In This Chapter
Seeing how others are using XBRL
Identifying characteristics of XBRL implementations
XBRL is a powerful tool that businesses can use in many ways, but it’s not an end unto itself. Not all organizations need all the characteristics XBRL has to offer; more to the point, some organizations may target only a subset of XBRL’s characteristics.
One good way to understand the use cases for XBRL is to look at how others are using it. Many different organizations make use of XBRL. We can’t cover all the possible uses in this chapter, but you can use this information to uncover your specific use cases for XBRL.
Gaining Knowledge from XBRL Projects Around the World
Online, you can find three particularly good lists of projects around the world that are making use of XBRL. These lists don’t include every XBRL project, but rather all the projects for which public information exists, many of which are government projects:
XBRL Planet (http://xbrlplanet.org): This site lists information for more than 100 worldwide projects. Many projects are from government organizations that provide detailed information. Regretfully, you don’t find as much information about commercial organizations implementing XBRL, but some information, such as case studies, is available.
XBRL Info Wiki (www.xbrlwiki.info/index.php?title=XBRL_ PROJECTS): Maintained by XBRL Spain, this wiki has a great deal of information about all things XBRL, one of which is a list of projects from around the world. Again, many are projects of various government agencies.
XBRL Around the World Spreadsheet (http://xbrl.org/ BestPractices/WorldWideXBRLProjectsListing-2 0 0 9-07-15. xls): XBRL International created a spreadsheet that contains a listing of XBRL projects around the world.
To avoid having to type these long links, . This takes you to a landing page where you can click the link you need.
In this section, we take a look at how some companies and other organizations are using XBRL.
Wacoal
Wacoal is a Japanese conglomerate that manufactures and sells women’s intimate apparel with revenues of about $1.6 billion annually. The company needed to aggregate operational information from its 36 subsidiaries that operate in 23 different countries using 32 different proprietary business applications. The applications operated on multiple platforms, such as mainframes, minicomputers, UNIX, PCs, and so on, which provided data to the company’s accounting subsystems.
The multiple disparate systems resulted in a significant amount of rekeying of data, which led to inefficient accounting and reporting processes and additional time needed to close the topics. Wacoal wanted to improve these processes and reduce the high costs of developing and maintaining interfaces between these disparate systems.
Wacoal used XBRL to integrate these systems, creating a fully automated process with no manual rekeying. Wacoal used a canonical-based approach to achieve its results. The system is flexible for future integration changes without the need to modify applications. The monthly closing process is two days faster, and real-time processing and reporting of financial data is available daily.
Wacoal accomplished these goals with an estimated savings of two-thirds over the traditional approach (implementing an ERP system). Wacoal also estimated that it took one-sixth of the time to implement the system over the next best alternative.
For more information about this use case, see www.xbrl.org/business/ companies/breathing-new-life-into-old-systems.pdf.
U.S. FD1C
The FDIC currently captures data for about 9,000 banks. The FDIC moved from an electronic system that used an internally developed proprietary information-exchange format to an electronic system that uses XBRL as the information-exchange format. The FDIC wasn’t moving from a paper-based system or a PDF or nontagged electronic system; the FDIC already had structured, tagged data.
The FDIC moved from a proprietary electronic data-exchange format that it internally developed and maintained to a global open-standard format, XBRL. This change helped the FDIC move from proprietary internally developed software to more off-the-shelf software. Not all internally developed software went away; in fact, the FDIC still has a significant amount of internally developed software. However, the amount is less than it would have had to create had the FDIC not used XBRL.
The more software users, the lower the cost per user will be. As a result, moving from proprietary internally developed software to off-the-shelf software can give you a significant savings, if off-the-shelf software meets your needs. For example, Microsoft Word is an off-the-shelf software product; you can go to any computer store and purchase it. The cost of developing Microsoft Word was substantial because the number of supported features is high, but because the number of users is large, the cost per user is low. Imagine if every company had to create its own word-processing application. The cost would be high, and the number of features would likely be lower in order to reduce costs. If off-the-shelf software can meet your needs, the savings can be significant. Open-source software allows users to modify the source code, allowing them to take something that may not quite be what they need and tweak it as needed.
Now banks can submit information once to the Federal Financial Institutions Examination Council (FFIEC) XBRL system, which in turn shares it with FFIEC member agencies, such as the FDIC, Federal Reserve System (FRS), and Office of the Comptroller of the Currency (OCC).
We point out the benefits the FDIC realized from XBRL in Chapter 1. Every national bank in the United States, about 9,000 of them, file today with the FDIC using XBRL. This number will grow to 65,000 financial institutions as the FDIC rolls out the next phases of its project to credit unions, thrifts, and other financial institutions.
