iBR Magazine March 2012

Vol

03 • Issue 01 • March 2013

Finding The Benefit of XBRL John Stantial, UTC

page 12

page 27

HMRC and Companies House Update

The Carbon Disclosure Project

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EDITOR ’S M ESSAGE

From the Editor’s Desk The headlines surrounding the XBRL over the last quarter haven’t exactly been fantastic, and as a publication that prides ourselves on being at the forefront of standardised business reporting techniques and technologies, we have to ask, why?

There are genuine concerns that XBRL is just a headache imposed by the SEC with no real internal reporting benefit, there are concerns that it is too error prone and the information too delayed to be of use to investors, and there are concerns that it is also just expensive, when many of the biggest companies developed their own systems to carry out exactly the same functionality before XBRL was widely in use.

However, these are only one narrow interpretation of the story. In this issue we talk to a major filer who has been with XBRL since the start, we talk to representatives of the end investors who are supposed to be getting the most out of XBRL, and we talk to regulators and XBRL developers about the latest trends and developments of the technology.

iBR Editorial Advisory Board Ami Beers – AICPA, United States Noemi Di Segni – XBRL Italy Carsten Felden – Technische Universität Bergakademie Freiberg, Germany Poul Kjaer – Aguilonius Nordic A/S Association, Denmark Makoto Koizumi – Fujitsu, Japan Gargi Ray – Infosys, India Michelle Savage – XBRL US, United States Dave Nitchman – XBRL International publisher Sky Team International (HK) Ltd 18/F, 8 Queen’s Road Central, Hong Kong Tel +852 2921 9367 Fax +852 3007 0249 Editor Peter Waters project director Rebecca Trant operations director Tammy Fung design & layout LEAP Design Associates Sponsorship and Advertising sales@iBR-mag.com general inquiries info@iBR-mag.com

publisher’s note The opinions expressed in this publication are not necessarily those of the publishers

All new regulatory impositions go through certain phases, with the initial uptake, the spread of the technology, and the difficulties of making sure that everyone is producing data to a universally high standard. These are to be expected, and in some ways it is a good thing that XBRL is gaining the traction of those in the community; it gives those responsible the chance to fix the problems, and take XBRL to the next step.

or of the institutions of the contributing

Yours,

No part of this publication covered by the

author. Although care has been taken to ensure the accuracy of the information contained within the publication, neither the publishers, authors nor their employers can be held liable for any inaccuracies, errors or omissions; nor held liable for any actions taken on the basis of the views expressed, or information provided within this publication.

publisher’s copyright may be reproduced,

Peter Waters Editor, iBR peter@ibr-mag.com

stored in a retrieval system or transmitted, in any form or by any means, be they graphic, electronic or mechanical, including photocoping, without the written permission of the publisher. Any unauthorised use of this publication will result in immediate legal proceedings.

All Rights Reserved © 2013

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TABLE OF CONTE NT

contents 4

COVER STORY

By John Stantial, United

finding the benefit for filers Technologies Corporation

8

xbrl for investors

By Glenn Doggett, CFA Institute

30 Towards a Sounder and

the 2013 XBRL US GAAP Taxonomy

Accounting Standards Board

By Roy Warden, Her Majesty’s

AG Germany and Paren Shah of cundus Ltd Great Britain

50 DENMARK: XBRL reporting for SMEs in Denmark

17 INSIDE STORY environmental

Denmark

53 netherlands: Dutch

businesses benefit from XBRL

By Alan D. Smith, CITI

Roadmap

By Pedro Faria, Carbon Disclosure Project

By Geoff Zakaib and Gerald

45 canada: The Canada day

Information and Technology

By Shweta Gupta, Microsoft

24 INSIght upcoming european directives

By Gianluca Garbellotto, IPHIX

47 FOCUS ON EUROPE Solvency II Pillar 3

By Karin Wallagh and Dave Van Den Ende, Deloitte Netherlands

Trites, XBRL Canada

20 It’s all about

By Lise Fode and Niels-Peter Authority and Poul Kjær, XBRL

42 canada: The XBRL Canada

reporting

Rønmos, Danish Business

Corporate Actions Communications More Transparent

House

and Regulatory BI at cundus

40 Rendering

Jack Mansfield, Companies

By Paul Penler, Ernst & Young,

By Gerrit Vogt and Dr. Maciej Piechocki, External Reporting

and Louis Matherne, Financial

Revenue and Customes, and

By John Dill, BMA

34 FOCUS ON AMERICA united states: Using

xbrl in the uk

Public Reporting, QRTs and XBRL

Safer Financial System

12 NEWS

vol 03 • issue 01 • March 2013

A Solution for Supervisory Reporting,

56 FOCUS ON ASIA

japan: xbrl in japan

By Mr. Ito, Financial Services Agency, Japan

59 in the world of...

Hudson Hollister, Founder and Executive Director, Data Transparency Coalition

By Gilles Maguet and Thomas Verdin, XBRL Europe

page

30

27 opinion

A New Specification for a New Regulatory Environment

By Jon Siddle, CoreFiling

page

56

page

insight

24

upcoming european directives

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opinion

towards a sounder and safer financial system

focus on asia: japan xbrl in japan

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cover story

Finding the benefit for filers

By John Stantial, United Technologies Corporation

John Stantial, Assistant Controller of UTC, looks at the benefits, headaches and hurdles of XBRL filing, and what can be done to renew enthusiasm.

We became interested in XBRL around six years ago. At that time there was a real shortage of any practical information on XBRL, unless you were one of the few gurus within the industry, so we decided that the only way we were going to learn about XBRL was to go out and grab some tagging software and do it. We ended up with a piece of software that at that time cost approximately $300, so it was an easy investment to make.

We picked up the software and started playing around with it, and it was actually the best thing we could have done because it took something that was very hard to conceptualise intellectually and made it much more understandable and practical.

Since we had done the work we figured that we might as well go ahead and file with the SEC’s voluntary filing program. I think we were the eighth or ninth company to do so, and the first one that wasn’t a company affiliated with the industry.

