Adoption and acceptance of XBRL by small and medium-sized accounting organizations in the Netherlands.

[Adoption and acceptance of XBRL by small and medium-sized accounting organizations in the Netherlands.]

March 3th 2011

Table of contents1. Introduction51.1 Thesis background51.2 Research justification and objective51.3 Research methodology61.3.1 Choice for a computer delivered survey61.4 Thesis structure72. Literature research and theoretical orientation82.1 Chapter introduction82.2 XBRL for Dutch accounting organizations82.2.1 Brief overview of XBRL82.2.2 The history of XBRL92.2.3 The structure of XBRL102.2.4 XBRL in the Netherlands132.2.5 General advantages and disadvantages of the use of XBRL182.2.6 Processes of accounting organizations and consequences of XBRL192.3 The Dutch market of small and medium sized accounting organizations232.3.1 Definition of small and medium sized organizations in the Netherlands232.3.2 Branch organizations (professional associations) in the Dutch market of small and medium sized accounting organizations242.3.3 The use of XBRL in small and medium sized accounting organizations in the Netherlands252.4 Acceptance versus adoption262.4.1 Adoption measurement272.4.2 Acceptance measurement272.5 Acceptance measurement models272.5.1 Technology acceptance models272.5.2 Reumermans integrated model292.4.3 Usage of Reumermans integrated model302.5 Chapter conclusions313. Operationalization of theoretical acceptance factors and identification of responders343.1 Chapter introduction343.2 The operationalization process343.3 The survey design383.4 General questions and identification of the responders383.4.1 Organization size393.4.2 Fields of activity403.4.3 Memberships of branch organizations413.4.4 Decision about XBRL usage433.5 Operationalization of the factors of the organizational perspective483.5.1 Factor: Decision-making structure483.5.2 Factor: Top management support493.5.3 Factor: Goal alignment503.5.4 Factor: Managerial IT knowledge513.5.5 Factor: Management style513.5.6 Factor: Resources allocation523.6 Operationalization of the factors of the technology perspective533.6.1 Factor: Information system facilities533.6.2 Factor: Information system competency543.6.3 Factor: Information system integration553.6.4 Factor: User support553.6.5 Factor: Information system structure573.7 Operationalization of the factors of the user perspective573.7.1 Factor: Perceived ease of use573.7.2 Factor: Job relevance583.7.3 Factor: Result demonstrability593.7.4 Factor: Output quality593.7.5 Factor: Subjective norm603.7.6 Factor: Image613.7.7 Factor: Voluntariness613.8 Recommendations for further acceptance and adoption surveys623.9 Chapter conclusions634. Survey outcomes by operationalized factor644.1 Chapter introduction644.2 Survey outcomes for the organizational perspective654.2.1 Overview of the results by operationalized factor654.2.2 Analysis of the results by operationalized factor664.3 Survey outcomes for the information technology perspective684.3.1 Overview of the results by operationalized factor684.3.2 Analysis of the results by operationalized factor694.4 Survey outcomes for the user perspective734.4.1 Overview of the results by operationalized factor734.4.2 Analysis of the results by operationalized factor744.5 Chapter conclusions755. Adoption of XBRL775.1 Chapter introduction775.2 Current adoption775.3 Expected adoption785.4 Predicted adoption795.5 XBRL adoption versus Rogers adoption curve815.6 Chapter conclusions826. Acceptance of XBRL846.1 Chapter introduction846.2 Calculation of results846.3 XBRL acceptance in the organizational perspective846.4 XBRL acceptance in the information technology perspective876.5 XBRL acceptance in the user perspective906.6 XBRL acceptance in general926.7 Chapter conclusions947. Global conclusions and further research967.1 XBRL and the Dutch market of small and medium-sized accounting organizations967.2 Measurement of adoption and acceptance of XBRL967.3 Adoption and acceptance of XBRL987.4 Weaknesses in this study1007.5 Further research1008. References101Appendix A. XBRL survey Are accountants and taxation specialists ready for XBRL?104Appendix A.1. Nieuwsbericht op NIVRA website104Appendix A.2. Enqute104Appendix B. Charts for the results by operationalized acceptance factors.113Appendix C. Correlations121

1. Introduction1.1 Thesis background

This thesis is written to complete my Masters Degree in Economics and Informatics at the Erasmus University in Rotterdam (the Netherlands). The subject of this thesis is XBRL. XBRL is the abbreviation for eXtensible Business Reporting Language. It is an open standard for digital exchange of financial data, based on XML (eXtensible Markup Language). In the seminar period before this master thesis, I have done a study on the financial costs and benefits of XBRL in the business reporting chains from accounting organizations to the Dutch Tax Office and the Chamber of Commerce with three other students. [DGLS2009]

Although the conclusion of that research was that it was at that moment too early for gathering empirical evidence about specific costs and burdens, the interest for the developments around XBRL was awaken.

At the end of the seminar and before the start of this thesis Jan Pasmooij RE RA RO (chairman XBRL Netherlands and IT manager at NIVRA) and thesis supervisor Prof. dr. Gert J. van der Pijl were contacted. With these two persons, the developments around XBRL and at the fields where information is still limited have been looked at. This meeting resulted in the decision to start a study that would give more insight into the adoption and acceptance of XBRL by small and medium sized accounting organizations in the Netherlands. The main focus of this study is the acceptance.

