for ―Business‖ Reporting
                                          41
Who‘s Embracing XML now?
• Software developers
  Using XML as the core technology for new products

• Database developers
  Building XML support into their products.

• Industry groups
  Deciding how information should be shared.

• Organizations
  Investigating how to tie their inter and intra company processes
  together.




                                                                     42
                  XBRL Support
―I would like to see you develop valuation models that result
   in consistent, comparable and fair values of assets and
   liabilities. I would like to see you hone specific, but plain
   English definitions for the types of information you believe
   should be included in public disclosure. I would like to
  see you take your XBRL project a step further,
  providing account classifications for companies in
  common industries. In short, I challenge you to turn all
  of this data into meaningful information for investors.‖

- Arthur Levitt, Chairman, U.S. Securities & Exchange Commission
   October 24, 2000, at the Fall Council of the AICPA (Las Vegas, Nevada)


                                                                            43
• XML for Financial Reporting
• Enables a dramatic improvement in the processing
  of financial reports
• XBRL documents can be—
   –   Prepared efficiently
   –   Exchanged reliably
   –   Published more easily
   –   Analyzed quickly
   –   Retrieved by investors simply
       to enable smarter investments


                                                     44
                                              Benefits




• XBRL is:
  – NOT a new accounting standards but enhances
    the distribution and usability of existing
    financial statement information
  – Enabler and an extension for relational
    database functionality for all financial
    statement information



                                                   45
      Problems XBRL Addresses
• Ineffective communication to
  investors
• Inefficient aggregation and analysis
• Inefficient creation of financial
  statements


                                         46
 Why XBRL ?
 Enable business reporting
  that leverages the Internet &
  XML
 Effective access and
  analysis of business reports
 Improve corporate
  communications with
  stakeholders
                                  47
          Process Benefits:     Who benefits


  Lowering Financial Reporting Cost
 • Today‘s external reporting processes    Printed
                                          Financials
    – Rework and delay
    – Ad hoc and non repeatable           Regulatory
    – No path forward                      Filings



Accounting                                Web Site
  System


Explanatory                                 Tax
   Text                                    Return


Third Party                                Trade
Information                                Filings
                                                       48
                               Who benefits
        Process Benefits:
Lowering Financial Reporting Cost
 • Common interchange format and storage is good    Printed
   information management practice                 Financials

    – Reduces redundancies & discrepancies
    – Repeatable processes using tools             Regulatory
                                                    Filings
    – A platform for continuous reporting

Accounting                                         Web Site
  System
                            XBRL
Explanatory               Documents                  Tax
   Text                                             Return


Third Party                                         Trade
Information                                         Filings
                                                                49
XBRL: Interoperability & Multiple Uses
                                             US GAAP
  G/L Package              ERP                Financial
                                             Statement
                                             In English
                XBRL
                                             US GAAP
    Custom
   Developed                                 Financial
    Systems                                  Statement
                                              In Dutch

                                              US GAAP
                                     XBRL     Financial
                                             Statement
                                             to the Web


                                             US GAAP
    Other                                    Financial
 Sources of
 Information
                                             Statement
                                              to Print
                XBRL
                                             US GAAP
    Other                 Other              Financial
 Sources of            Sources of            Statement
 Information           Information          to Cell Phone
XBRL: Interoperability & Multiple Uses
  G/L Package              ERP              US GAAP
                                            Financial
                                            Statement
                XBRL
                                                                Investors
    Custom                                                          &
   Developed                                 EDGAR              Creditors
    Systems                                   Filing




                                     XBRL     Tax       XBRL   Government
                                             Filing




    Other                                    Bank                News
 Sources of                                                     Agencies
 Information
                                             Filing
                                                                  And
                                                                 Others
                XBRL

    Other                 Other              Press
 Sources of            Sources of           Release
 Information           Information
Once Every Event is tagged in XBRL…
                                                 IAS
  G/L Package              ERP                Financial
                                             Statement
                                             in German
                XBRL
                                                                    Investors
                                             US GAAP
    Custom                                                              &
   Developed                                  Financial             Creditors
    Systems                                  Statement
                                             In English