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Since we were cutting our teeth and filing with the SEC we still wanted to get things right, so we hired one of the Big Four to come in and do a review of our filing; give us any pointers, and show us some more expedient ways of doing things, indicating what we might have been doing wrong and so forth. That turned out to be very beneficial and accelerated our learning process. Since we were trying all of these things it garnered the attention of the SEC, and we went down to meet with them a few times to discuss what we were seeing and what we saw as beneficial and not beneficial.

We never contemplated outsourcing our tagging because it never made much sense. It was easier to do in-house; it wasn’t costly, we understood it much better, and we had a lot more control. We just built it into our quarterly closing routine and now we rotate it amongst the staff in financial reporting.

f i nd i n g t he b en e fit fo r file rs

Any benefit for internal communications?

We haven’t really been able to find a means of incorporating the functionality onto other aspects internally. We’ve tried, but we really can’t find something that it fits logically and is beneficial to our processes. One of the challenges we are having is expanding the application of XBRL. Unfortunately, XBRL is something we do because of the SEC, rather than because there is an internal value.

In my mind it was okay to start at that point and we certainly needed the SEC to invest to get the taxonomy in place and develop some of the robustness around it, but it seems to me that we are on a plateau and can’t get over whatever hurdle we are facing to find a broader means of applying the functionality.

analysts that follow us have already published their results. So to wait another week or two or three to get the tagged financial information disseminated is almost irrelevant at that point.

This is where, unfortunately, I think there tends to be an insufficient level of understanding across industries and companies. The people that are not proponents of XBRL are very fond of saying that nobody uses their data because they never get any questions on it. I’m not sure that’s true; the data is used in the background by the aggregators and then it’s swept into the analysts’ models, but the analysts themselves aren’t the ones doing all of that, they are just using the output of their models.

There are people within In our case, years ago we “... part of the problem is these organisations that started using Hyperion that since XBRL has really are using XBRL and are Financial Manger (HFM) benefiting from it. The same worldwide, so we already only been utilised for thing would happen if you have a worldwide financial SEC reporting, other than were to tag early in the reporting system that all of process with webcast data our underlying ERP systems individuals who are directly or an earnings release. The are linked into. Something like involved in SEC reporting, it’s reality is that the data that XBRL in-line for the general is being pulled into their ledger would be a major a tool that’s largely invisible model is being pulled from undertaking by a company. to most personnel including some XBRL source; he or Unless you’re at a crossroads she just doesn’t understand or in a situation where you our senior management.” that. They are receiving need a new ERP system or to all the benefits of XBRL data; the consistency, link with ERP systems, it’s not something you’re going the accuracy, and so forth; there’s just a large to readily undertake to demonstrate the functionality educational process, almost a sales process, of XBRL. That’s kind of where we get stuck. necessary with XBRL. Also, part of the problem is that since XBRL has One of the things that could help the current really only been utilised for SEC reporting, other than initiative is to have the SEC only require reporting individuals who are directly involved in SEC reporting, in XBRL and not in both in HTML and XBRL. The it’s a tool that’s largely invisible to most personnel current reporting requirements are turning XBRL into including our senior management. They know we file a redundant, more costly, more time consuming in XBRL in conjunction with our Form 10-Ks and Form exercise which does not help XBRL’s cause. I’d prefer 10-Qs, but other than that they’d be hard pressed to that they ditched the HMTL; if we filed directly in really explain what it is. So if you can’t get that more XBRL we could accelerate our reporting. broad based understanding it’s hard to get a level of pull for XBRL beyond SEC reporting.

The ideal would be if this country followed the example of the Standard Business Reporting (SBR) How about for investors and analysts? program in Australia. Conceptually that’s the best The world today operates in minutes not days, so idea, where you can just get your data out there within hours of having an earnings call, all the

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cover story

and all of the government agencies that request it can just tap directly in. There’s an amount of reporting that we currently do for all the various agencies that is nothing short of monumental.

Is there an issue around the demands of different agencies?

There’s no consistency between government agencies. Often definitions of the same caption differ depending on the agency, or even sometimes it could be the same data but you don’t have an ability to submit it in an efficient fashion. You have to go and pull it from some ERP system, or in our case maybe the HFM system, but then you have to either manually fill out a form or go online and enter it for an agency and then turn around and fill out that same information on a form or online for another agency even though it’s the same data. There are lots of issues in terms of reporting to the various US governmental agencies.

It’s not like we have to look at this hypothetically, because Australia has a better system. Maybe they don’t have quite the same level of reporting that we have in the US but they’ve certainly streamlined and marginised quite a bit of it successfully.

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The biggest frustration I have right now is that XBRL has all this potential, but because the SEC is the only one that has pushed it, it is really only viewed as just another reporting burden, as opposed to potentially something that could be a tool that could really save hours for corporations. That just doesn’t seem logical to me.

What comes next?

Right now, I still don’t see a big benefit for preparers.

Since preparers are the ones that provide all the data I think we really have to find something that benefits them if you are going to get a lot of sustained momentum behind this initiative.

Otherwise the filers are just going to feel that it is another governmental obligation and just keep complaining about it, which they do regularly. It’s just never going to get the momentum it needs to go to the next level.

So where could that benefit for filers be found?

I did an exercise once where I tried for go and figure out all the governmental reporting we do here in the US as a corporation. I could not even figure out all the levels of reporting we did

f i nd i n g t he b en e fit fo r file rs

because it kept taking me into more and more functions. I had to go over and talk to legal, treasury, finance, HR, tax and so I just ended up stopping with a subset of it, and already I was into tens of thousands of manual hours a year on reporting for all these different areas.

All that reporting has zero value add to the corporation, but you’ve got the equivalent cost that is really massive. But if you have to do it because it’s a regulatory requirement, then there needs to be a way to undertake it in an efficient manner that utilises the same data multiple times across platforms, and to setup the functionality to report so that it’s largely automatic.