Committee of European Banking Supervisors (CEBS)
The Committee of European Banking Supervisors (CEBS) is made up of about 27 regulators from the different European Union countries. The members collect solvency and liquidity information for the financial institutions that they monitor. The members are using IFRS for financial reporting by all financial institutions in Europe (rather than the 27 different sets of financial reporting standards used previously) to collect liquidity information. The members use Basel II for financial institution solvency reporting. CEBS suggests XBRL as the exchange medium for these standard liquidity and solvency data sets. In addition to each country collecting financial institution information within the country, the members of CEBS (the countries) also exchange information among themselves using XBRL. CEBS considered other standards and thought about creating its own standard, but decided to go with the global standard XBRL.
Belgium was first, going live with XBRL in 2006. Spain, France, Germany, Poland, Denmark, Greece, Ireland, Italy, and Luxembourg followed. Other European countries will likely follow suit. XBRL currently has no other alternative, unless each supervisor creates its own solution for exchanging this information.
For more information, see www.eurofiling.info.
Dutch Association of Water Boards
The 27 Dutch Water Boards (Waterschappen) are responsible for local water management in The Netherlands. Their objectives are to protect the land from flooding and drought and ensure proper waste-water treatment. The Water Boards maintain the predetermined water level, dikes, and water ways, monitor water quality, and treat both residential and industrial waste-water. Their reporting requirements are subject to both national and European legislation.
Starting in 2004, the EU, as well as the European Central Bank, require quarterly financial reports, called Economic and Monetary Union (EMU) reporting. Statistics Netherlands (CBS) is chartered to receive and process these reports, as well as for other decentralized government entities (provinces and municipalities). EMU is just one of the 50 reporting duties for the Water Boards. EMU reporting is required from tens of thousands of institutions in Europe; CBS has hundreds of thousands reporting relationships.
The Water Boards needed to implement a new reporting requirement for more transparency on their capital and exact financial status. And even if the reporting was both more frequent and in more detail, the Water Boards wanted a reduction in the reporting burden.
In July 2003, the implementation of XBRL reporting began, using off-the-shelf software that supported XBRL. The project reached out to the main suppliers of financial software in the industry. In April 2004, the first XBRL instances began arriving from reporting entities. The Water Boards’ implementation costs were minimal. The total investment for development, software, training, and mapping were calculated as 10 extra man days and €8.000 Euros (about $12,000). Research in 2006 showed that reporting time decreased by 25 percent for the Water Boards that participated.
It was the first time XBRL was implemented in the public domain and on the receiving side as well as the preparing side of the reporting chain. This implementation is a full-cycle implementation that uses the public Internet as the communication channel for reports.
You can find more information about this project at www.semansys.com/ PDF/XBRL_Case_Water_Boards.pdf.
Dutch SBR Project
The success of the small Dutch Water Boards project (see preceding section) ignited the Dutch government’s interest in using XBRL for, well, everything! The Dutch government expressed the ambition to reduce its total administrative and reporting burden by 25 percent. Many of the major administrative burdens originate from gathering, manipulating, registering, retaining, and providing information.
In spring 2004, under assignment from the Ministries of Justice and Finance, the Dutch Taxonomy Project (NTP) started with the construction of a dictionary of elements (XBRL taxonomy) for the compilation and exchange of annual accounts, tax declarations, and economic statistics on the basis of the open standard XBRL. This financial report domain covers 70 to 80 percent of the entire information exchanged between the government agencies and companies. In the Netherlands, organizations must provide annual accounts to the Chambers of Commerce, the tax filings to the Netherlands Tax and Customs Administration, and the statistics to Statistics Netherlands. So the project focus is on a national (and thus multiagency) taxonomy to report in XBRL.
During the standardization process, analysis of existing legislation resulted in changes resulting in decreases in the amount of elements that companies needed to report. Smaller companies can now use the fiscal elements to create both the fiscal profit filing and the annual accounts because they now use the same definitions.
NTP is now rebranded into SBR. The Dutch SBR collaborates with both the Australian and New Zealand SBR programs. Australian SBR developed a business case in 2007. As a result, the government has provided support and funding for the SBR program. Thirteen Australian, state, and territory government agencies are involved in the delivery of SBR.
In 2009, the SBR program in New Zealand was still in the initial planning stages. The focus is on finalizing the business case, as requested by Cabinet. If the business case receives approval, the goal is to have full implementation by 2012.
For more information, see www.xbrl-ntp.nl/English.