The study focuses on small and medium-sized organizations (SME), because this is the largest group of accounting organizations in the Netherlands, and also because there is not much information available about their adoption and acceptance. Larger accounting organizations are more involved in XBRL conventions compared to smaller organizations. In some situations are agreements about the use of XBRL part of a convention. Meetings of convention members are sometimes used to exchange information about the use of XBRL. Therefore it can be stated that there is more information available about the acceptance of XBRL of large accounting organizations and less about small and medium-sized accounting organizations. Therefore these organizations are the scope of this study.

1.2 Research justification and objective

In various different sources of information the acceptance of XBRL is spoken about, mostly referred to as the next step in development of XBRL [ACCAGE01] [ACCWEB01] [CHS04] [HIGHB01] [JOURACC01] [Q4BLOG01]. However a study that measures the state of acceptance based on acceptance theory model is not known. Also there has been no study done before on this subject, with the focus on the small and medium sized accounting organization market in the Netherlands, which has measured the adoption and acceptance on this scale. For this study a survey is spread among all accounting organizations in the Netherlands.

Jaron Azaria [AZARIA07] conducted a field research on the current position of digital financial reporting in large organizations, and the role of XBRL in this process. This field research shares some elements with acceptance measurement that is described later on, but no specific acceptance model was used. Another big difference is the focus of the study Azaria focused on large companies, while this study focuses on small and medium sized accounting organizations.

The main research question of this study is defined as follows:

What is the current state of adoption and acceptance of XBRL in small and medium-sized accounting organizations in the Netherlands and how can it be explained?

Before this research question can be answered, the following sub research questions also need to be answered:

1. What is XBRL and what does it mean for accounting organizations?

2. How does the Dutch small and medium-sized accounting organizations market look like?

3. Which models are available for adoption and acceptance measurement?

4. How could the adoption and acceptance of XBRL be measured for small and medium-sized accounting organizations in the Netherlands?

5. Which measurement questions need to be asked half-yearly to measure the acceptance of XBRL for small and medium-sized accounting organizations in the Netherlands?

1.3 Research methodology

The first phase of this study was the literature study. During this phase information was collected from a large number of sources. This gave some insight into the current situation of the acceptance at SME organization, but more information had to be gathered from the SME organizations themselves.

In consultation with the NIVRA some possibilities are considered for how this information could be gathered. Eventually a computer-delivered survey was chosen. The survey is spread by 5 accounting branch organizations (professional associations) in the Netherlands amongst all accounting organizations in the Netherlands.

Below is a brief description of why a computer delivered survey was chosen.

1.3.1 Choice for a computer delivered survey

There are three types of interviews according to the book Business Research Methods [BLUM05]:

Personal interviews

Telephone interviews

Self-administered surveys

Each of these approaches has its advantages and disadvantages. For this study, the following requirements were defined:

Time efficient. The method had to be time efficient, because the project has to be carried out in a limited time frame and should be easily repeatable.

Low costs. Costs of this study had to stay low.

Minimum requirement of staff. As a result of limited time and budget, the staff requirements to carry out the interview had to be minimal.

Anonymous. The interview has to be carried out anonymously. Information about the state of XBRL acceptance and implementation can be company-sensitive information because it could give the company a competition advantage.

Based on these criteria, a self-administered survey is the best solution. However, it also has some disadvantages. [BLUM05].

The disadvantages will be described below, along with the measures taken to reduce these disadvantages.

Accurate mailing lists are required. Because of the involvement of the mentioned branch organizations, it was possible to reach all the accounting organizations.

Instructions needed and no possibility to ask follow-up questions. The following steps are taken to formulate clear questions that provide the needed information and therefore reduce this disadvantage. For the drawing up of the questions for the survey a number of personal interviews are held with XBRL professionals in the Netherlands. After these interviews the questions were improved in cooperation with the NIVRA (and indirectly also with other branch organizations). In the last step, before the survey was spread, it was presented to a test group to test if the questions were clear.

In the self-administered survey category three types of surveys are distinguished [BLUM05]:

Mail surveys

Computer-delivered surveys

Intercept studies

Only the first two were options for this study. For matters of cost efficiency and easy result processing, a computer delivered survey was in favor above a mail survey and was therefore chosen as research method.

1.4 Thesis structure

In the next chapter of this thesis are the results of the literature study described.

The literature study has been split up into a segment about XBRL in general, and a segment about the stakeholders of XBRL in the Dutch accounting market. Also, the difference between adoption and acceptance is described in the literature study, along with the available acceptance models and the acceptance model of Reumerman (which has been used) in particular.

Chapter 3 discusses the operationalization of the factors. For each factor it has been discussed what influence it has, and which questions are asked in the survey. Also, the results of the general measurement questions are presented.

Chapter 4 contains the results of the factor specific measurement questions. The results are described for all responders that fall in the small and medium size organizations definition and the results are analyzed for correlations.