All the different monthly, quarterly, semi annual, annual, and other reporting requirements that we have to generate the data for, inputs such as productivity and capital expenditure across the company, are very important when you consider they are the source input for metrics that drive the economy. Yet the data is all collected on a manual basis because it’s viewed as just another reporting

obligation. There could be hundreds and hundreds of forms if the data has to be collected by a legal entity for a company our size. No standardisation, none of the benefits that you get with XBRL in terms of consistency and the ability to look at definitions and automate and so forth.

If a broad range of government agencies allowed us to submit in XBRL then we could setup the functionality on our HFM system to generate the reports automatically, to pull the data automatically from the underlying ERP systems and then feed into reports that can be tagged automatically in XBRL to be remitted to whoever requires such information.

Then every time the report is due, instead of spending hundreds of hours manually pulling the data and filling out a report, you simply press the button on the report and send it through whatever means they want to receive it electronically in XBRL. I thought really at the end of the day that’s what XBRL was supposed to be; a common sense simple tool to enhance efficiency in processes.

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cover story

XBRL For Investors By glenn doggett, CFA Institute

Glenn Doggett of the CFA Institute examines how XBRL can benefit both filers and analysts.

There is a lot of information that is constantly being reported, but the analysts have to go through several processes to get the data into a useful form.

We see XBRL as a way to have machine to machine deliverable information that requires fewer human fingertips, and how this could lead to improvement in their evaluation process. That’s what we are holding out for, as we expect XBRL, when it starts becoming more widely reported to be more useful to the investment industry.

We really see XBRL as a way to get information to the investors, primarily the institutional investor, equity research analyst and buy-side analyst. These are the people that are doing investment analysis for a living who will understand these benefits. As a researcher your investment pool may be 10 companies, but there are really 25 peers. Having information more easily available as you expand your analysis allows you to become more efficient, especially for international markets. When you have computer readable information on an entire country like China, one of the earlier adopters of XBRL, that even had a taxonomy that was translated into English, you no longer have to worry whether you are reading the information right. XBRL is helping that information move throughout the global investment community.

One of the downsides of XBRL right now, especially in the US, is that XBRL is a regulatory filing that sometimes comes in days or weeks after a press

x b r l f o r i n v e sto r s

release or after an update to a company website.

These sources may have a complete income statement and balance sheet for analysis. So the information that is computer readable is stale by the time it’s actually filed. Now the information that’s included in the footnotes and other more detailed tagging does have some current value. The equity research analyst really drills into every facet of every number that the company reports. So the extensions for them are a good thing because the analyst can quickly pull out what the company is saying it believes to be unique to its operations. However, you really need a time period of files so that you can conduct the analysis. One report isn’t going to be enough for everybody, but we’re really looking at that building up the available set of data over time.

What we’re typically hearing is that before investors make any wholesale changes to how they do their processes, they want a business cycle of information.

Depending upon what industry is being followed an

analyst typically needs four to eight years of annual information. That’s what they’re looking for to do evaluation, to determine how clean the data is, how comparable it is: you need these periods to look at the company to see how it’s improved over the past or how it has changed from the past.

The other thing that really has us excited is the number of companies that are starting to internalise the tagging process. Now, it’s never going to be 100%, as outsourcing the tagging to other firms is very cost efficient to the firm, that’s the most value for their money. However, the outsourcing process doesn’t allow them to start using that tagged information earlier, such as in the press release on their website.

The increasing number of companies that are starting to internalise the tagging process and the total XBRL process should, in our hope, bring about the tagged information being delivered the first and every time that new financial information is made available.

This is really where XBRL starts improving its utility and usefulness for investors. If a company can show

cover story

x b r l f o r i n v e sto r s

an analyst, they can push a download button and have the tagged information imported directly to a model or released to excel, as opposed to opening a press release as a PDF and typing away to update your model; the benefits are instantaneous.

We think there are still many more hurdles to go, because right now in most countries we’re just talking about the financial information and the footnotes. There’s still a lot of information that investors believe is decision useful that is reported separately from financial reports. Important operational data is contained in other parts of the regulatory filing or press release. Progress is being

“One of the downsides of XBRL right now, especially in the US, is that XBRL is a regulatory filing that sometimes comes in days or weeks after a press release or after an update to a company website.” glenn doggett, cfa INSTITUTE

made on corporate actions and on dividend reporting streams that are starting to get tagged.

There’s still a lot of information that investors use that companies have not begun addressing. So there are other growth opportunities for XBRL. The reporting companies have to be comfortable that the analysts are looking at what is required to be tagged before the company is willing to make that next step into how it develops XBRL from a requirement to tagging everything.

For us the big step this year is to see the continuation of a global adoption from a regulatory standpoint. We’ve already had information from Pakistan saying that the regulator is looking at an

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XBRL reporting process and from Latin America last year there were several regulators moving forward.

We want to see the continuation of the regulatory community, in aspects other than financial reporting, embrace structured reporting practices.

Here in the US, there are other agencies, such as the Energy Information Agency which tracks information on utilities, that doesn’t use XBRL for tracking any information related to the operations of companies. As we continue to see the broadening use of XBRL then it becomes more and more valuable because it touches on those other data sets investors and analysts use in their evaluations.

Another valuable area going forwards is the continuation in the enhancement of products that are available for the investment community, as this is really what will bring the investors to the table.

Investors are looking for more options and enhancements from the services information firms are providing. Whether it’s a portfolio manager or research analyst; knowing that XBRL will make the valuation process more efficient and enable more streamlining: That’s what’s going to bring them to the table.

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news

XBRL In The UK With Roy Warden, Head of the Corporation Tax Process Team at Her Majesty’s Revenue and Customs, and Jack Mansfield, Head of E-Accounts Transition, Companies House.

Roy: I think there’s wide recognition that XBRL has huge potential and there’s also recognition that it is a public good. It is something that supports effective financial regulation by governments.

That’s in addition to any other benefits it might have in terms of supporting financial analysis and supporting good investment decisions.

