XBRL Data Collection & Analytics in the Cloud

Free Webinar:
Secure XBRL Data Collection & Analytics in the Cloud

October 11, 2012


Whether it's for 20 filers or 200,000 filers, a cloud-based XBRL Data Collection and Analytics platform can provide fully-integrated supervisory reporting for any Financial Regulator - in a maintenance-free, pay-per-use hosted service.

This free webinar will explore the benefits and challenges of cloud-based XBRL solutions how implementing a hosted platform can help insulate Regulators and Filers from the complexities of XBRL to pave the way for 100% compliance.

read more and/or register at http://www.sqlpower.ca/xbrlpower/page/webinar

Who's using XBRL today?

Trillions of dollars, in fact over two-thirds of global market capitalization is essentially being reported in XBRL format. Hundreds of XBRL initiatives in a dozen countries or more are currently being deployed - it's safe to say that XBRL is establishing the standard for disclosure in the 21st century. Application of XBRL towards capturing and reporting against corporate contribution to social justice, environmental protection and human rights is also now emerging, and is without a doubt merely the tip of a much more significant iceberg.


COREP/FINREP
The COREP/FINREP Taxonomy provides an XBRL representation of the Committee of European Banking Supervisors (CEBS) Common Reporting Framework. FINREP (FINancial REPorting) is designed for credit institutions that use IAS/IFRS for their published financial statements.

SEC
Recently, the Securities and Exchange Commission (SEC) officially announced the adoption of XBRL for U.S. listed issuers' financial statement filings.

IFRS
By providing the IFRS Taxonomy, the IFRS Foundation seeks to address the demand for an electronic standard to transmit IFRS financial information.

India
The Ministry of Corporate Affairs in India has decided to mandate select class of companies to file their balance sheets and Profit & Loss Accounts in XBRL mode for the fiscal starting on or after April 1, 2011.


read more:
• http://www.sqlpower.ca/xbrlpower/page/what-is-xbrl
• https://sites.google.com/site/multiaccesssystems/using-xbrl-to-define-information-containers/who-and-what-uses-xbrl
• http://www.xbrlplanet.org

Solvency II and XBRL

Coined as the "Basel II of insurance reporting", Solvency II is the new European insurance directive slated to come into effect on January 1, 2013. As determined by the European Insurance and Occupational Pensions Authority (EIOPA), this risk-based standard for capital adequacy requirements and governance will use XBRL as the uniform format for prudential reporting across Europe.

XBRL is an open-source computer language that allows companies to precisely tag the thousands of pieces of financial data included in typical financial statements and footnotes. These XBRL tags make the financial data computer-readable and allow users of financial statements to electronically search for, assemble, and process data - so that analysts, investors, journalists, and regulators can readily access and analyze it. This will enable insurance regulators to make like-for-like comparisons of financial data from insurers across Europe.

The Journal of Financial Regulation and Compliance, in examining the suitability of XBRL for Solvency II, explains "Once a taxonomy has been created at the European level, extensions can be added to cover the particular features of national regulatory frameworks, thus ensuring the homogeneity of the system of information while giving it the flexibility that the framework requires."

Anthony Fragnito, CPA, CEO of XBRL International, on EIOPA's decision to use XBRL commented, "The EIOPA mandate for XBRL in the pension and insurance sector is a critical step toward the transparency and process improvement benefits of XBRL to insurance and risk management, and expands the XBRL footprint across the financial services and capital markets sectors."

read more:
• http://www.sqlpower.ca/xbrlpower/page/solvency2
• http://solvencyiiwire.com/eiopa-aligns-solvency-ii-xbrl-taxonomy-with-eba/9555

Pre-Built vs. Custom-Built XBRL Solutions

To Build or Not to Build? That is the question...

The key to avoiding reputation risk concerns is to create a secure, integrated platform for data collection, return management and analytics. Building a customized solution has its advantages in terms of customizing for specific market needs, but the cost of building and maintaining these custom systems can prove to be astronomical and they are usually less flexible in terms of adopting new and ever-evolving financial reporting standards.

One could also argue that in this global economy, customizing a solution for a specific market need is fairly shortsighted. Standard and Globally-approved Taxonomies have evolved over the past decade with the primary intention of leveling the playing field and ensuring that the financial health of an organization is measured and assessed against these global standards. Commercially available off-the-shelf software (COTS) solutions are also more dynamic, usually Taxonomy and/or metadata driven, easily cascading any changes to the taxonomy throughout the system.

Custom solutions are not only more expensive but are also riskier to develop/deploy than COTS solutions that have been proven across many deployments around the world. Solutions based on COTS software have been proven to be more flexible, dynamic, cost effective and can often be deployed in less than 90 days, avoiding lengthy delays and exponentially increasing the likelihood of success.

read more: 
• http://www.sqlpower.ca/xbrlpower/page/stock-exchanges

Why is XBRL important for Market Regulators?