U.S. SEC
Although not the first, one of the key XBRL implementations in the world is the U.S. SEC’s use of XBRL for financial reporting by public companies regulated by that agency. The SEC closely watched the FDIC’s XBRL project (see the earlier “U.S. FDIC” section) and started experimenting with XBRL in 2005 when it instituted a voluntary filing program whereby public companies and the SEC could test XBRL. Eventually, almost 100 companies participated in that voluntary filing program.
The SEC invested $5 million to assist in the creation of the XBRL taxonomy required for a production system, and that taxonomy was built between 2006 and 2008. It also spent $50 million to update systems to make use of XBRL.
Ultimately, the SEC mandated that all public companies it regulates must provide information to the agency in an XBRL format. About 500 of the largest U.S. public companies began reporting by using XBRL in June 2009. Other organizations are being phased in over a three-year period based on a company’s public float.
A public float is a way many regulators determine company listing requirements. It’s similar to market capitalization, which is the stock price times the total number of outstanding shares of stock. Public float removes the shares held by directors and executives, leaving only public investors.
Initially, the XBRL filings are supplemental to the current SGML or HTML filing formats. The SEC has stated that it will eventually drop the legacy formats and require only XBRL filings after it’s sure that its XBRL system works with satisfactory results. Chapter 13 provides more information about the SEC’s XBRL project.
Australian SBR Project
The Australian government has been watching the FDIC and Dutch SBR projects. In 2007, in its SBR Project, the Australian government funded the first phase of a massive project to use XBRL as the standard way to communicate between government and business, between government and consumers, and between governmental entities. The first phase of the project will be for the Australian Tax Office to implement XBRL. The cost savings of this project is projected to be $780 million in Australian dollars (about $650 million U.S.) per year!
The early efforts of the Dutch project, Australia, New Zealand, and Singapore have resulted in these countries working together to create one SBR approach usable by any country.
National Tax Agency of Japan
One of the earliest adopters of XBRL, the National Tax Agency of Japan (NTA) introduced an e-Tax filing system using XBRL 2.0 as the filing format in 2004, using the system for the electronic filing of corporate taxes by businesses in
2005. NTA announced that it would accept XBRL 2.1 filings in September 2008.
Tokyo Stock Exchange
In 2003, the Tokyo Stock Exchange (TSE) began to receive XBRL-based financial statements. TSE provides a database called TDnet that allows its users to browse a database of information via the Web for companies listed on that stock exchange. Over time, more and more data will become available in the XBRL format.
While the TSE was one of the first stock exchanges to make use of XBRL, other stock exchanges are already following suit or plan to do so. The Korean Stock Exchange, the Shenzhen Stock Exchange (China), and the Shanghai Stock Exchange (China) already put systems that make use of XBRL into production. The U.S. NASDAQ has built some prototypes to test XBRL.
Japan Financial Services Agency
Japan’s Financial Services Agency (Japan FSA) launched a system called Electronic Disclosure for Investors’ NETwork (EDINET). The system’s users can browse information using the XBRL format for those companies that it regulates. Japan FSA regulates approximately 4,700 listed companies and 3,200 investment funds.
The MIX MARKET
Microfinance is the practice of providing financial services (credit, insurance, and banking facilities) in small amounts to poorer people, usually in developing countries. In particular, microfinance involves loaning small amounts to entrepreneurs who have no access to credit so that they can establish, operate, or expand a business.
The MIX (Microfinance Information Exchange) is a nonprofit organization created to increase the financial transparency, and therefore accountability, of microfinance organizations. The MIX MARKET is its Web-based information platform that collects information from more than 1,000 such institutions, including their financial data, audited results, and data relating to their social impact (such as the percentage of women borrowers). Microfinance institutions that join make information about their activities public and can compare their performance with that of similar organizations.
The MIX has basically created an SEC EDGAR-type system for the microfi-nance industry by using XBRL and a lot of off-the-shelf software. The MIX did create some proprietary aspects of its system, but using XBRL helped it to significantly reduce the costs of what it was trying to achieve.
Nevada’s state controller’s office
The State of Nevada’s state controller’s office operates a centralized debt-collection system for agencies of the state. That system uses 71 Microsoft Excel workbooks with about 18 sheets each that contain various categories of debt to capture information from the agencies.
The process of using Excel for this function results in data validation issues, internal control issues, issues relating to cutting and pasting information from the 71 individual spreadsheets into a consolidated spreadsheet, and so on. You probably know the drill and may use Excel-similar things for a different type of information.
The state built a prototype that included a centralized data repository in XBRL, a centralized debt collection XBRL taxonomy. The state of Nevada wanted to integrate the XBRL repository with vendors’ payment systems so that one agency isn’t trying to collect on debts when another agency is paying that company for payables owed by the state.