XBRL is going forward at different rates in different places. The UK has mandated the use of iXBRL for company tax returns and that came into effect from April 2011. Companies House makes extensive use of XBRL for registering accounts for the public record.

Other parts of government involved in financial regulation are aware of XBRL and its potential.

Jack: All UK companies are obliged to file a copy of their annual accounts for the public record and can file electronically using our XBRL/iXBRL services or as paper copies. Currently around 60% of companies choose to file via XBRL/iXBRL and during 2013 we will be launching our first accounts data products.

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there is a slightly disparate nature in how this has been approached by different organisations. Do you think THESE will come together?

Roy: I think we’ll come together because there are a number of drivers compelling it. This includes an appetite of governments for effective financial regulation. This is particularly so in the aftermath of what happened to global financial markets in 2008. The global appetite for more effective financial regulation will drive people to look at things like XBRL. Another driver is new UK accounting standards, backed by XBRL taxonomies, involving a whole range of stakeholders including the accounting profession, HMRC, Companies House, the Big Four and others.

When you get a new development like that it provides an impetus so people go out and look for what are the appropriate arrangements to support it.

I do think things will come increasingly together and become more coordinated but it won’t just happen overnight. It will still be a steady journey.

x b r l in the uk

Jack: For XBRL to become more widely acceptable and bring organisations together we need sustainable foundations in place as a basis for confidence in XBRL in the UK. These are actually evolving now and we are about to embark on a period of development to establish a new governance structure and new taxonomies for the next accounting standards. Once in place, there will then be a platform from which more organisations will be able to embrace the use of XBRL for new applications for their particular requirements.

to regulators at the other and the software industry enabling them to talk to each other in the middle.

Every element in that chain needs to be contributing and participating and putting its requirements forward and challenging what’s being put forward by others.The UK is pretty good at doing that.

Jack: The span of collaboration is widening as more people and organisations understand what XBRL can be used for and the benefits that are arising from the use of it. There is a tremendous amount of work “There is a collaborative enterprise from still going on among government organisations and software businesses at one end to regulators at the providers. Also when XBRL data is other and the software industry enabling made available to the public and them to talk to each other in the middle.” business users there will be exciting developments yet to come.

roy warden, her majesty’s revenue And customes

jack mansfield, companies house

Roy: There is also the role of the software industry.

When HMRC announced that it was going to mandate the use of XBRL for cooperation tax, that was a completely new requirement and the software industry took a while to work it out, to position itself for how it was going to respond. But now lots of software companies have come to market with very good products for a range of customers which support online filing and the use of XBRL. There’s a lot of experience not only on the theory, but also on practical implementation and that just adds to this foundation.

XBRL supports all elements in the value chain.There is a collaborative enterprise from businesses at one end

On the fundamental underlying nature of the relationship between HMRC and Companies House and the wider regulatory environment; how does that feed back up the chain and back into the vendors?

Roy: I think that’s a very interesting point. In the past, Parliament would make a tax change with all the accompanying consultation.

Similarly when the accountancy bodies introduced new accounting standards, they have their own consultation, and at the end of it, you have an accountancy standard. We are now entering the world in which all these things need to be linked together.

If Parliament was to change corporation tax rules, that could have an impact on XBRL tagging. Similarly if the accountancy profession changes accounting standards, they take into account the impact on XBRL. We are feeling our way on this because these are new links. We managed it successfully with the mandation of corporation tax online filing. But the more XBRL grows the more we are going to have to build in specific ways to keep different strands in line with each other. That’s why it’s particularly important to have appropriate governance arrangements.

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Don’t swim with the crowd . . .

Jack: The software vendors’ continuing contribution via high quality XBRL-based products cannot be under-estimated. An overall aim is to try to achieve benefits all round without creating burden. If XBRL is seen as a natural part of new software tools used by business and their agents then requirements of government and regulators should become simpler to comply with in the UK and elsewhere.

Is cooperation between different regulators around the world one of the bigger challenges you face as part of the regulatory conversations?

Roy: I think that’s absolutely right. At the moment in the UK we’re all still grappling with the challenge of just coordinating within the UK, but all these issues apply globally as well.

Conversations are taking place at XBRL conferences all around the world. In November 2012, there was one in Yokohama, and there’s going to be one in Dublin in April 2013.These are incredibly important for bringing interested parties together and having good conversations.That kind of engagement is going to have to develop and become more rigorous. It’s very encouraging, however, that there is now an emerging network and people have got into the habit of congregating globally to talk about these issues.

Jack: This certainly seems to be something that is gathering momentum.There is a growing pool of knowledge and willingness to exchange ideas. Even at a European level there are a number of XBRL workgroups being set up. I guess there is some risk of “initiative overload” because it is so important to ensure that existing projects deliver proven benefits first.

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Coming back to the UK, what is the nature of the cooperation between your two organisations?

Roy: The cooperation between HMRC and Companies House is very close; Jack and I bump into each other all over the place. The two departments have developed a joint filing facility between Companies House and HMRC. But that’s just one manifestation. Our conversation is very good. It’s a model for how this network of conversations can be extended to other people.

What’s also encouraging is that when Jack and I compare notes, we find that we’ve been talking to the same people in the accounts industry or professional software industry or wherever. I think it’s fair to say that the relationship between Companies House and HMRC is the most firmly established, and the challenge in the UK is to extend that to other bodies, other stakeholders.

Jack: Essentially HMRC and Companies House have adopted a common approach to how we both use XBRL for our separate statutory services. We both use in-line XBRL, the same published taxonomies and have a common validation set. In simple terms our approach is for companies to “Prepare XBRL Once and File Twice” and for software providers to develop products that combine HMRC and Companies House filing requirements. More than half of all accounts are being e-filed voluntarily via our XBRL services and we feel confident that companies are already finding efficiencies from using XBRL. We work together with the software providers who originally enabled their products for compliance with

x b r l in the uk

HMRC’s iXBRL mandation.There are now a number of major accounts production packages enabled for iXBRL to Companies House so the next move is to convince more accountancy firms to use them.That has started to happen and the major accountancy professional bodies are keen for their member firms to file accounts electronically to Companies House.