Stock Exchanges that collect standard electronic financials and that have automated the analysis and mining of this data have a fundamental advantage over other Exchanges: they are much more attractive to investors.

Investors as well as Portfolio Managers and Analysts all share the same insatiable thirst for the most current reported investment data. Their livelihood relies on the steady flow of timely, comprehensive, and accurate market information - which is exactly what XBRL can deliver.

With XBRL-compliant data, Stock Markets can offer increased value and provide competitive advantages to institutions and private investors. Financial data verified in real-time, converted to XBRL and posted directly to an Issuer's website improves worldwide exposure and provides rapid analysis capabilities to the investment and analyst community.

XBRL adoption drives international confidence in the Exchange and improves perceived market stability - ultimately attracting new capital investments from domestic and international investors.

read more: http://www.sqlpower.ca/xbrlpower/page/stock-exchanges

Some of the Pros and Cons of XBRL

The XBRL adoption debate has been going on for over a decade now with as many detractors as there are proponents across the world. Each group is steadfast in their position, citing the many advantages or disadvantages of XBRL, in support for their position.

Advantages:

1. XBRL is a universally accepted information sharing language. XBRL is available across many countries and facilitates sharing of business information in many languages, on any computer platform and in multiple accounting standards. Regulators and Investors alike can access this information electronically and in seconds be able to perform real-time analysis within and across organizations.

2. XBRL improves Corporate Transparency and increases overall credibility of the Global Financial community. The global financial crisis in 2008 has fueled the adoption of XBRL by regulators across the globe. Standard financial element definitions, common validation rules, increased reporting, and improved analysis have all conspired to improve the financial transparency of organizations that might have otherwise used accounting tricks to mask their financial health.

3. XBRL improves the quality and speed of information exchange while reducing overhead. The implementation and deployment of XBRL drastically reduces the ongoing costs of information collection, analysis and dissemination, while substantially improving the accuracy and quality of the data. Regulators adopting XBRL as the required standard for filing see many benefits, starting with more accurate filings since validation is typically performed on the filer’s end prior to submission. This leads to a reduced administrative burden, providing better oversight at reduced costs.

4. Availability of standard global Taxonomies. Since XBRL is Open Source, Regulatory organizations around the world can readily and freely re-use standard Taxonomies that may have taken years and cost millions to develop and document. These Taxonomies could be adopted as-is or can be tweaked/customized by the adopting organization, reflecting the unique way they regulate and/or do business in their jurisdiction.

5. XBRL adapts well to a variety of uses. XBRL is not just a financial reporting vehicle; although it is primarily used today for financial reporting, it can equally be used to share non-financial business information like inventory levels, production volumes, reseller sales and returns.

Disadvantages:

1. XBRL Complexity can lead to transmission errors. Being XML-based, XBRL is complex and not easily read or written by accountants, regulators or business users, necessitating the dependence on experienced IT developers to assist with the electronic filing. XBRL’s complexity combined with letting inexperienced users create data for transmission increasing the likelihood of errors.

2. Increased Organizations’ filing Costs. Many regulators around the globe have mandated XBRL, but have not provided their filers with a data collection or an XBRL conversion facility to assist with the XBRL adoption. This forces organizations to hire 3rd parties to generate the XBRL filings for them, or alternatively revamp their back-end systems at huge costs in order to generate XBRL filings themselves.

3. XBRL facilitates near real-time disclosure. The potential to quickly report information in an automated way is a double-edged sword. On the one hand, near real-time disclosure improves transparency and sharing of information; on the other hand, near real-time disclosure may emphasize short-term results at the expense of long-term objectives. Some argue that real-time disclosures may cause undue stock price volatility and impulsive decision-making by investors, suppliers, customers and management.

4. XBRL Taxonomies are extensible and possibly too flexible. Taxonomies are by design extensible, allowing organizations to add data elements that better describes an amount that doesn’t currently exist in that particular taxonomy. However, overuse of taxonomy extensions may result in an organization’s filing being non-standard and less comparable to companies in the same industry - thus reducing transparency and eliminating many of the XBRL benefits.

5. Early Global adoption of XBRL has resulted in chaos and increased costs. Global adoption of XBRL as the Financial Reporting standard has rushed organizations into adoption before integrated XBRL productivity tools were readily available. This resulted in a huge amount of custom coding by desperate IT groups rushing to fill the gap between readily-available technologies and the immediate business requirement of generating or collecting XBRL filings.

read more: http://www.sqlpower.ca/xbrlpower/page/offer-roadmap

3 Approaches to XBRL Adoption

XBRL has been widely adopted by Regulators throughout the world, in one of 3 ways:

1. Mandated XBRL filings

2. Voluntary/Optional XBRL filings

3. Converted/Facilitated XBRL filings

Mandated XBRL Filings:

This is when the regulator mandates to their filers that they must file their financial returns using XBRL starting at a given point in time, usually providing an 18-24 months lead time. These regulators would not provide any facilities to the filer to generate or convert their data to XBRL; it is up to each filing organization to determine what they’ll need to do to convert their financial data to XBRL. Failing to submit their filing in XBRL by the set deadline would usually result in penalties for the non-compliant organization.