In chapter 5 the results about the adoption of XBRL are presented. We look at the current adoption, the expected adoption and the predicted adoption.

In chapter 6 we look at the results by acceptance perspectives and at the total acceptance result for XBRL.

Chapter 7 contains the conclusions of this study and chapter 8 contains a complete list of literature that has been used in this study.

This document contains three appendixes. In appendix A the survey is found as it was sent to the accounting organizations. Appendix B contains charts for the results of the factor specific measurement questions. Appendix C contains a table of all calculated correlations for the survey results.

2. Literature research and theoretical orientation2.1 Chapter introduction

The literature study and theoretical orientation is an important element of this study. The purpose of the literature study is to create a base of knowledge to answer the first three sub-research questions. Each of the following subchapters is based on one of these questions. The three sub-research questions are answered in the conclusions of this chapter.

The first subchapter contains general information about what XBRL is and what the current developments are. Also the involved parties, the advantages, disadvantages and the impact of XBRL are described.

Chapter 2.3 contains a description of the Dutch market of small and medium sized accounting organizations. The definition of small and medium sized companies is described, along with some branch organizations (professional associations) that are active in the accounting market. A brief analysis of the use of XBRL in that market, based on literature, is also part of that subchapter.

Chapter 2.4 of the literature research provides more information about the difference between adoption and acceptance and contains an overview of the available models for technology acceptance measurement. The development of models is briefly described. The model that is used for this study is described in more detail and an explanation is provided for why this model has been chosen.

2.2 XBRL for Dutch accounting organizations

This subchapter provides an overview of the XBRL technology, the situation in the Netherlands and the advantages and disadvantages of XBRL usage. It also provides an overview of Dutch accounting organizations, their processes and the possibilities for the use of XBRL.

2.2.1 Brief overview of XBRL

XBRL is the abbreviation for eXtensible Business Reporting Language. It is an open standard for digital exchange of financial data, based on XML (eXtensible Markup Language). XBRL is being developed by an international non-profit consortium of major companies, organizations and government agencies. [XBRLINT01]

XBRL can be distinguished into two variants:

XBRL Financial Reporting (FR)

XBRL Global Ledger or XBRL General Ledger (GL)

XBRL FR is designed for external reporting, while XBRL GL makes it possible to record and exchange transactions of the general ledger and to zoom in on the data to a lower level of detail [XBRLNL01]. It could be said that the focus of XBRL GL is more focused towards the internal organization. XBRL GL is in an earlier phase of development, compared to XBRL FR, but in the future it could be of great help for integration and audit purposes.

When XBRL is mentioned, it usually refers to XBRL FR. No exception is made in this paper. XBRL GL is referenced in this paper with the full name XBRL GL.

2.2.2 The history of XBRL

The website of XBRL international [XBRLINT01] gives a very complete overview of the early history of XBRL. Much of the following information has been retrieved from the mentioned website.

The foundation of XBRL began in April 1998. In that year, Charles Hoffman, a certified public accountant with the firm Knight Vale & Gregory in Tacoma, Washington investigates how XML could be used for electronic reporting of financial information. He began to develop prototypes of financial statements and audit schedules using XML.

In July of that year, Hoffman informed the AICPA (American Institute of Certified Public Accountants) about the potential of XML for financial reporting. The AICPA decided to start a project and developed a prototype that was finished in December 1998.

In January 1999, the AICPA stated that such a technology for electronic reporting of financial information is important for the accounting profession. A business plan for the further development was created in June of that year. The new prototype was completed in October 1999. In August the AICPA announced that an XML financial reporting specification would be developed. Twelve companies also joined the group.

The first press conference was held in April 2000. During the press conference, they announced that the new name for the technology is XBRL. In July, the fist specification (1.0) of XBRL was released. One month later, Bill Gates stated that XML is the nest revolution on the internet. This was a big step forward, because it means that XML tools will be more and more integrated in (and supported by) products of Microsoft.

2001 was the year of further improvements and the first pilot test. In June it was announced that the XBRL specification is modified to reflect W3C (World Wide Web consortium) recommendations, so that the standard would be consistent. In that month, it is also announced that XBRL-GL for the general ledger will be developed. This created a bridge between transaction reporting in the general ledger and business reporting in the form of XBRL. In October, seven jurisdictions are formed including XBRL-Netherlands. XBRL 2.0 was released in December 2001. Also in December the first pilot had been started in the banking industry.

In May 2003, during the 7th XBRL international conference in Amsterdam, the Dutch tax authority, the central bank and the bureau of statistics outlined their interests in XBRL.

In April 2004, the Dutch government stated that XBRL would be used for reducing administrational burdens of organizations [COMP01]. In September 2004, XBRL-US presented new taxonomies that support the US GAAP.

2006 was the year that the first version of the Dutch taxonomy (NTP taxonomy) was released; version 0.9 of the NTP was released in January. [XBRLNTP01]

The US SEC mandated the 500 largest U.S. companies to use XBRL in May 2008. In December that year, a group of five Dutch accounting organizations and two software companies signed a covenant and agree thereby to deliver 500 shortened profit declarations (verkorte winstaangifte) in XBRL in the Netherlands during the following year [XBRLNTP02].