What are your main drivers going forward?

Roy: At HMRC we are very happy with the individual entity data we get and we want to build on that. As more and more people join the discussion, HMRC will quite likely come to have a smaller less prominent part in the whole picture so that our concerns will be less prevalent than they are at the moment.

Roy: Since April 2011, we’ve had over two million company tax returns with XBRL data, and we are learning every month, almost every day how to use that better, and we have got some very impressive tools that enable us to look at the data and work out where the risks are that we need to investigate.

Jack: It’s inevitable that the desire for the ability for greater analysis will drive the increase in the volume of XBRL filed and improvements in accounts data quality.

Jack: Companies House’s use of XBRL will enable us to make a further significant step towards becoming a fully electronic register. We want to be more efficient and provide better information to those who access the information on the register – bulk or individual users alike.

Roy: And what you find is that you start off with some questions and you look at the XBRL data to answer them, but in the course of answering them you uncover all sorts of other things that you hadn’t realised. We’re still in a very fast escalation curve, of realising what the potential of this information actually is.

Jack: In relation to the reporting of larger company information, the HMRC mandate covers tagging of the individual subsidiary accounts information.

From the public register point of view and as more companies e-file XBRL with Companies House, hopefully we will soon be able to make that CF_SH_IBRmag_Layout 1 08/02/2013 10:29 Page 2 information available to the public.

And on XBRL data for the financial markets?

Roy: There’s a really important point there which is that there’s a limit to how far HMRC and Companies House can take this. We will push it forward for our own benefit and we will be happy to share our expertise with others. But there are limits beyond that; it’s not our core business so we will pull back from that.

Jack: My understanding is that there are XBRL developments underway in various countries throughout the world. How or if Companies House can influence this is perhaps beyond our current scope as we are limited to UK statutory disclosures and filing deadlines which may not match the more rigorous demands of the financial markets. However I feel that HMRC and Companies House’s experience in establishing practical and valuable applications for XBRL in the UK will be relevant to the wider picture.

Precision Reporting

. . . learn to be different SEAHORSE® AUTOMATED TAGGING FOR WORD & EXCEL

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news

x b r l in the uk

Why iXBRL Works For The UK HMRC’s choice of iXBRL as the platform for electronic data submission of company financial statements within company tax returns has neatly avoided a couple of potential pitfalls.

First, it has enabled UK accountants to retain ownership of the visual presentation of their financial statements. UK accountants are generally fiercely proud of the presentation of their financial statements, which are prepared using something called a “fair presentation framework”, which is basically an overriding objective to present financial information in a way that users can readily understand. A lot of care and thought goes into presentation and disclosure of financial statements and the iXBRL format has created an environment where this culture is unaffected.

Secondly, it makes discussion about the XBRL submission simpler. Page numbers are retained, so two people can have a conversation about the document over the phone without resorting to jargon. Those responsible for the tax submission do not have any uncertainty about the iXBRL information – it is their information and not a regulator-generated rendering of their XBRL data, which would be relatively impersonal.

HMRC made smart implementation choices. They restricted the size of the mandatory taxonomy to around 2,000 items that are commonly understood and used in financial statements. No-one was expected to invent tags to describe unusual items in the financial statements. Checks to ensure internal consistency of the electronic data were

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Jon Rowden XBRL Assurance Leader, PWC

kept to a minimum. A soft landing approach was taken to the inevitable mistakes and errors that can occur. Certainly tax filers needed to show that they had made a serious attempt to get the iXBRL tagging correct, but where errors occurred the tone has been of encouragement to improve rather than punishment for failure. Clear guidance was made available and kept up to date on the HMRC website. A development team was available to help software companies troubleshoot emerging issues.

The result has been an implementation that, nearly two years on, has surely achieved the benchmark for regulatory initiatives: useful information is available for a clear purpose, namely the better inspection of taxes. People now wonder what it was they were originally concerned about when iXBRL was launched. It’s business as usual.

There will be challenges ahead. UK GAAP is being transformed and this will mean that the taxonomy will surely be revisited to reflect changes in accounting practices. Currently iXBRL financial statements are not required to be publicly disclosed, but they can be voluntarily submitted to Companies House and in the future it is possible that rule will be changed to require even greater prominence for the iXBRL financial statements. So expect the position to continue evolving.

inside story

Environmental Reporting

By pedro faria, Carbon Disclosure Project

CDP’s technical director, Pedro Faria, has been leading the climate change reporting taxonomy project.

The Carbon Disclosure Project (CDP) is the only global system for companies and cities to measure, disclose, manage and share vital environmental information.

CDP has been working with XBRL to revolutionise the way the world’s most powerful organisations report their climate change information.

The CDP is an international not-for-profit organisation working to drive environmental disclosure and action to deliver a sustainable economy, prevent dangerous climate change and protect natural resources. We want to transform the way the world does business: we see a world where capital is efficiently allocated to create longterm prosperity rather than short-term gain at the expense of our environment.

By collaborating with investors, governments and purchasing organisations, we motivate more than 4,000 organisations and 73 cities around the world to be accountable for their impacts on the environment by providing a global platform to enable them to provide vital environmental information to their stakeholders. Through our programmes for climate change, supply chain, water and now for the first time (through our new alliance with the Global Canopy Programme) forests, we collect, analyse and disseminate corporate and government progress on relevant strategy, management, risks, opportunities, actions, performance and transparency. We offer a single platform for companies to report their environmental information, avoiding the burden of multiple investor requests.

We have created the largest collection globally of self-reported climate change data and put it at the heart of business, investment and policy decisionmaking because we believe that evidence is the basis for insight that will create change. By working with the world’s largest investors, businesses and governments, CDP is uniquely positioned to catalyse action towards a more sustainable economy, helping these market forces to become more resilient and to improve their environmental performance.