                                              French
                                     XBRL       Tax         XBRL   Government
                                               Filing



    Other                                    Canadian                News
 Sources of                                  Banking                Agencies
 Information                                  Filing                  And
                                                                     Others
                XBRL
                                            EDGAR 10k
    Other                 Other
 Sources of            Sources of
                                            line item via
 Information           Information           Cell Phone
     XBRL Working Model: Planned Specifications
                       XBRL for G/L              XBRL for Financial
                       Journal Entry                Statements                  XBRL for
                        Reporting
                                                                              EDGAR Filings



                                          Internal          External                 Investment
Processes         Business
                                         Financial          Financial               and Lending
                 Operations
                                         Reporting          Reporting                  Analysis


               XBRL for Business                              XBRL for
                Event Reporting                              Tax Filings


                                                                            Financial
                                                                            Publishers
                                   Companies                                                 Investors
Participants                                                                and Data
                                                                           Aggregators

                    Trading            Management
                                                        Auditors                Regulators
                    Partners           Accountants


                                                 Software Vendors
XBRL: not a Transaction                            What it is




      Protocol
 • XBRL is merely a format to serialize complex,
   structured financial data: e.g., statements, G/Ls.
 • Therefore, it cannot replace OFX, ebXML,
   ANSI X.12 Trans Set 821, OMG G/L Spec, ...
 • Future message sets in those protocols could
   include XBRL tagged data if they need to send
   financial statements in the message body.
 • XBRL provides a framework and an AICPA
   approved vocabulary that can be extended to
   many other reporting frameworks.
                                                            54
    XBRL: not an
 accounting standard
• Means of communicating
  – Current GAAP
  – Current practice
• Flexible standard
  – Future standards
  – Future general practice
                              55
          XBRL Impact
"Coming down the road are standards like
 XML and XBRL that take data handling
   a major step forward from HTML, the
    current web standard. With these new
   standards, plus those for accounting, it
     will be possible to scan a universe of
        corporate data across the web and
 extract, say, the chairman's report for all
     companies with a certain market cap,
                 EBITDA, and gearing. …
                                               56
XBRL: A Fragment of a Raw Data
     Raw Data in Spreadsheet…

     Company     Financial       Line Item               Label                   Year   Value
                 Statement
     Coca Cola   Balance Sheet   CurrentAssets.Cashand   CurrentAssets.Cashand   1999   1611
     Co.                         CashEquivalents         CashEquivalents

     Coca Cola   Balance Sheet   CurrentAssets.Cashand   CurrentAssets.Cashand   1998   1648
     Co.                         CashEquivalents         CashEquivalents




     Same Raw Data in XML (XBRL) Format

     <group>
     <group type="CurrentAssets.CashandCashEquivalents">
     <item period="1999">$1,611 </item>
     <item period="1998">$1,648 </item>
     </group>



                                                                                                57
58
What software ‗sees‘
is the differentiator
and drives benefits
    (here is an example)


                           59
     Importance of Reporting

“…[W]hat excites the CEO is the ability
 to know what the business is doing at
  any given point in time, react quickly
     to market shifts and competitive
   threats and remain in tight control
 while empowering employees to make
    informed decisions more quickly.

     Year End Earnings Release Call
                    August 10, 1999
                                      John Chambers
                                          Cisco CEO
                                                      ”
                                                          60
                   Best Practice
“ Virtual Close … has, in my
The
 opinion, just as much impact
on a company’s future success
  or lack thereof as the well-
 published e-commerce area.

