Digital Financial Reporting

This is yet another iteration of the interactive information hypercube viewer that I keep fiddling with.  See this blog post for information on prior iterations.

This version is a major step forward because it actually works!  You can grab information about this prototype here. Read that overview document to understand what is going on.

Note that this version implements the financial reporting logical model (draft) that the XBRL International Taxonomy Architecture Working Group is working on.  The point of the prototype is to test that logical model so that I can provide input to that group.

I would encourage you to grab the Excel prototype application and check it out.  See that overview page for a link to a ZIP file which contains the prototype. If you fiddle with the application what I am hoping that you see is that the XBRL instance information renders quite nicely and is definitely very readable by humans. The rendering is driven by two things: the XBRL instance/XBRL taxonomy DTS (discoverable taxonomy set) information and logic in the Excel application which takes advantage of the financial reporting logical model.

This works even better than I had anticipated. I always thought the rendering would be 98% of what one might want, the user would have to do 2% of the work to adjust the slicers, rows, and columns.  But, I was able to get 100% of what I wanted automatically.  The roll forward is not quite what I desire but I know how to fix that without too much effort.

Don't be fooled by what might appear as the simplicity of what you see.  This is not a simplistic implementation of XBRL. In fact, it is quite robust. The US GAAP Taxonomy and SEC XBRL reporting can follow this model. The model is simple, not simplistic.  That is the idea: make it simple and easy to use.

I am getting more and more evidence and insight into what an XBRL application for financial reporting can and should look like. I am seeing that it is very possible to hide XBRL in the background.

The XBRL International Taxonomy Architecture Working Group is looking for software vendors to experiment with the financial reporting logical model.  If you are interested, send me an email or contact XBRL International for more information.  This is a great opportunity to not only experiment and learn more about XBRL.

I have had several posts relating to what I call the "interactive information hypercube": here, here, here. The idea of interactive information hypercube grew from prototyping I was doing while testing ideas which I wanted to get into the US GAAP Taxonomy Architecture.  I was successful with many, not as successful with others. Frankly, I learned a great deal from the experience of working on the US GAAP Taxonomy Architecture group. (Go look at the authors of the document, those are XBRL heavyweights!)

I took what I learned from helping to create the US GAAP Taxonomy Architecture and took that to the next level and created what I called XBRLS with another XBRL heavyweight. Those ideas where summarized in the document XBRLS: How a simpler XBRL can be a better XBRL. In that document I called what evolved into the interactive information hypercube idea "neutral format tables".  These have also been referred to as "generic tables" and "general table format" among other things.

For my State Fact Book Prototype I created yet another iteration. This one actually works to a degree. You can get to that prototype from that State Fact Book Prototype link or this is a direct link to the prototype created in Excel. Here is documentation which walks you through the prototype.

Two other influences on this interactive information hypercube is the Interoperable Taxonomy Architecture (ITA) work I am doing with the XBRL International Taxonomy Architecture Working Group toward expressing a logical model for financial reporting. This UML model and mind map of the financial reporting domain are my input to that group.

I came up with the term interactive information hypercube in the following way:

• Interactive came from the SEC. I admit I stole that idea, it is a good one.  The SEC coined the term "interactive data". Heck, like Picasso said, "Good artists copy, great artists steal." But I did not agree with their use of the term data.
• I chose to use the term information rather than data because the hypercube are really about information, not data.  See this white paper Data, Information, Knowledge, and Wisdom to understand the difference.
• The term "cube" is used by the OLAP people, but hypercube is really a better term. A cube is three dimensional whereas a hypercube is n-dimensinal (any number of dimensions). Fundamentally, the flexibility of multidimensional model is what is important.  The ADAPT model and the OLAP Council White Paper. OLAP gets in the way as its focus is on aggregating numbers.  The interactive information hypercube can aggregate, but it does not have to.  Also, the interactive information hypercube handles text.  Most OLAP applications have a very difficult time handing text. In my view this is a limitation of business intelligence tools.

Keep all this in the back of your mind and use your imagination when you have a look at the prototype/demo. This is not a truly functional application, I took some short cuts which are explained in the documentation. I get more and more convinced that this is a good idea the more I fiddle with it.

If you look at a business report, such as a financial report, they are really a bunch of hypercubes strung together.  Here is an example of that I put together in 2007, stringing pivot tables together: PDF of a financial, same financial as Excel pivot tables.

You can achieve this today give the right XBRL taxonomy architecture.  The US GAAP Taxonomy is a big step in that direction but is still a little too inconsistent in the way it is built.  XBRLS provides better discipline in terms of how to structure your XBRL taxonomy.  Given the right architecture, rending seems both easy and it provides the "interactive information", the ability for the consumer to reconfigure the information and have it their way.

Imagine it.  What if there was an iPad application for reading financial statements.  These won't be the static financial statements which are digital paper like HTML or PDF.  I am talking interactive information, XBRL in the background allowing all sorts of interesting things to happen, things no one has seen before.

It is probably just a matter of time before we see something like this.  I hope it is sooner rather than later. The iPad makes its debut in Apple stores tomorrow.

Some say that iPod, iPhone and iPad type applications are going to radically change computing. Maybe it won't be Apple, rather Google's Android will surpass the iPhone. One Google executive says that phones will make personal computer irrelevant.  Or maybe Microsoft Smartphones will catch up.

Or maybe all this will turn out like the Apple Newton, in the dump.  Or maybe Apple learned a lot from its experience with the Newton, that is why the iPod and iPhone are so hot.  Maybe the iPad will change how we interact with computers.