In 2009, three Dutch banks (the ABN Amro, ING and Rabobank) had announced that they would support XBRL for credit reporting after April 2010. [COMP02]

2.2.3 The structure of XBRL

This subchapter briefly describes the elements of XBRL and how it works. The goal of this subchapter is to become familiar with the working and possibilities of XBRL.

XBRL and XML

XBRL is based on XML (eXtensible Markup Language). XBRL is a markup language, which means that there is, besides the data available in the document, also metadata in the file. Metadata contains data (information) about the primary data of the file. An (fictive) example: The Da Vinci Code (data) is the title (metadata) of a book (metadata). The data is positioned between tags that contain the metadata information. The tags in this example are and .

Example of a XML file:

The Da Vinci Code

Dan Brown

The tag book explains that data between the opening and closing tag are part of a book.

The title tags show that the data between the opening and closing tag is the title of the book. In this case The Da Vinci Code. The next tag is writer. Between these tags is the writer of The Da Vinci Code mentioned, namely Dan Brown.

In other words could be said that book is an element, while the title and writer are attributes of the element book.

When we look at XBRL files, it can be said that XBRL files do not only hold the financial data, but also provide information about this data.

A difference with HTML is that a tag in markup languages (like XML and XBRL), does not describe how the contents have to appear, which is the case with HTML files.

XBRL taxonomies and instances

XBRL consists of two main components:

XBRL taxonomies

XBRL instances

The difference between these two is that XBRL instances contain the facts being reported while the taxonomies define the concepts being communicated by the facts. The combination of an XBRL instance, its supporting taxonomies and additional linkbases constitute an XBRL business report. [XBRL2.1]

In other words: An instance document contains the facts (data), while taxonomies contain the explanation of it. The information in taxonomies is closely related to regulations about the definitions of financial data.

An instance document is an XML file. Elements of the instance document are linked to the taxonomies. An instance document can contain links to several different taxonomies, or the taxonomies itself could contain links to other taxonomies. The entire set of linked taxonomies is called the discoverable taxonomy set (DTS). The taxonomies and instance document are linked together with the XML linking (Xlink) technology.

As mentioned earlier, the data in XML files is gathered in the instance file between tags. Information about what this tag means, and how this should be handled by a computer, are stored in a schema file. Relationships are described in so called linkbases. There are linkbases for definition, calculation or presentation. Label linkbases and reference linkbases refer to external resources.

Example of a XML file (continued) :

The Da Vinci Code

Dan Brown

By reading this file, it is clear that the title of this book is The Da Vinci Code. We all know what a title is, but it can be defined for instance as: An identifying name given to a book, play, film, musical composition, or other work [FREEDIC]. This information can be stored in a schema file. The definition linkbase describes in this situation that An identifying name given to a book, play, film, musical composition, or other work is the definition of the tag title.

A taxonomy contains many schemas and linkbases. The picture below gives an overview of how the DTS, taxonomy, linkbases and an instance document are related in the XBRL framework.

Figure 1: The structure of XBRL [IASB01]

A more detailed description of structure and fundamentals of the XBRL framework would go beyond the purpose of this chapter (that is to create a base of information that is sufficient to understand the global working of XBRL). However, the website of the International Accounting Standard Board contains an easy to read and rather detailed description of all the parts of the XBRL framework [IASB01]. This website is advisable for everyone who is interested in more detailed information about the XBRL framework.

Mapping

Before an XBRL instance document can be created, the data in the general ledger have to be linked to the right elements and attributes of the taxonomy. This process is called mapping. The process has to be carried out once, but has to be repeated when a taxonomy or the structure of the data (that has to be represented in an instance file) changes. Because of that fact, users will benefit from a situation where the taxonomy changes as little as possible. Yet, XBRL is still developed and changes from time to time.

Dutch taxonomy

The Dutch architecture consists of different layered taxonomies (the DTS) and is based on the IFRS-GP taxonomy. A Dutch base domain has been built on top of the IFRS-GP taxonomy. Above the base domain, domain-specific taxonomies built, which are followed by formsets for different parties. All these taxonomies are (directly or indirectly) linked from the reports (instance documents).

More information about the Dutch architecture can be found in the architecture description of the Dutch taxonomy project (NTP) [XBRLNTP03].

The following picture provides an overview of the Dutch taxonomy architecture.

Figure 2: The hierarchy of XBRL [XBRLNTP02]

XBRL instances readers

Because of the design of XBRL with different layers, XBRL instances are not as easily readable by humans as classic financial reports that are produced without making use of XBRL. However, to make XBRL instances easier to read, several parties (for example Hitachi, Invoke or SavaNet) have developed XBRL readers that are able to open XBRL instances and able to display information that is easier to interpreted for humans.

2.2.4 XBRL in the Netherlands

The use of XBRL in the Netherlands will be described in this subchapter, starting with the Dutch infrastructure for the exchange of XBRL instance documents. The involved parties will also be described, along with more details about the Dutch governments decision to lower the administrative burden of companies.