The state is also looking into using XBRL for grant reporting and sub-grant reporting, audit reporting, and other situations where spreadsheets are used. See www.govtech.com/gt/653 427 for more information.
Nevada Department of Agriculture
Not every XBRL project has to be huge, or even large. To test the utility of XBRL, the Nevada Department of Agriculture used XBRL to try to reduce costs and improve the processes and procedures relating to about 60 grants that it administers. Prior to using XBRL, the process was labor-intensive and therefore time-consuming and expensive. The department had a proliferation of spreadsheets and word-processing documents designed to gather, maintain, and analyze information.
The interrelationship between the grants management goals and XBRL’s benefits were the driving factors for looking at XBRL as a solution. The department’s goals for the project were timely and accurate data, stronger internal controls, reduced costs, standardized systems, seamless data exchange between business processes, and a common understanding of the elements between processes. XBRL met all these goals. Additional benefits were that the system created is scalable and adaptable and saves time.
As a result of the project, the grant program manager, a business person, can add or modify the grants in a database using an XForm that is tied to an XBRL instance. This approach facilitates automating and improving source data capture, audit trail, and data integrity.
A key piece of this solution is the XBRL GL adaptor, which draws data from the State data warehouse and transforms that data into XBRL GL instance documents. The department developed a grant and XBRL GL taxonomy that resulted in standardized reporting.
United Technologies Corporation
United Technologies Corporation (UTC) was one of the early participants in the U.S. SEC voluntary filing program that the SEC used to test XBRL. (See the section earlier in this chapter.) UTC wanted to get a grasp on XBRL proactively,
before the SEC might mandate its use. As part of the process of creating its voluntary SEC filings in XBRL, UTC learned a great deal about XBRL. UTC found that it can implement XBRL for a reasonable price and without significant knowledge of the underlying technology. But UTC also realized that beyond the potential SEC mandate, it could find other internal uses for XBRL within its processes, resulting in saved time and money, as well as increased quality.
John Stantial, CPA and director of financial reporting for UTC, wrote an article called “ROI on XBRL,” which was published by the Journal of Accountancy. You can read about the specifics of what UTC learned at www.journalof accountancy.com/Issues/2007/Jun/RoiOnXbrl.htm.
Deloitte Australia
The clients of Deloitte, an accounting firm in Australia, delivered financial information in different formats, including spreadsheets and output formats from the various accounting packages. For each format received, Deloitte created a process to transfer data from the clients’ systems to the Deloitte systems so that Deloitte could do the write-up or other work. This tedious, time-consuming, and error-prone process provided little value. The lack of interoperability drove costs up and introduced other inefficiencies.
Deloitte Australia used XBRL as a standard data format for obtaining write-up work data from their clients. The net savings was 70 percent of what it had cost the company in the past. For more information, see www.ubmatrix. com/downloads/Deloitte_UBmatrix_business_brief.pdf.
U.S. Department of Housing and Urban Development (HUD)
The Federal Housing Administration (FHA) replaced a data warehouse used to translate a commercial chart of accounts into an USSGL, a federal chart of accounts, for an asset-servicing and accounting system. The data warehouse was expensive to manage and resulted in inefficiencies. Using XBRL, the FHA was able to integrate a family of disparate financial systems, including accounts receivable (loan servicing) and accounts payable (property accounting, contract management).
With the project fully implemented, the FHA is able to leave its legacy commercially based accounting systems in place but receive daily input in accordance with USSGL requirements. The FHA is now using a single source for multiple reporting requirements, eliminating duplicate data entry, duplicate
data processing, and extensive reconciliation processes. With daily data transmissions and reconciliation, the FHA has better control over its cash and can close its topics with less effort. The FHA removed a data warehouse, saving time and money and reducing complexity. Reporting is simplified through repurposed data, eliminating manual steps.
Accounting and ERP Software
Perhaps one of the most significant uses of XBRL as a canonical format is within software applications, such as accounting and ERP software. Prior to XBRL, it was impossible for this type of software to use one standard format to export information to because software vendors had no one standard established to agree on. Today, with XBRL, a format is finally available.
Various accounting and ERP software vendors already support XBRL within their systems. Generally, these software packages support the ability to export and sometimes import XBRL. These vendors include
SAP
Navision
FRx
Creative Solutions Hyperion (Oracle)
A survey of accounting software vendors done by XBRL-US and the American Institute of CPAs indicated that two-thirds of all accounting system vendors supported XBRL or planned to do so soon. (To read more about the survey, go to www.webcpa.com/article.cfm?articleid=3 57 8.) Frankly, we’ve observed that the current support for XBRL in accounting software is somewhat overstated. We do believe, however, that accounting software will move in this direction as more users demand support for XBRL.