   Year End Earnings Release Call
                  August 10, 1999
                                    John Chambers
                                        Cisco CEO   ”   61
             XBRL Impact
 • ― … If Europe moves quickly to take up
      these standards, it could give them an
     attractive lead in the race to accessible
       and comparative key data that would
         stimulate investor interest. It would
            undoubtedly spawn a plethora of
      research tools that would be useful to
   both private and professional investors.‖
•
• - Investors Chronicle, August 9, 2000
                                                 62
  XBRL and the Emergence of ‘e-
          Standards’
• E-Standards are fundamental
• HTML is the standard that enabled the web‘s first
  ‗Big Step‘
• XML is the web‘s next ‗Big Step‘
   – Over 200 XML-Based Specifications and Protocols
     exist, including—
      •   RosettaNet – computer company supply chain and trading webs
      •   OBI - Open Buying on the Internet - retail e-commerce
      •   FpML - Financial Products (Derivatives, Swaps, FX)
      •   ACORD XML - Insurance industry information exchange standards
          derived from EDI.
   – UN/CEFAC = EBXML
• XBRL is uniquely focused on financial reporting
                                                                          63
                   Standard .orgs
                             (reporting vs ‘e’)
Accounting / Auditing
     Reporting
                                      ‘e-Business’
   ASB                                W3C
   IASC                               OASIS;UN/CEFAC
   FASB                                T (ebxml)
   IFAC
                                       xml.org
   SEC
   Territory Institutes
                                       RosettaNet
                                       ACORD
CPAs participate / lead in these      What about these?
The range of what is under
development today………...

  HR                                                ―Horizontals‖
                                                   (Infrastructure)
                                                 there are others…..
XBRL is uniquely focused on
  CRM
  Etc.
       business reporting


                                         CHEMX
       RosettaNet




                          ACORD


                                  FpML
                    ANX




   ―Verticals‖ (Industry Supply Chains)
           there are others…….
   XBRL Adds Reporting to E-Commerce

        Tax   Regulators Investors    Creditors     Lenders Website

One                              Aggregators                          One
way                                                                   way



                           BUSINESS
                  ERP           G/L Packages        CRM


                        Transaction Creation
2-way                                                                 2-way

          Suppliers      •Orders        •Orders         Customers
                         •A/P           •A/R
                         •Delivery      •Delivery
                                                                              66
   XBRL Adds Reporting to E-Commerce

        Tax   Regulators Investors    Creditors     Lenders Website

One                              Aggregators                          One
way                                                                   way


                               XBRL
                           BUSINESS
                  ERP    G/L Packages CRM
                   BUSINESS REPORTING

                        Transaction Creation
2-way                                                                 2-way

          Suppliers    (e-)Commerce
                         •Orders
                         •A/P
                                        •Orders
                                        •A/R
                                                        Customers
                         •Delivery      •Delivery
                      OTHER XML INITIATIVES                                   67
                                                           XBRL - What

                    Key XBRL Components

• XBRL / XML Specification (XBRL.org)
   – Global architecture/technology

• XBRL hierarchical vocabulary (jurisdiction/industry)
   – Dictionary of terms by jurisdiction/industry sector


• Style Sheets                        (preparer)

• XBRL enabled tools                  (market)

                                                                    68
       Key to our Success
 Market driven model
  – Start simple, be inclusive
 Broad supply chain participation
 Members support XBRL
 Members do not compete on the ―framework‖
 Build structure & systems to support open
  community & market development


                                              69
Steps in Technology Acceptance


              Acceptance

          Simplification/Tools

               Taxonomy

              Visionaries

                                 70
Financial Institutions—and their Users
  • SMALL BUSINESS provides FINANCIAL
    INSTITUTION with their information in XBRL and
    receives loan approval in less than a day instead of two
    days—or two weeks.