The Securities Exchange Commission (SEC) in the US is a good example of mandated XBRL adoption: the SEC mandated organizations to file their Financial Statements in XBRL in 2008 but left it up to each organization/filer to determine how to generate their XBRL filing.

This approach to XBRL Adoption isn’t conducive to 100% compliance or even data accuracy, as it usually results in each filing organization having to scramble to determine the best and/or most affordable means of generating XBRL instance documents by the set deadline.

Voluntary/Optional XBRL Filings:

This is when the regulator announces their readiness to accept XBRL filings, but it is completely voluntary and there are no associated penalties for not filing in XBRL. This type of adoption usually results in a minimal XBRL compliance rate as there is usually no incentive for the filing organization to incur the cost of generating XBRL filings from their back-end systems. Typically only very large organizations that file in multiple jurisdictions (and that have already internally adopted the XBRL standard) would comply.

Regulators choosing to adopt this Voluntary/Optional approach, like the Australian treasury’s Standard Business Reporting (SBR) initiative, typically experience a very slow adoption rate and do not realize the immediate benefits of XBRL adoption.

Facilitated XBRL Filings: 

This is when the regulator mandates to their filers that they must file their financial returns using XBRL starting at a given point in time, usually providing a 12-18 months lead time. These regulators would provide all their filers with a Data Collection or Data Conversion facility that will convert a standard format to XBRL on the filers behalf. This approach to XBRL Adoption usually results in a 100% filer compliance and maximum data accuracy, as it does not place any additional burden on the filer.

This approach also ensures that the data validation for completeness and accuracy is done at submission time against the taxonomy, reducing the regulators processing and re-submission costs, while providing them with the added benefit of being able to properly compare and asses 100% of all filings in a given industry and across industries.

Although the converted/facilitated XBRL adoption approach is the most desirable from both the filers’ and the regulators’ perspectives, yielding all the XBRL benefits and eliminating all but arguably one of the disadvantages of XBRL adoption (near real-time Transparency), there is a cost to rolling out this data collection/conversion facility to all filers. That cost has consistently come down over the years and at the publishing of this article, depending on the software vendor, stands at less than 1 year of ROI.

The Deposit Insurance Corporation of Ontario (DICO) is a good example of the Facilitated XBRL approach. In adopting XBRL, DICO not only revamped their back-office systems to accept and process XBRL filings, but they also provided their filers with a thin-client Data Collection facility to capture all the required business information. Once validated and submitted by the filer, these filings were then converted into XBRL instance documents for processing by DICO’s back office system. It is important to note that DICO’s filers (Ontario credit unions) were not exposed to XBRL at any point in time, and in most cases had no idea that their filings were being translated and consumed as XBRL instance documents.

read more: http://www.sqlpower.ca/xbrlpower/page/offer-roadmap

Who needs XBRL?

Businesses are always bombarded with requests to provide more detailed, more rigorously defined and a wider variety of information - yet most businesses are not equipped to deliver it. The pressure on businesses and regulatory agencies to capture, exchange, and analyze data is also growing rapidly.

For businesses to comply with these regulatory requests, they must collect and monitor more detailed information and report them on a more frequent basis. Governments and regulators requesting this information must also implement sophisticated systems to capture, process and analyze massive amounts of information from thousands (in some jurisdictions millions) of filers. This information must be accurate, complete and consistent - allowing regulatory organizations to quickly assess, consolidate, analyze and act on these monthly, quarterly or annual filings. 

A financial data exchange standard was needed to ensure that information is being consistently reported across organizations and to the satisfaction of a variety of regulatory bodies. Enter XBRL: established in 1999, XBRL (short for “eXtensible Business Reporting Language”) is an open source XML based language developed to define and exchange business and financial information. XBRL is used to describe the data elements and the business rules inherent in this business information. Like a barcode, it links fact values to a wealth of metadata that govern the interpretation and validation of these facts. XBRL promises to help achieve corporate and regulators’ goals for quick and automated analysis of larger amounts of information - thus reducing time, costs, and errors involved in business reporting processes.

XBRL provides for the structured exchange and validation of business reporting information. It also ensures context and integrity of the data’s meaning across multiple processing and reporting environments. With XBRL, businesses and agencies can attain higher levels of data accuracy and information reuse, which results in faster turnaround times and decision making.

read more: http://www.sqlpower.ca/xbrlpower/page/offer-roadmap