State of Oregon CAFR Pilot Project
The Oregon state controller’s office created a pilot program that explored the steps necessary to build an XBRL taxonomy for government accounting standards used by state and local governments for financial reporting and then express the state’s Comprehensive Annual Financial Report (CAFR) using XBRL. Approximately 88,000 state and local governmental entities create and submit CAFR reports annually.
The Association of Government Accountants XBRL pilot project is documented in a white paper called “XBRL and Public Sector Financial Reporting: Standardized Business Reporting: The Oregon CAFR Project” (see www. agacgfm.org/research/downloads/CPAGNo16.pdf).
At a fundamental level, the use case for CAFR reporting is quite similar to public companies reporting to the SEC or banks reporting to the FDIC. What is unique about this pilot is that it tries to understand the benefits to the creators of this information. Although the data collected by this study isn’t great enough to be conclusive in terms of savings, the study does refer to similar projects, such as the Dutch SBR Project described earlier in this chapter, which realized a 75-percent time savings in the creation of financial reports.
Morgan Stanley
Morgan Stanley is a global financial-services firm. Morgan Stanley created a framework for doing its financial analysis using XBRL. Originally starting with XML, Morgan Stanley switched to XBRL when it realized that it needed features that it would have to recreate if the company stuck with XML. The new system replaced an older system based on Microsoft Excel spreadsheets. The older system suffered from inconsistencies between the many spreadsheets used, an inability to make global adjustments to all analysis spreadsheets, inconsistencies and errors in these spreadsheets, and maintenance issues.
Within the new system, Morgan Stanley created an XBRL taxonomy that defined financial-reporting concepts reported by organizations but also analytical concepts, such as return on equity and working capital. A central database shared by all analysts housed financial and analytical data so that when, for example, Morgan Stanley changed its economic forecast, all models impacted by this adjustment were updated in real time. The new system resulted in discipline and consistency in the analysts’ workflow, which resulted in greater comparability across data for individual companies and across companies being analyzed.
Prior to the SEC requiring public companies to supply their financial information to the SEC using XBRL, Morgan Stanley was required to either key each companies’ information into its models or purchase data from one or more data aggregators. Because of the time and effort involved, Morgan Stanley couldn’t tag or analyze all information. As more and more companies provide their information in an XBRL format to the SEC, less information will need to be keyed into Morgan Stanley’s system or purchased from data aggregators, and the more companies Morgan Stanley can follow via its analysis.
PricewaterhouseCoopers iDP
PricewaterhouseCoopers (PWC) developed an internal-use Web services platform called iDataPlatform, or iDP, that enables the distribution of information to portlets (think of them as individual workspaces) along with an XBRL-enabled Microsoft Excel spreadsheet and includes features that provide information visualization, consumption, and other such reporting tools. PWC employees use this information for various types of analysis.
PWC obtains information from a number of third-party data providers that feed the iDP system. That information is parsed from general ledger and financial regulatory reporting information from a number of available sources. PWC maps the information to both the IFRS and US GAAP XBRL taxonomies.
You can use iDP to structure data for reporting and analysis at the general ledger or financial-reporting level and perform analysis internally or for using peer company reporting. Leveraging the XBRL abstraction layer (of information taxonomies, presentation concepts, rules, and so on), iDP also enables consumers to collaborate in the customization of their own personal analytical presentations and concepts.
Identifying the Common Characteristics of XBRL Projects
Patterns of common characteristics exist within the XBRL implementations described in this chapter and elsewhere. We see the following characteristics:
In the case of government-related projects, each country has common functions that make use of XBRL within that country. These common functions are regulators of stock exchanges and securities, banking regulators, business registrars, revenue reporting and tax-filing agencies, and national statistical agencies.
One regulator mandating XBRL can require thousands, tens of thousands, hundreds of thousands, or even millions of businesses to report using XBRL.
The areas of the world where XBRL are taking off the fastest are Japan, Europe, China, and Australia.
At least one nonprofit (the MIX) has implemented XBRL.
The implementation to date that will exercise XBRL’s extendibility features the most is the U.S. SEC.
SBR implemented by the Netherlands, Australia, New Zealand, and Singapore (and being watched by the United Kingdom with interest) is becoming a standardized approach for a government to make use of XBRL. You can consider SBR an application profile; see Chapter 12.
We are not aware of any significant failed XBRL implementations.
Stock exchanges and banking regulators are the two biggest groups to have implemented XBRL.
The European Parliament is the largest governmental body that has expressed interest in XBRL.