Exchange process infrastructure

In the Netherlands, generated XBRL instance documents can be sent to demanding organizations via a government transaction gateway called OverheidsTransactiePoort (OTP). The OTP infrastructure and its elements will be described in this paragraph. More detailed information about the infrastructure of the OTP can be found on the website of the Dutch taxonomy project [XBRLNTP04]. At January 11 2010, the OTP is renamed to Digipoort. However for this thesis, it is referred to as the OTP, because that is the name that is also used in the survey.

The infrastructure of the government transaction gateway consists of four major parts:

Process server. This is the part of the OTP that is responsible for the right execution of functions. It triggers one or more services of the OTP to fulfill this task.

Service Bus. The service bus is responsible for the transportation of the data between the involved parties.

Services. Services are components of the system that perform different type of tasks in the processes and are triggered by the process server. The services can be divided into internal and external services.

Examples of internal services are retrieval, delivery, verification and status information services. A full list of services and their functions can be found at the earlier mentioned NTP website [XBRLNTP04].

External services are provided by external systems and contain authorization and validation services. An authorization function has the task to check if the sender is allowed to send a particular XBRL instance. Validation services check the XBRL instance at correctness. Checks are technical as well as logical.

Portal. The portal can be seen as the interface with which the user communicates. Its task is to handle document (XBRL instance) uploads and to handle return information.

The illustration below shows the different parts of the infrastructure of the government transaction gateway.

Figure 3: Overview of the OTP. [XBRLNTP04].

Involved parties, their interest and the current situation

The parties in the Netherlands, which are somehow connected to XBRL, could be roughly divided into two categories.

Users of the XBRL taxonomy, XBRL instances and XBRL systems. These are the organizations that use XBRL somewhere in their business process. They can be either senders or receivers (or producers and consumers).

Other involved parties. These organizations contribute to, or influence in some way, the Dutch development of XBRL.

The accounting organizations, which are the focus of this study, are users of XBRL. The internal processes of accounting organizations are described later in this chapter. It is also interesting to see which other stakeholders could be defined, because of the fact that they influence, directly or indirectly, the accountant organizations.

Stakeholders of XBRL developments in the Netherlands are:

The Dutch government

The Dutch government is involved as regulator, but also through the NTP, their Logius service (discussed later) and through government organizations that are consumers of XBRL instances.

In January 2007 the government started a project to reduce the administrative burden of Dutch companies. The target is to reduce 25% of the administrative burdens by reducing costs (less), simplifying the procedures (easier) and by making the changes tangible and visible (noticeable) [MINEZPVAR01] and [MINEZVOOR01].

As a result the Dutch government introduced different laws. An interesting one is the simplification of the annual account for small entrepreneurs (Vereenvoudiging jaarrekening voor kleine ondernemers). This law states that small companies are allowed to publish their annual reports based on fiscal principles. In the earlier situation, these companies had to publish reports on fiscal and commercial principles. This law makes the path clear for a higher level of standardization. Another law is the shortened tax profit declaration (Verkorte winstaangifte). This law heavily reduces the elements and process time of tax declarations. As a part of the administrative burden reduction project, the government decided to extend the use of XBRL in the Netherlands.

XBRL Netherlands

XBRL Netherlands (XBRL Nederland) is the Dutch organization that is involved with the adoption and promotion of XBRL in the Netherlands. XBRL Netherlands is the organization that represents the Netherlands in the steering committee of XBRL International. [XBRLNL01]

Dutch taxonomy project (NTP)

The Dutch taxonomy project organization is responsible for the development of the Dutch Taxonomy. The Dutch taxonomy is developed together with the government and business organizations, on the initiative of the Ministry of Finance and the Ministry of Justice. A covenant regulates the rights and duties of the involved parties (government, consuming parties, business organizations, associations of undertakings, intermediaries and ICT service providers). Ninety parties are currently signatories of the covenant. [XBRLNTP01]

Logius (former GBO.Overheid)

The government transaction gateway (OTP) is in the first place an initiative of the Dutch government. Control and administration of the OTP is a task of Logius service organization. This organization is also responsible for other government related services like DigiD, the overheidsservicebus and waarschuwingsdienst.nl.

Accounting organizations

Accounting organizations are intermediaries in the process of financial reporting. They process financial data of companies into useful information that is used for internal or external reporting. They have also an auditing task in the business reporting chain. Impact and changes for accounting organizations will be discussed further in chapter 2.2.6.

Companies

Companies are directly involved in the XBRL reporting chain when they produce their own XBRL instances for external reporting, or when they send their own XBRL instance (created by an intermediary) to consuming parties.

When a company put financial reporting out under contract to an intermediary (and the intermediary is also responsible for spreading the information), the company is not directly involved in the XBRL reporting chain. However a company can influence an intermediary with demands of cost reduction or speed, which could trigger an intermediary to consider the use of XBRL.

Software vendors

Suppliers of software for bookkeeping, reporting and declaration are faced with many changes in requirements concerning their software. In general it could be said that software vendors have to implement XBRL in their solutions. In some cases the need for a specific solution domain will completely appear or disappear. For example, the need for XBRL instance reader solutions appear and the need for not XBRL enabled solutions could disappear over time. Some vendors chose to extend their software with a broader spectrum of solutions. The changes in the three mentioned domains (bookkeeping, reporting and declaration) are assessed along with the surrounding processes of intermediaries in chapter 2.2.6.

