By Richard Oppenheim
Learning is a never ending, always on process. We learn to walk and spend the rest of our lives perfecting our steps. We learn to talk and spend our lives learning new words and using both old and new all the time. We learn accounting basics and spend the rest of our lives learning new rules, new regulations, new ways to adapt accounting principles and procedures to business issues both personal and client-oriented.
Learning is something that has to be matched with a desire to know. We will not learn new things if we are not interested in how to walk better, speak better or practice accounting in ways that clients and business people around the globe want to use it.
XBRL is one of the new processes that require new knowledge for understanding and use. Learning has to be accomplished at all levels from awareness to advisor to implementer to developer.
The evolution surrounding financial accounting and reporting is well documented. From clay tablets to online computer based education, financial accounting and reporting has been learned by everyone who has ever been connected with accounting as a professional, banker, bookkeeper, or CPA.
Converting a set of books and records into readable financial statements such as Balance Sheets, Income Statements and lots of supporting schedules was part of every accountant’s education. Financial reporting is one of the key components of every business operation. In 1999, with the backing and nurturing of the AICPA, a committee created the language and definitions that started as XFRML (eXtensible Financial Reporting Management Language) and then was broadened and enhanced to be XBRL (eXtensible Business Reporting Language).
The financial reporting world is very busy adopting and implementing XBRL as a key reporting tool. There are an ever increasing set of guidelines and regulations surrounding the creation of reports using XBRL based tools that can access a wide range of digital accounting and information data bases.
Last year, in 2007, the SEC announced a $54 million investment to update its public company disclosure system through XBRL. Even more innovations are anticipated for adoption and use throughout 2008. Clearly, XBRL has gone global as it will be used throughout the world. The clear significance is that this financial and operational information needs to be understood and used by business professionals, CPAs, financial analysts, students and anyone with attachment to accounting records and business operations.
In October, 2007, the SEC launched its Office of Interactive Disclosure to expand the use of digital data for analysts, investors, and business advisors. The SEC is further implementing a program for all publicly-traded firms to file their financial documents using XBRL. More information can be found at www.sec.gov.spotlight/xbrl.htm.
It is time to start learning about XBRL. Charles Hoffman, of UBMatrix and identified as the father of XBRL, says, “I see it this way…the best way to understand XBRL is to jump in with both feet. “ Hoffman’s advice is not suggesting a careless or dangerous jump. Rather, Hoffman understands why it is essential that Accountants make the commitment to learning as soon as possible. For CPAs, it is not just learning how to spell XBRL. It is, of course, learning about the functions, capabilities and tools surrounding XBRL.
Hoffman further states, “The best way to predict the future is to create it. Paper is dead meat, I mean, come on! Not everyone is needed to create the future, but for the hearty soles that do, this can be a truly valuable and profitable opportunity.” Implementing XBRL requires knowledge of a range of terms and techniques. More information about what needs to be understood can be obtained at the XBRL association website - www.xbrl.org. This site has a substantial volume of information about terms and specific education courses along with links to other sites.
Wayne Harding, known as the Godfather of XBRL, states, “Go to www.xbrl,org and click on education and training. Then use your favorite search engine for the phrase ‘XBRL Training’ to find places in your area including the local State Society workshops and webcasts.”
Where to Begin
For any new learning exercise – walking, bike riding, or accounting – each of us has a sense of what works best. We can read a book, attend a workshop, participate to a webcast, perform web searches, or find a personal trainer. Of course there is the old standby, “all of the above.” Consequently the first step is to determine where you are in the XBRL learning cycle. This includes:
· Self-assessment – what do you already know
· Firm assessment - what do your colleagues inside the firm know
· Client Assessment - what is the status of client implementation
· Financial reporting assessment - what financial reports do you need to create
With the answers to the above you can locate resources that can integrate within your determined needs. The XBRL learning process has a logical table of contents. You need to plug in based on your knowledge and skill level. There are a lot new terms to learn, such as Taxonomy, Instance Document, Tagging. The XBRL consortium defines Taxonomies – “Taxonomies are used to define accounting, financial and non-financial reporting terms in a disciplined manner. “ Rather than clutter this article with the rest of the terms and definitions, refer to the glossary created by the XBRL consortium. This glossary is located at: http://www.xbrl.org/technical/SGS-PWD-2005-05-17.htm
The following are the categories of information that you should locate to start compiling the necessary knowledge about XBRL.