Over 4,000 organisations, including 81% of the world’s largest public companies, now use our system to disclose vital climate information to 722 institutional investors representing US$87 trillion; more than half the world’s invested capital. This is a significant change in comparison to just ten years ago. Our first climate change questionnaire was just eight questions long. It was sent on behalf of 35 investors representing US$4.5 trillion and was answered by 235 companies. Since then, we have achieved a huge amount, accelerating climate change and natural resource issues to the boardroom, as well as moving beyond the corporate world to engage with cities and governments.

Platform for collaboration As a platform promoting information exchange and collaboration, CDP supports any organisation that aims to harness the power of the economic system to mitigate climate change. It’s not just companies, investors and cities that benefit from our unique collection of environmental data. Other

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charities and NGOs, think tanks and universities have all used CDP data. It is this data that guides us to establish how we can meet changing market demands and so we facilitate working groups, forums and partnerships to create solutions for a wide range of environmental data issues, such as those associated with accounting or policy.

In The Stern Review Report on the Economics of Climate Change (2006), Professor Stern established that climate change will cost us between 5-20% of GDP unless we act to prevent it, with the cost of prevention estimated between 1-2%. Indeed, more than half the cities that use the CDP system tell us that they are already dealing with negative impacts of climate change.

For example, when Jakarta was hit by floods in 2007 it experienced a total financial loss of US$879 million and over 200,000 refugees.

In 2011 the world experienced the highest disaster losses ever recorded. If we look back over the last Pedro Faria 30 years, extreme CDP’s technical director weather events account for over 78% of the disasters recorded and are responsible for US$2.6 trillion of associated costs, this is two thirds of all the disaster losses of that time.

And so, we use our information to demonstrate the business case for reducing impacts on the environment and natural resources, this moves the market ahead of where it would otherwise be on these issues. For example: • Investors can use CDP data to guide shareholder engagement campaigns on poorly performing companies. CCLA, for example, has recently introduced the Aiming for A Initiative, which will ask some of the largest UK companies to strive to achieve an A band in CDP’s climate performance ranking system and a position in CDP’s Carbon Performance Leadership Index;

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• Companies have been driven to reduce their

carbon emissions through Carbon Action. This is a CDP initiative that accelerates action on climate change on behalf of a vanguard group of investors by engaging with the largest listed global companies that do not have emissions reduction targets, to request that they set one. 61 of these companies have now done so and the 250 companies engaged report plans to reduce 497 million tons of greenhouse gas emissions; • Having completed a number of research projects for the UK Government and advising on corporate carbon reporting, CDP was a force behind the introduction of the landmark legislation mandating the reporting of greenhouse gas emissions in the financial reports of listed UK companies.1 Delivering Value CDP is proud to be a pioneer of a new generation of non-governmental organisations that recognises that the problems created by the economic system need to be solved with the actors of that economic system.

In our view, business is and must be an integral part of the solution to climate change. Our proposition is one of value creation. CDP research released last year reveals that carbon reduction activities are producing an average ROI of 34.3%, with 88% of projects exceeding firm level return on invested capital. UPS is one of the companies capitalising on the reduced energy costs to be gained through reducing their carbon emissions.The shipping company has invested $1.2 billion in upgrading its transportation fleet and is saving $400 million annually.

Further, analysis of Global 500 companies achieving positions on CDP’s climate disclosure and performance leadership indices in the past suggests that organisations leading on climate change generate superior stock performance, delivering double the financial returns of the Global 500 over a number of years.

Companies also achieve strategic value from managing their environmental actions responsibly.

Through their first disclosure to CDP, Walmart discovered that the emissions in their fridges were higher than 1 More examples and case studies can be found at https:// www.cdproject.net/en-US/Results/Pages/case-studies.aspx

en v i r o nmen ta l re po rting

their truck fleet.This enabled them to make strategic changes to reduce their emissions.They were so impressed that they decided to ask their suppliers to begin measuring and reporting through CDP.They have since set a 20 million tonnes reduction target in their supply chain over five years. Meanwhile, Unilever has set a target to reduce water in their consumer facing products and has witnessed a 60% increase in demand for these products in under two years; they are now used in 12.5 million households worldwide.

Depositing greenhouse gases into the atmosphere is uneconomic. With no planet or no people, there is no economy. As Schumacher identified a faulty business logic, we seek to illuminate and educate the market forces of our economic system to balance the right values between economy, society and environment. CDP provides a vital information feedback loop that helps business identify this link and search for a more sustainable way to live and thrive on this planet.

It is 30 years since E.F. Schumacher‘s Small is Beautiful: Economics as if People Mattered was published but his words remain relevant: “.... we have no firm basis of belief in any metaeconomic values, and when there is no such belief the economic calculus takes over. In the current vocabulary of condemnation, there are few words as final and conclusive as the word ‘uneconomic’. If an activity has been branded as uneconomic, its right to existence is not merely questioned but energetically denied.”

Our latest venture, a product of collaboration between the Climate Disclosure Standards Board, XBRL and Fujitsu, is the XBRL climate change reporting taxonomy released last year. It is designed to transform the way companies report their climate change information by making the process easier and more streamlined. It will also facilitate the future integration of climate change data into mainstream financial reports by enabling easy extraction of material climate information.

An invitation to

THE LONDON CRD IV BANKING CONFERENCE Monday, 17 June 2013, 9.00am – 5.30pm, at The London Hilton on Park Lane th

Hosted by

XBRLUK with the support of XBRL Europe

This highly informative one day conference will explore the impact of new regulatory reporting around the Capital Requirements Directive (CRD IV) and will feature contributions from key organisations involved in the specification and implementation of the new reporting regime.

Aimed at regulators and the banking community, the conference will help you:

•Gain insight into the regulatory landscape •Understand the approach being taken by major banks •Learn about the solutions provided by services firms

The conference will take place in the heart of London at the London Hilton on Park Lane Hotel, 22 Park Lane, with easy transport links from London’s Heathrow airport.