As mentioned earlier, the OTP exchange infrastructure is linked to external services. One of these external service is the Authorization Service Provider (AUSP). At this point in time, there are two parties in the Netherlands who offer solutions for authorization. They can also be seen as involved software vendors. The two parties are CreAim and Diginotar [XBRLNTP04].

Bureau of Statistics (CBS)

As part of the project reduction of administrative burden, the Dutch Central Bureau of Statistics (Centraal Bureau Statistieken, CBS) reduces the amount of statistics delivery duties for companies. [MINEZVOOR01] The CBS also accepts data in XBRL format from companies that do not exceed 50 employees, but only for a limited amount of information request areas. [CBS01]

Chamber of Commerce (KVK)

The Dutch Chamber of Commerce (Kamer van Koophandel, KVK) accepts, as a part of the reduction of administrative burden, annual accounts in XBRL format. Besides the change in document type, the choice for XBRL also caused a fundamental change. The KVK only accepted documents that were created from commercial principles. With the choice for XBRL, the KVK has indirectly chosen for a fiscal principle, because XBRL is based on the fiscal principle. With the digital delivery, the KVK intends to save much time and effort in the processing of received annual accounts. [KVK01]

Dutch Tax Office (BD)

The Dutch Tax Office (Belastingdienst, BD) has started a pilot project for the use of shortened profit declarations. [MINEZVOOR01] The declarations contain heavily reduced amounts of elements compared to the regular form, and are therefore easier and faster to process. A shortened profit declaration is almost immediately processed into a final tax assessment.

The manner of auditing of the Tax Office also changes. A new concept of auditing called horizontal supervision (horizontaal toezicht) is introduced. The idea behind horizontal supervision is that the intermediaries will provide a certain level of assurance. This means that the auditing task will move from the BD toward the intermediaries.

The Tax Office is also planning to introduce another way of random checks and inspections with the use of XBRL GL. This XBRL GL technique is (more) suitable to zoom in to lower levels of data, which can be tested for logical and technical accuracy. This concept of inspection is easier and takes less time, because it could be automated. [DGLS2009]

The Dutch Employee Insurance organization (UWV)

The Dutch Employee Insurance organization (Uitvoeringsinstituut Werknemers Verzekeringen, UWV) has decided to not support XBRL. The UWV however is a stakeholder, in the sense that they could influence the developments, for example via requirements if they want to join the XBRL developments.

Banking organizations

Banking organizations use financial information to calculate the risks for financing credit. Two banks (ABN AMRO and Rabobank) and two accounting organizations (Gibo groep and ABAB) are working together to create an extension for the Dutch taxonomy. The extension adds specific information to the taxonomy that is used by banks to calculate risks. [XBRLMON01] Since April 2010, the ABN AMRO bank, the ING bank and the Rabobank support XBRL for credit reports. [COMP02]

The corporate reporting supply chain

The following figure shows the place of different parties in the Corporate Reporting Supply Chain (CRSC) that shows the process of business reporting.

Figure 4: XBRL and the corporate reporting supply chain. [DGLS2009]

Other Countries

It is interesting to see what the current developments concerning XBRL are in some countries other than the Netherlands. Below, the developments of three selected countries are described.

Belgium

In Belgium, XBRL is already implemented for the Central Balance Sheet Office (CBSO). Belgian companies get a 60 Euro discount on the costs for turning in the annual reports in XBRL format. The CBSO currently receives more than 90% of all the annual accounts in XBRL format. The number of types of information that may be sent by XBRL instance is still increasing. [XBRLPLAN01]

The situation in Belgium is however different from that in the Netherlands, because the Belgians had already one principle, instead of the fiscal and commercial principles that are available in the Netherlands. This makes the change smaller than in the Netherlands. [PLEINP01]

Japan

In Japan, XBRL is used in production at key governmental and public organizations. Projects for the use of XBRL at EDINET and TDnet listed companies are completed and these companies are required to submit fillings in XBRL format. XBRL Japan organizes monthly seminars for its members to explore the advanced use of XBRL. [XBRLPLAN01]

United States of America

As mentioned earlier, the US SEC has mandated the 500 largest U.S. companies to file in XBRL format. XBRL is also suggested for risk return summary proposals in mutual fund prospectuses and for credit rating agencies to report rating changes in XBRL format. [XBRLPLAN01]

2.2.5 General advantages and disadvantages of the use of XBRL

The most important advantages and disadvantages of the use of XBRL in the Netherlands will be described in this subchapter. Information in this chapter is based on an earlier study [DGLS2009]. A more detailed description of the (dis)advantages mentioned below can be found in that paper.

It has to be said that not all of the mentioned advantages and disadvantages could be assigned directly to the XBRL technique. In some cases is XBRL a key enabler of the advantages or disadvantages.

Digitalization

The use of XBRL stimulates digitalization of financial data exchange between company and intermediary, and between sender (intermediary or company) and receiver (CBS, BD, Kvk and Banks). Digitalization of data involves (or could involve in the future) for example annual reports, the samenstelverklaring and return information like delivery notifications or final tax assessments.