              Average Time for Loan Processing—1.75 days


                 90% + time spent on Mechanics
               Value-added Analysis and Decision-making?                        <10%


 Mechanics                   With => Better
             More Time for AnalysisXBRL? Analysis => Less Risk

                                            Or
 Mechanics Analysis    Mechanics Analysis        Mechanics Analysis   Mechanics Analysis

                  Process more loans in the same amount of time
                                                                                           71
   XBRL Working Model: Supply
      Chain & Beneficiaries
                                              Today
                                        XBRL for Financial
                                           Statements




                              Internal            External            Investment
Processes       Business
                             Financial            Financial          and Lending
               Operations
                             Reporting            Reporting            Analysis




                                                               Financial
                                                               Publishers
                            Companies                                       Investors
Participants                                                   and Data
                                                              Aggregators

                 Trading    Management
                                               Auditors           Regulators
                 Partners   Accountants


                                        Software Vendors
                                                                                        72
Benefits to Today's Users
 • 1. Reduce cost of analyzing and
    reporting financial information
 • 2. Increase speed and efficiency of
    business decisions
 3. Enhance the distribution and access
    of existing financial statement
    information
 4. More readily exchanged
 5. Increase and enhance analysis
                                          73
             Benefits
• 1.Reduce cost of analyzing and
  reporting financial information
• 2. Increase the speed and efficiency of
  business decisions
• 3. Enhance the distribution and usability
  of existing financial statement
  information

                                              74
 Example: Cost Reduction
• International Subsidiaries:
• Large multi-national corporation uses
  XBRL to quickly roll–up, analyze and
  publish the financial statements of
  numerous subsidiaries—
     •   in different countries
     •   with different languages
     •   using different GAAP
     •   on different computer systems

                                          75
             Benefits
• 1. Reduce cost of analyzing and
  reporting financial information
• 2.Increase the speed and
  efficiency of business decisions
• 3. Enhance the distribution and usability
  of existing financial statement
  information

                                              76
Example: Efficient Decisions
• Major mutual fund company feeds
  XBRL-ized information to customers to
  differentiate their funds as more
  objective and reliable investments
• An investor uses XBRL to compare the
  financials for a range of companies—
  – Belonging to different revenue levels
  – Located within an industry sector
  – Along multiple analytical criteria

                                            77
             Benefits
• 1. Reduce cost of analyzing and
  reporting financial information
• 2. Increase the speed and efficiency of
  business decisions
• 3.Enhance the distribution and
  usability of existing financial
  statement information
                                            78
    Example: Credit
• Loan Approval:
  – Small Business provides Bank with their
    financial information in XBRL and receives
    loan approval in 1 minute instead of 2 days
• Credit Approval:
  – Company approves customer credit request
    with automated assessment processes
    facilitated by XBRL
• Line of Credit:
  – Company provides capital markets with
    financial information in XBRL and receives
    expedited line of credit                      79
                                            App to fin rep



XBRL Taxonomies Under Development

  Commercial and Industrial Companies, US GAAP
   - Published
  Federal Departments, US
  Mutual Funds, US
  Financial Institutions, US
  Commercial and Industrial, IASC
  Commercial and Industrial, German GAAP
  Bank Call Reports - FDIC

                                                        80
How Do You Get There?
        Needs Assessment



   Design Solution/Business Plan



      Training & Education



         Implementation

                                   81
               XML Shortcomings?
          Not a replacement for integration
                and middleware tools


                                         Lots of Hype, not a solution
                                                for everything
There are many different standards
         among industries



                                                 Standards still evolving
But, you can‘t wait while the
     standards evolve….



                                                                            82
XBRL Development & Adoption
Additional Education Sources
•   www.xbrl.org - Student Competition
•   web.bryant.edu/xbrl
•   www.ebxml.org
•   www.w3.org; www.xml.org
•   www.rosettanet.org
•   www.ibm.com/developer/xml
•   www.microsoft.com/industry/biztalk




                                         84
       Final Thought……..
Change is not what it used to be…..
Change has become a process; it‘s
become a permanent part of the
external environment




                                      85
             Summary
• FASTER

  – BETTER
     • CHEAPER

• Our profession will have to follow
  technology and record business
  activity in an real-time mode.

                                       86
Concluding Remarks…..




                        87
To download slides……….


http://web.bryant.edu/~xbrl/riscpa.ppt




                                         88

								
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