1 Introduction – all about XBRL
As a starting point, this unit will describe and clarify the how and why of XBRL. The key is to understand the value add that XBRL provides. Components that would normally be included are:
- Terms described – such as tagging, instance document, and taxonomy
- Purpose and function of XBRL instance documents
- Analyzing data to create XBRL based Financial Report s
- Using taxonomies in the financial reporting process
2 The XBRL language – identification of the programming language
This section provides technical detail for the people who will be directly involved in the set up and structuring of XBRL reporting. Managers will want to know this information but do not need to become skill based experts.
· Basic programming coding of XML and HTML
· How XBRL evolved from XML
· Implementing XBRL programming
· XBRL as an internal audit tool
· XBRL as an external audit tool
3 Taxonomies – set up and use
Establishing the appropriate connections among digital data and financial reporting and statements is essential. Using existing Taxonomies or adding new ones is a very important process. The focus of this unit is to make sure that the XBRL taxonomies development process is understood and the results will satisfy company needs and regulatory reporting requirements.
- Create an environment so that all participants – internal staff and management, external CPA firm staff and partners - understand the XBRL taxonomies that will be used
- Establish a set of procedures for the creation, development and implementation of XBRL taxonomies
- Establish a methodology for quality controls over this process
- Establish and support training materials and procedures
- Practice with sample data
4 Advanced
For the already technically competent within the firm and the client, there needs to be this extra course that will provide more details about the programming elements required of XBRL. Accountants are rarely in the technical deficiency group. Most accountants (all is too dangerous a generalization) know how to use computers and access information through a variety of programs. The key is to separate who is going to do the detail work and who will be a manager responsible for quality control management. Financial reporting is the key result from any XBRL process. Everyone needs to be involved with the result. This unit will help separate the techie “to be dones” from the management responsibilities.
- XBRL Tools available – software and other resources
- Instance Creation techniques
- Generally Accepted Accounting Principles (GAAP) - understanding the US GAAP taxonomies
- Support tools available to understand, use and extend existing taxonomies
- Practice with sample data
How To Keep Going
Learning is a wonderful exercise. It most often leads the way in two distinct areas. First, it helps move all participants - the individual, the firm, the client, the regulatory agency, the viewing public – towards better and deeper understanding of the information be presented. Second, education can help keep all the same participants out of the traps and pitfalls that can arise from not knowing information surrounding business processes and operations. XBRL as a reporting tool has no equal in its capability for creating meaningful and readable and understandable financial reporting information.
Recognizing the need for learning is the beginning of a beautiful relationship with tools that can add value to all that is done by the accounting. Taking the building block approach to this learning establishes the key components for answering the following questions.
· Who is going to learn
· How much new technology is needed to be learned
· What are the steps and process and technology that will be used
· How the knowledge will be put into practice
· What results are expected
Beyond these questions rise the global reach of business and business reporting. It is not just the United States that is adapting and adopting XBRL as a methodology for reporting financial information. The international business world is adopting XBRL methods at a very fast pace. It is up to the professional accountants to be part of this learning opportunity. Value added services means learning and teaching of useful and usable concepts, ideas, and technology. XBRL represents an excellent value added opportunity for today and tomorrow and beyond.
Related contact information:
Wayne Harding CPA wayne@wayneharding.com
Charles Hoffman CPA Charles.Hoffman@UBmatrix.com
CreativeSolutions www.creativesolutions.com
Microsoft FRx www.frxsoftware.com
Rivet Software www.rivetsoftware.com
SnappyReports www.snappyreports.com
UBMatrix www.ubmatrix.com