Information could also be of higher quality due to the combination of the taxonomy that supplies definitions and due to horizontal supervision. As a result of digitalization and the establishment of the Government Transaction Gateway, it is easier to spread information. Retyping errors will occur less, because the retyping process is terminated. Also transport and delivery costs are reduced and time is saved. Storage of information will become easier due to digitalization, because there are no large physical libraries needed.

Disadvantages of digitalization (or the change to another digitalization standard) is that the need of knowledge and skills in the organization changes at managing level as well in the supporting (IT departments) and executing roles (users) in the organization. There could be also need for new hardware, software or a new infrastructure. These mentioned disadvantages and costs are initial costs, but can also cause returning costs at longer period (like energy consummation, backup, service or licensing costs) and need to be taken into consideration and managed carefully.

Digital storage of data has also a disadvantage. The information is exposed to cyber crime and should be protected. However, the need for physical protection is also still there.

Standardization

XBRL causes standardization, due to the use of the Dutch taxonomy. This result in easier exchange of information via the OTP and result in a situation in which all parties know what is meant by the datafields, because there is one standard definition. This could improve the information quality.

Due to standardization, it is also easier to integrate different systems with each other. Auditing will become also easier, because it becomes possible to support the auditing process by computers. Mapping costs for the receivers are terminated because all the data that they receive have the same format.

However, a disadvantage is that in a situation where not all consecutive processes are fully XBRL-enabled, the data has to be mapped before an XBRL instance can be created. This is a process that has to be carried out only once (per data source), but has to be repeated when the taxonomy or the data structure changes. This means much work in the current situation where the taxonomy is still in development.

Another disadvantage is that standardization makes organizations less flexible to choose their own way of reporting.

Also are organizations faced with major changes in their (core) processes. It is questionable how much organizations will decide to use XBRL and how they will maintain their execution of professional duties on longer term, when they decide to use XBRL not. For organizations that decide to use XBRL it is questionable if they succeed in changing their processes and in implementing XBRL.

A last point of criticism is about the technical part of the taxonomy. It is said that XBRL has weak points, like the redundancy in linkbases and that fact the definition of semantics is not optimal. [PIJLS07]

Safety

The Government Transaction Gateway is safer than earlier methods of digital communication with the government, like the BAPI channel. It checks the authority and authentication of the users and uses hashing and encryption methods for data that is being sent.

The drawback of these safety measures is the raise in costs and efforts it takes to implement and maintain them.

Regulations

An advantage for XBRL is that the government has decided to support XBRL in its project to reduce the administrative burdens. As a result to the new and changed regulations, costs will be reduced and procedures will become easier. The senders, as well the receivers of XBRL information, are expected to receive these benefits (over a longer period of time). Companies which has put financial reporting out under contract to an intermediary, could also receive the benefits if XBRL. This is happening when intermediaries recharge the lower costs into the bill for the companies. Companies can also benefit from the shortened profit declarations, because they receive their final tax assessment earlier.

The Dutch government however has chosen not to oblige XBRL.

2.2.6 Processes of accounting organizations and consequences of XBRL

As described earlier, accounting organizations (also referred to as intermediaries) are creators of financial reports for companies. It is also possible that an organization produce their own financial reports, but that situation is out of the scope of this subchapter.

Intermediaries receive more or less structured data from companies and process this data into useful financial information that can be used for internal or external reporting purposes. Accounting organizations also carry out assurance activities. This means that they audit the financial data that companies provide and provide a certain level of assurance about the correctness of the data.

Both activities will be described in this subchapter.

Composing activities

The activities that take place in a situation without XBRL can be divided into three main process steps. It starts with the moment that a company its data enters the accounting organization until the moment that financial reports left the intermediary.

1. Administration and bookkeeping. During this process, a trial balance (kolommenbalans) is prepared. Different accounting software packages (like Accountview, Exact, Unit 4, etc) could be used in this process.

2. Report generation. The financial reports are created in this step. Accounting organizations use report generator software to support this process.

3. Fiscal preparation. The reports generated in step 2 could not be used for reporting to the Tax Office without changes. The process of fiscal preparation is supported by fiscal software.

The figure below shows the parties and software types that are involved in the process of composing financial reports in accounting organizations.

Figure 5: The process of composing financial reports. [DGLS2009]

As the earlier study financial advantages and disadvantages of the use of XBRL [DGLS2009] describes, XBRL could be used at different places in this process. The more and earlier the first stage in which XBRL is used in the process, the higher are the benefits.

The following picture gives an overview of the earlier mentioned process with XBRL.

Figure 6: The process of composing financial reports with the use of XBRL. [DGLS2009]

Instead of the situation where each receiving party has its own way of sending and receiving financial reports, the XBRL situation shows the standardized way of spreading information via the Government Transaction Gateway (OTP).

At this point in time it is most common that XBRL is generated at point three in the process that is shown above. The fact is that the principle has changed from commercial and fiscal, to one (fiscal) principle. As a result, the information of the report generator could also be used for fiscal announcements. This will result in a situation where the fiscal software will become needless in the future.

