Digital Financial Reporting

The Federation of European Accountants (FEE) issued a policy statement on XBRL.  The six page policy statement titled eXtensible Business Reporting Language (XBRL) - The impact on accountants and auditors can be found here on the Web.

The policy statement goes further than anything else that I have seen coming out of the accounting community in saying that accountants are going to have to understand XBRL.  I agree with these statements.  The FEE states

There are two pillars to XBRL: an IT literacy pillar and a technical accounting and auditing pillar.  Organisations wishing to adopt XBRL will need to consider both pillars in establishing their training needs to ensure successful use of XBRL.

The FEE also points out key areas for training for accountants, identifying necessary skills required including:

• Select the appropriate taxonomy and download from the appropriate web page;
• Identify taxonomy elements required for any particular instance;
• Identify when a valid taxonomy extension is required;
• Create valid extensions; and
• Create valid instance documents in line with the appropriate specification or user guide.

If you are an accountant anywhere in the world, particularly if you practice in the area of public accounting, you definitely want to take a look at this policy statement as a clue of what is coming down the road in the world of accounting and financial reporting.

FINREP (FINancial REPorting, see http://www.eurofiling.info/) has published an XBRL architecture which is worth taking a look at if you are a student of XBRL and trying to figure out the best approach to use it.  FINREP, which relates to financial reporting of financial institutions in Europe and uses International Financial Reporting Standards, is published by CEBS (Committee of European Banking Supervisors).

The architecture document can be found here.  If you go to the EUROFILING home page (above) you can find additional information such as explanatory documentation, the draft taxonomy files (note that this is draft version).

CEBS has always been great about transparency of what they are doing, why, and the reasoning that has gone into what they are doing.  The information they publish is intended for those participating in the COREP and FINREP projects, but this information is also very helpful to others who are making use of XBRL who have to grapple with similar issues.  Why reinvent the wheel?  Why not learn from what these regulators are spending vast amounts of resources to figure out?

In particular, this presentation is incredibly helpful. This is a PDF of a 325 page PowerPoint presentation!  I would have hated to sit through that meeting.  But, a tremendous amount of work was put into the slide deck.  The presentation goes into detail about issues such as use of default dimensions, typed dimensions, and other things people don't tend to think about.

The bottom line here is that the FINREP architecture and other information is worth the effort to study.  Other regulators, corporations, and consultants who help these folks can glean massive amounts of useful insight from what FINREP has made available.  This architecture is not applicable to only financial reporting, it is applicable to FINREP in general.  FINREP itself learned a lot from what COREP created.  A next step the FINREP and COREP folks will go through is to reconcile the two different architectures, perhaps resulting in one architecture used for both FINREP and COREP.

Key aspects of the architecture include:

• It breaks a big reporting use case into bite size pieces.  Reports are broken into "Tables".  There are "core" tables and "non-core" or detailed tables.
• XBRL Dimensions are used to express these tables.  The multidimensional model is used consistently, there is no mixing of XBRL Dimensions and non-dimensional XBRL.
• Tuples are not used, rather XBRL Dimensions are used to express complex facts.  (See the presentation if you don't understand this.)  This is consistent with the US GAAP and IFRS taxonomy architectures.
• The architecture addresses the IT need to model data and the business user need to present information well.

I ran across two photos of old, old financial statements which I really got a kick out of and I thought I would share.  Check these out.

I have previously heard people refer to paper based financials as "dead tree format". This takes the cake though. Here is a "dead rock format" financial statement.

Early balance sheet

And here is one of those dead tree formats:

Wachovia National Bank balance sheet

Both of these photos come from Wikipedia

XBRL Site (http://www.xbrlsite.com) is a web site that I maintain to provide additional information about XBRL.  If you have been their, you will know that the web pages were pretty plain.  That is because I don't put a lot of effort into making them look pretty because I was editing the pages in Microsoft Word.

Well, guess what I got for Christmas.  An iMac.  I use it for my photography and video editing.  It also has a web page editor, iWeb.  I figured I would fiddle with that and use that to maintain the XBRLSITE.COM web site.  (By the way, I really like the iMac.  Another reason I got an iMac is the tight "integration" of the iMac, iTunes, my iPod Touch, and things.  I think Apple is creating some really nice hardware and software, wanted to check it out.)

If you have not checked out XBRLSITE.COM you may want to do so.  There is actually more there than what you see on the meager three pages which you see when you go to the site.  Most of the other content is referenced from this blog to that web site.  Plus there is other stuff which I experiment with and don't really link to at all, other than email discussions with others working with XBRL.

By the way...thanks for the iMac Santa!