cpa’s and the company business information supply chain mike willis founding chairman, xbrl...
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CPA’s and the Company Business Information Supply
ChainMike Willis
Founding Chairman, XBRL International
Partner, PricewaterhouseCoopers
Business Trends Detroit Automobile Company, 1899 Ford, 1903 The impact:
1908 12 to 14 hours to assemble $1000 price per car
1914 93 minutes to assemble $360 price per car
1929 1 in 5 Americans owned a car
Business Trends (cont.) 1974
Average Grocery Store had 9000 SKU’s Chewing gum sale in Ohio changed that forever
Today – UPC implications $17B annual savings in grocery chain savings alone Average Store over 30,000 SKU’s Greater controls over assortment, inventory levels and
pricing Scanning /self check out are routine
We showed that it could be done on a massive scale, that cooperation without antitrust implications was possible for the common good, and that business didn’t need the government to shove it in the right direction.
— Alan Haberman, Chairman, Symbol Standardization Subcommittee
Open Standards – Discussion Topics Company Applications
Operational Use Risk & Credit Assessment Internal Reporting External Reporting
The Corporate Reporting Supply Chain
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investmentand Lending
AnalysisProcessesProcesses
ParticipantsParticipants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies
What
ACORDXBRL
Ledger XBRL
Financial Statements
The Corporate Reporting Supply Chain
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investmentand Lending
AnalysisProcessesProcesses
ParticipantsParticipants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies
What
ACORDXBRL
Ledger XBRL
Financial StatementsYou are here
Transaction Data
Multiple Departmental Excel Spreadsheets
Senior Management
Consolidated spreadsheets for management
Email & File Servers
Management Reporting Current Architecture
2000 elements = 6500 spreadsheets (this is not a typo)
SQL
SQL
Transaction Data
Multiple Departmental Excel Spreadsheets
Senior Management
Consolidated spreadsheets for management
Email & File Servers
Management Reporting Current Architecture
SQL
SQL
Subsidiary ERP’s
Senior Management
Internal Reporting
Supplemental information aggregation
Transaction and or
subsidiary Data
Senior Management
Viewing and aggregation for department & management
Web Services Architecture
XMLWeb
ServicesSchema
Visibility of Information The first obstacle is……….?
Language
XBRL can help to increase the consumers access to information in their own language regardless of what language the report is published in.
Let’s find the amount for ‘financial income’
Once you have virtual access to the underlying detail data; then you can begin to access it.
Management can access
Board members can access it
Others???
How they access it is also part of their ability to analyze it?
Visualization – A better way of analyzing information today
Most information today is in columns of numbers
Visualization – A better way of analyzing information today
• Identified business drivers that contribute to a company-defined outcome (EVA, ROCE etc) can be mapped out; Performance in each of those drivers can be colour coded
• Management are provided with a clear view of what caused a given outcome and the scale of their impact.
• Includes organisation charts that reflect financial performance;
• Favourable performance shown in blue (and adverse performance shown in red);
• Enables an immediate top-down view of business unit performance throughout the global company.
Business templates: to portray financial/non-financial information
Visualization – A better way of analyzing information today
• Monthly financial data can be compared against either budget and/or against previous year to get idea of under/over performance;
• The data can then be smoothed into a Moving Annual Average to clarify the underlying trend of the variable
• The standard deviation of any financial variable may be calculated for every business unit in group;
• Business units with a high standard deviation for a given financial variable (i.e. > 2) can be immediately identified and ranked in order;
• The analysis provides an immediate way of identifying unusual performance amongst a large group of business units.
Statistical analyses: to identify trends and outliers
Visualization – A better way of analyzing information today
• Possible end-of-year sales, profit .etc outcomes can be calculated on the basis of a number of forecast scenarios;
• The average of these scenarios can then calculated and assessed against management forecasts;
• Enables an immediate identification of over optimistic forecasts and the possibility of profits warnings.
• Variables can be plotted against one another to determine their respective influence on a given outcome;
• In the above example, gross profit margin is shown against sales for FY2002 and actual outcomes are shown against those that were budgeted for.