For further information please see http://www.xbrl.org.uk/conference Enquiries should be sent to conference@xbrl.org.uk Supported by

insid e story

DATA S TAN DARD S

It’s all about Information and Technology

Exploring data standards and the processing of data from disparate sources, by Shweta Gupta, Technology Evangelist with Microsoft Corporation.

This article will explore data standards and the technological complexities of processing data from disparate sources. Technology is critical to the data driven eco-system of the global economic framework. Technology has enabled the building of advanced information systems that process large amounts of data, and provided in-depth analysis to situations. However, these information systems are not effective unless they are fed by ‘smart data’.

Smart data is data which is error free, complete, accurate, available in a timely manner and is ‘process-able’ by information systems. Herein lies a key challenge: you may have the exact data you need at that very moment, but the data may not be in a compatible format or structure for your processing needs. In addition, the complexity of the data magnifies the effort, time and related resources required to convert the data into a format that a data consumer can analyse. These complexities include information systems having their own proprietary format and needs for processing data. Ultimately, this article will suggest

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a way of reducing the complexities of processing data from disparate sources, but first let’s take a look at one of the critical eco-systems, the Financial and Business Reporting Supply Chain (Figure 1).

Financial and business reporting data is complex and requires ‘meta-data’ for processing. The diagram above represents how businesses publish the same data in different formats, and shows the burden that reporting businesses have both to the regulatory authorities (that may be across countries), to stock exchanges, their shareholders and the market at large. When we consider the data consumers, we realise that they will not be much happier! They rarely get complete information, they often need to refer to multiple sources to collate information and then they

Financial Reporting Data Issues: • Non Standard • Data loss due to normalization • Errors due to manual re-input • Company’s story lost in transition

inside story

Figure 1 Typical business and financial reporting supply chain

have to manually re-enter the data into their own records. Commercially available data aggregators selling data feeds does help somewhat, especially for large investors, but the problems of incomplete data or data loss due to normalisation always persists. In addition the data provided by these aggregators is based on their interpretation of numbers and figures, and may not exactly match with the company’s story.

A global affect Today, a country’s financial stability depends on how well its capital markets and economy are regulated. Industry regulators and stock exchanges supervise capital markets through the use of compliance rules and information disclosure requirements. These disclosures, when monitored and acted upon, bring about the improved health of a business. In addition, global organisations like the IMF, World Bank and the OECD rely on the financial and business reporting data to gauge the economic health of a country and to define international funding policies. To

develop policy, these global organisations rely on both voluntary data collection and aggregated mandatory disclosures.

In addition to policy these national and international organisations conduct various analytics on reported data to ensure sound economic health. This of course requires that the data is complete, accurate, on time and processable, i.e. smart data.

While some monitoring and supervisory organisations focus on addressing the ‘content’ issue (i.e. accounting principles, solvency ratios, etc), there remains the key issue amongst regulators of having the data in a process-able format. Each regulator could theoretically develop their own advanced, proprietary data format that would enable the most efficient way for their data processing. However, the full potential of data supporting the monitoring of the whole economic system would not be realised until the data format is process-able by many countries and global

Meta-data is data about data. For example ‘2000’ is data, whereas ‘Sales of Company XYZ Inc. for year 2012 in Dollars’ is meta-data. Metadata is structured information that describes, explains, locates or otherwise makes it easier to retrieve, use or manage an information resource. Metadata is often called data about data or information about information.

(Source: NISO - http://www.niso.org/publications/press/UnderstandingMetadata.pdf)

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monitoring agencies. Particularly given that the data required for any kind of detailed monitoring or analytics in the financial and business domain needs to be very granular. However, often this data is only available in CSV documents which need manual extraction or to be viewed before analysis. This problem also exists for large data aggregators who have been providing information feeds of aggregated and standardised data that can be fed into systems for analysis. In addition to make this data process-able it is extracted and stored into the data aggregators’ standard proprietary databases. These data challenges are compounded by the fact that each company has its own set of reporting items, calculations and uniqueness that define its business. Ultimately,

The industry, largely led by regulators, turned towards developing and adopting ‘Data Standards’.

A data standard is a structure or a format that represents data and its meta-data for information creators and consumers in order to represent, share and consume through in-built or bought systems. In addition, a data standard should meet the following two objectives: 1. A data standard should be technology-agnostic or at least compatible with most prevalent technologies available today.

2. More importantly, data standards should be flexible and extensible to be able to capture complete data with minimal or no loss due to format standardisation.

Specific to the financial and business reporting industry, a significant number of standards have emerged which attempt to streamline this supply chain. Standards like SWIFT, “The end point will result SDMX, ACORD, IFX2, ASC X93, XBRL4 and in clean, accurate, iXBRL. Most of these standards are based on open source XML5. complete and timely

data – ‘smart data’ for the world’s information systems.” shweta gupta microsoft

not only does this result in data loss due to normalisation, it could also lead to manual keying errors or errors caused by multiple mappings between different formats and systems.

A regulatory body cannot afford for these issues to arise, especially when monitoring a country’s financial and capital markets.

The ‘data standards’ age There is clearly a dichotomy between data inconsistencies and the global importance attached to the use of that data. A solution that would enable efficient and effective sharing of financial and business information, from the creation of that information, through to the processors and consumers was therefore required.

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XML is technology-agnostic and the most widely used format for data exchange. XBRL has been adopted across a large number of countries.

Like other data standards, the adoption has been largely driven by the regulatory authorities. XBRL and its variant iXBRL (which represents data in XHTML format instead of XML), almost meets the above mentioned objective of a data standard.

XBRL, including its derivatives such as XLINK, is completely based on XML and hence is also technology-agnostic.

Regulators and global monitoring organisations that have been driving data standards adoption today recognise the impact of having smarter data. If data is available at source in XBRL, they will be able to feed it into their systems and autogenerate smart reports without spending too much time on converting data into their formats. The moment systems understand data and its linkages, converting data from one format to another is also pretty easy, and can happen seamlessly. In fact,

DATA S TAN DARD S

iXBRL goes one step further, in that it allows not only systems to extract and process data but also preserves the user friendly format (XHTML – a version of HTML), and the report can be viewed by a user using a simple browser.