Who knows how things will turn out.  Personally, I am betting on that iPad application for reading financial statements, interactively of course.  I will get an iPad and play with it, see what you can do with it.  I have an iPod Touch and really like it.  I use it as a music player and a way to show people photos and videos I take.  I don't have an iPhone, but have been talking to the people who I know who do have one about their experiences.  Pretty much every one loves it.

I think the bigger screen of the iPad will be a big game changer.  It will be kind of like carrying around a clipboard.  You certainly won't carry it around with you all the time, but I can certainly see the iPads utility.  Maybe it is underpowered.  Maybe the battery will not work long enough.  These are details which will be worked out over time I speculate.

Imagine it.  Everyone connected by the Web, not the current Web but the Semantic Web.  iPads, iPods, iPhones, Androids, Smartphones; maybe a few PCs will still be around.  IFRS used globally.  Financial information in XBRL making it dynamic like a pivot table, rather than static like the legacy paper statements.

All this will make it easier to keep tabs on our investments, on how our governments spend the taxes we pay to them, on how the charitable organizations we contribute to spend our contributions, etc.

I think it is only a matter of time.  What do you think?

This is my next iteration of what I have been calling an interactive information viewer:  Interactive Information Viewer.

(Here are blog posts which discuss and can take you to prior versions of this prototype:  First version, Second version.)

In this most current version I have incorporated many, but not all ideas yet, from this blog post relating to the best ideas for getting the most out of your XBRL architecture.  I guess I started on this idea of what I am now calling an interactive information viewer when I was working on the US GAAP Taxonomy.  I took what I learned from that process, took it further, and came up with XBRLS which is basically a profile of XBRL. Additional ideas came from the COREP taxonomy and from the FINREP taxonomy.  What I called a "neutral format table" had evolved into "interactive information viewer".

Fundamentally, I am stil pursuing the goal of a business user defining a data model (dynamic model where extension is an option, not a static form), articulating information based on that data model, exchanging that information with another business user within an automated process.  There can be zero ambiguity, the semantics need to be understood the same by both those creating and consuming the information, the information needs to be readable by a human and by a computer AND all this needs to be done by business users...no IT department assistance at all.  Clearly this cannot be done unless there is off-the-shelf software on both ends of this exchange and that software needs to be operated by a business user.  But before that software can be built, we need to know what is needed to make all these moving parts work together effectively in order to achieve this goal.

The SEC implementation of XBRL offers a lot of clues as to how to make this work.  It seems to me if the SEC can make this work (i.e. business users filing financial information with the SEC) then I should also be able to get this to work.

The term "interactive information viewer" comes from the following.  First, the SEC used a term "interactive data".  I borrowed from the SEC but changed the use of data to information because XBRL is really more concerned with information than data. (See this blog post for more information on that difference.)  The "viewer" part comes from the notion of the way you look at business information is more how a Microsoft Excel pivot table might work or how a business intelligence tool works.  Basically, there are two things that you gain.  First, the information on the report is not fixed, the user can move it or reconfigure it.  Second, you loose the two dimensional nature of paper meaning that a computer can present things in more than two dimensions.

So in this prototype, imagine you could reconfigure the columns and rows or take a column or row and move it to the "Slice" section in the upper left hand corner.  Again, much like an Excel pivot table or business intelligence application.  There are three things which make Excel pivot tables and current BI applications not do the job here: (1) They don't understand XBRL, (2) They like the aggregate things (i.e. the OLAP piece), (3) They don't handle text well (i.e. they are optimized for numbers, not numbers and text).  These things will be worked out I am pretty sure.

So, an interactive information viewer is configurable in that the consumer of the information can "pivot" things to see them how they desire to see them.  This blog post discusses more of the characteristics of such an application.  Here is a demo/tutorials of one software application which shows you some of the basic ideas here (see the "The Basics of Quantrix Modeler" or the video tutorial on the left side).  Remember, here they are only dealing with numbers; but imagine if you could use numbers or text in the models.

The key here is the XBRL taxonomy.  All this is very, very possible today...but the problem is that every solution is proprietary in that you have to use the data format of those applications.  So, you cannot exchange the data between applications.  If business users can agree on one way to create a taxonomy and if ever software application supported that format, then we would have what we need.  XBRL is capable of doing this, but XBRL "out of the box" is just too flexible, there are too many options. So, we just need to agree on a subset, a profile, of XBRL which is 100% compliant to the XBRL specification.  Then enough software needs to support that profile.

I have created an updated "interactive information viewer" based on a bunch of work I have done trying to understand how to best render XBRL information in general and specifically for financial reporting.  Details of what I am seeing can be found in these three blog entries:

• Thoughts on Rendering (First Installment) 
• Thoughts on Rendering (Second Installment)
• Thoughts on Rendering (Third Installment)

My next step will be to update the comprehensive example which looks a little more like a financial statement to take advantage of the things which I have learned in this little exercise.  These are the test cases I am using to try and pull all these pieces together:

• Metapatterns: http://www.xbrlsite.com/Demos/Metapatterns/2009-03-14/
• Business use cases: http://www.xbrlsite.com/Patterns/2008-04-18/
• Comprehensive example: http://www.xbrlsite.com/examples/ComprehensiveExample/

If anyone has any better ways to get to the right result, I would love to hear from you.

The goal which I am striving toward is to make the following work for XBRL in general and XBRL specifically for financial reporting:

• Business users can do all of this without the IT department getting involved (ease of use)
• Extensibility which works correctly (not forms)
• Rendering which is easy and interactive (not static renderings)
• Does everthing which is needed today plus more (new beneficial features)
• Global, open standard (not proprietary to one software vendor)