However, many companies are still interested in financial reports based on commercial principles, so software must still be able to work with both principles. Therefore there will be fiscal software next to the classical report generators, until one type of software is able to handle all the needs for different types of reports, and also the financial announcements. In such a situation is XBRL generated at point 4 in the process, but that does not result in many advantages for accounting organizations, because the other processes do not benefit from the use of XBRL.

It is also a possibility that organizations turn their financial data in, in XBRL format (point one). This is however only possible in an organization that does his own digital bookkeeping in a software package that is able to export XBRL. Also, to work with this XBRL file, the intermediaries must be able to import this XBRL file into their own system.

Another possible point where XBRL files could be generated is point two (in the accounting software of the intermediary). The XBRL file generated at this point could be used for communication, but if the need for different type of reports still exists, then a report generator must be able to import the XBRL file for further processing.

Based on interviews, it could be said that at this point in time, export functions for XBRL are becoming more common, but import functions are rarely integrated in software packages. Therefore, it is most common that XBRL is still generated in the end of the process activities of accounting organizations.

As described earlier, the intermediary has to map the financial general ledger to the taxonomy, before XBRL files could be generated. This process has to be carried out once per taxonomy, but has to be repeated if there are changes in the taxonomy or the structure in which a company provides this financial data.

Assurance activities

The assurance activities of accounting organizations are also undergoing a huge change with the use of XBRL. The changes will be briefly described, but Bisschop described the changes in more detail in his paper called Invloed van XBRL op de accounting practice [BISS2009]. The paper is recommended for anyone who wants to read more about the changes in the assurance activities, the threats and opportunities to accounting organizations.

The first change in the assurance activities is the object of auditing. It changes from an annual account on paper to an electronic XBRL instance, linked to a specific taxonomy. The audit and control on segregation of duties is still necessary, but due to digitalization, systems are more and more involved. Therefore it is also necessary to look at the segregation of duties within the IT organization. These two changes result in changes in the type of knowledge and skills that auditors need to possess to carry out their tasks.

There are also different kinds of risks of fraud or mistakes in reporting with XBRL. It is possible that the wrong taxonomy can be used or that the data is not correctly mapped. The instance document can also be changed before or even after the approval of the auditor.

However, due to the clear definitions in the taxonomy it becomes easier to detect fraud, because there are no longer unclear, grey areas. More data also becomes available to base the approval on. Both these advantages can lead to a higher level of assurance.

Threats to accounting organizations

The developments around XBRL result in some threats to accounting organizations. The first threat is that it is possible that in a situation where XBRL is completely integrated in financial software, companies itself will be able generate and send XBRL instances without the need of accounting organizations. However, in such a situation an accounting organization can still fulfill a task in analysis of financial data. They can also provide services for implementation and the maintenance of the financial systems of the company.

Another threat is that banks are going to offer services that (partly) overlap with services that are offered by accounting organizations. An example is the development of the electronic invoice (e-factuur), which enables a bank to offer processing of the invoice in the bookkeeping of a company.

Opportunities for accounting organizations

Besides the threats that could lead to decrease of services and billable time, the implementation of XBRL in the Netherlands also offers some opportunities to accounting organizations.

Due to the standardization it becomes easier to compare companies with each other. Accounting organizations can offer benchmarks for companies. For example, a comparison of the financial figures among companies in the same branch.

Accounting organizations can also function as bank brokers. Because banks (are going to) accept XBRL, it becomes easier to compare credit offers of different banks and advise companies.

Horizontal supervision can also lead to new opportunities and advantages. An accounting organization often knows a company better than, for example, a bank. They know if the right procedure is followed and they could advise banks with this information for credit ratings. Accounting organizations can also help the tax office with supervision at the Tax Control Framework (TCF). Companies could profit from such a situation because there will be less (unforeseen) tax assessments afterwards.

With XBRL GL it is possible to offer real-time financial reports (for example on a companys website). However, to provide a certain level of assurance on this information, continuous assurance must be integrated in the organization. Continuous assurance refers to the fact that monitoring and auditing becomes integrated in the daily business processes of organizations. The amount and level of data of XBRL FR is not enough for continuous auditing. XBRL GL is required, because it makes it possible to zoom deeper in on the data.

2.3 The Dutch market of small and medium sized accounting organizations

In this subchapter the Dutch market of small and medium sized accounting organizations is described. The definition of small and medium sized organizations will first be in focus. The second segment aims to create a brief overview of branch organizations and professional associations in the Dutch market of small and medium sized accounting organizations. Information and available literature about the use of XBRL in small and medium sized accounting organizations in the Netherlands will also be discussed.

2.3.1 Definition of small and medium sized organizations in the Netherlands

Small and medium sized organizations are knows in Dutch as Middel- en Kleinbedrijf (MKB). MKB organizations are limited in size, usually up to 250 employees. Around 4,2 million people are working in the MKB in the Netherlands and 99% of all companies could be marked as being MKB companies [MKBNED01].

Based on the information of the NIVRA (see next subchapter), there are approximately 3275 accounting organizations in the Netherlands.

In 2005 the MKB definition was redefined. Companies are split in micro (