Graphical structures: to reveal “hidden” facts
The Corporate Reporting Supply Chain
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investmentand Lending
AnalysisProcessesProcesses
ParticipantsParticipants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies
XBRLLedger
XBRLFinancial StatementsYou are hereACORD
How does XBRL leverage XML?
XBRL adds to XML: Multi dimensional financial
data representations
Financial reporting vocabularies (taxonomies)
Aliases and other definition relationships
Mathematical relationships between concepts
Flexibility about how to present items to users
Structure for authoritative policies and guidance
Reporting apps need these even when using XML
CalculationsCash = Currency + Deposits
CalculationsCash = Currency + Deposits
PresentationCash & Cash Equivalents
PresentationCash & Cash Equivalents
FormulasCash ≥ 0
FormulasCash ≥ 0
ReferencesGAAP I.2.(a)
CoA 1100
ReferencesGAAP I.2.(a)
CoA 1100
DefinitionsAKA Liquid Assets Definitions
AKA Liquid Assets
LabelUS $
FY2003Budgeted
LabelUS $
FY2003Budgeted
XBRLItem
“200”
XBRLItem
“200”
Solution developmentStep 1.
Company Regulator
Problem = Exchange ofdata between regulated
entity and regulator
Regulator solution = Use XML Schema to
define terms for exchange
XMLSchema
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
Solution development.Regulator Perspective
Company
Regulator
XMLSchema
CompanyCompany
CompanyCompany
CompanyCompany
Company
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
CompanyCompany
Proprietary solution for RegulatorLooks good to the regulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
Regulator
RegulatorXML
Schemas
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
Regulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
Regulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
RegulatorRegulator
Regulator
Solution development.Company Perspective
Company
Proprietary solutions looks different to the companies
and is a costly and complexmodel
Regulator
Solution developmentStep 2.
Company RegulatorXBRL
Internal Reporting Instructions
3rd PartyInterpretative
Guidance
ReportingSources
RegulationsInterpretative
Guidance
Instructions
Stds (FASB,NAIC)
AuditGuidance
Validation
What you can do? ……..with a new tool.Internal Reporting Enhance Reporting Processes (ADT) Enhanced Reporting (ValueReporting) Benchmarking (ADT) Taxonomy development Connectivity to internal reporting policies Optimized Reporting Templates Intra-organizational reporting (ADT)
What you can do? ……..with a new tool.Internal Reporting Risk Management (ADT) Visualization Modeling (ADT) Compliance Reporting (ADT) Compliance Assessments (ADT) Compliance Monitoring (ADT) Compliance Monitoring (ADT) Continuous Monitoring Continuous Auditing
CPA’s and the Company Business Information Supply
ChainMike Willis
Founding Chairman, XBRL International
Partner, PricewaterhouseCoopers
Lower Costs
“…………[financial services] companies can reduce their publishing expenses 46%, by adapting an XML centric means for document development, assembly and distribution.”
Zap Think, March 2002 Financial Services XML Report
The Corporate Reporting Supply Chain
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investmentand Lending
AnalysisProcessesProcesses
ParticipantsParticipants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies
XBRLLedger
XBRLFinancial StatementsYou are hereACORD
Benefit Considerations
• XBRL benefits for consumers – Enhanced analytical capabilities– More timely, accurate, data for decisions– Enhanced functionality– Ease of use– Facilitates language translations
• XBRL benefits for producers– Tell your own story (precise & clear)– Accelerate adoption of reporting models– Enhanced functionality– Ease of use– Better control environment– Enhanced analytical capabilities– More timely, accurate, data for decisions
Benefit Considerations
• XBRL benefits specifically for regulators– Enhanced functionality of information– More timely, accurate, information for decisions– Enhanced analytical capabilities– Promotes more effective processes– Accelerates adoption of reporting changes– Includes regulatory input and perspectives– Lowers cost of regulation by spreading
development among collaborators
– Enhanced effectiveness of supply chain
XBRL – Ready for Prime Time?
“Some critics have suggested
that XBRL is not ready for
primetime. In fact, it is.”
Hon. Richard H. BakerChairman, Capital Markets Subcommittee