Clearly, XBRL and other data standards iron out many of the issues that stakeholders have been facing in and around data consumption and processing.

So, is our problem solved?

Data standards are powerful, and as such have become plentiful in recent years, with a variety of bodies creating different standards for often the same or highly related information. These disparate bodies have invested significant funds towards developing each of these standards and their supporting systems. Today, we have another data standards challenge: the same data needs to be represented in different formats for different purposes. While the formats are well known and are certainly manageable, significant further investment is still required if we are to build systems compatible with each standard.

One possible solution is collaboration between each of these data standards consortia. These consortia should come together, pool resources and converge into one single standard; a http://www.ifxforum.org/home/ https://www.x9.org/home/ 4 http://www.xbrl.org 5 http://www.w3schools.com/xml/, a markup language that allows for storage and transport of data.

2 3

mammoth task but an important one. In some respects, this has already begun: XBRL for example has formed a coalition with ACORD, OMG and SWIFT, with efforts ongoing to link (map) the standards to allow for conversion from the transactional paradigm to reporting. There is much more to be done in this area but the task has started, and the world’s standards bodies have engaged to solve this problem. The ideal end state is still a long way off. The end point will result in clean, accurate, complete and timely data – ‘smart data’ for the world’s information systems. Ultimately the ‘Financial and Business Reporting Supply Chain’ would be streamlined as shown in Figure 2.

Figure 2 Streamlining business and financial reporting through data Standard

insight

Upcoming European Directives XBRL Europe Secretary General Gilles Maguet and Thomas Verdin, CHAIR OF THE XBRL EUROPE BUSINESS REGISTER WORKiNG GROUP examine the situation and involvement of XBRL Europe in the latest news from Europe.

XBRL Europe closely follows the progress of upcoming directives in Europe that involve XBRL. 2013 is a key year in that respect as many texts are in a decisive phase involving various issues and types of reporting such as regulatory reporting for banks and insurance companies, the socalled transparency issues, aspects of accountancy, and finally the interconnection of the business registers. gilles maguet, xbrl europe

In regulatory reporting for the insurance sector, everything depends upon the Solvency II Framework Directive (2009/138/ CE) adopted on 25th November, 2009.

thomas verdin, xbrl europe

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But this is just a framework.

Implementation of the measures is going to be carried out through

03 • issue 01 • March 2013

delegated acts and the Omnibus II package.

These measures are still under discussion and in the process of being adopted by European institutions. In parallel, EIOPA (European Insurance and Occupational Pensions Authority) has prepared technical standards, which include the reporting aspects and XBRL, but these are dependent on the definitive adoption of Omnibus II. We hope a final vote for Omnibus II will occur during the first quarter of 2013. EIOPA has announced that XBRL will be the preferred standard for Solvency II reporting in the 27 National Supervisory Authorities. It will be up to these NSA to mandate reporting in XBRL, however, we expect that the great majority of them will do so. We see that almost everything is in place for XBRL reporting, and even the taxonomies are close to being ready for first reporting in 2014. Even if there are some postponements due to delays in voting for Omnibus II, some countries like France have announced that they will impose Solvency II reporting in XBRL in the present version of the taxonomy anyway in 2014.

In the regulatory banking sector the situation is slightly simpler. The present regulatory reporting scheme was adopted in 2005, and is based on the COREP and FINREP regulatory frameworks, which themselves are based on Basel II requirements, which have been implemented.

Due to comparability issues between the national

u p c o mi n g eu r o p ea n d i r ect i v es

versions of COREP and FINREP, new versions based on Data Point Modelling are under finalisation between the European Banking Authority (EBA) and the 27 National Supervisory Authorities. The EBA has mandated reporting from the NSAs in XBRL, and it is up to the NSAs to mandate XBRL for this reporting. As the majority were already imposing XBRL, one can expect that the standard will continue to spread.

But in parallel, a new directive is under finalisation, the CRD IV/Basel III directive for which negotiations are under completion between the European institutions (Parliament, Council and Commission). The implementation of this directive contains technical aspects on the application of the Basel III capital ratio for banks, for which a calendar of implementation is under final negotiation. The ratio will be introduced in 2015 as planned, but the Basel Committee decided to set up a four-year transitional period: banks will have to apply 60% of the requirements by 2015, rising to 100% by 2019.

As this is a very hot topic in the XBRL community, we have decided to set up a specific large CRD IV/ Basel III conference organised by XBRL UK with the support of XBRL Europe in London on the 17th of June 2013. We will come back later on this event.

Since its inception in 2008 XBRL Europe has contributed to progress in banking and insurance regulation related to XBRL reporting through its COREP – FINREP – Solvency II Working Group chaired

by Derek De Brandt (derek.debrandt@xbrl-eu.org) from XBRL Belgium. In particular, contributions have

SAVE THE DATE

been made to the various taxonomies and XBRL Europe has organised some dedicated events in recent years.

Two other very important directives are in preparation within Europe; these are the Transparency Directive 2011/0307(COD) and the Accountancy Directive 2011/0308(COD), which mention the reporting of financial statements for the non-listed and listed companies.

The first versions of these directives were proposed by the European Commission at the end of 2011 without XBRL, and without structured reporting of any sort. The technical committees of the European parliament have, in response, proposed to introduce mandatory XBRL as of 1st January 2018 for financial reporting of all companies. At the moment the outcome of latest discussions between the Commission, the Parliament and the Council would be to introduce mandatory XBRL in the Transparency Directive for listed companies as of January 1st 2018 with a framework to be developed by ESMA (European Securities Market Authority), the third supervisory authority in Europe. And the Accountancy Directive now only contains a mention to an electronic publication system that allows accounting data, but the Commission is being encouraged to explore means for a harmonised electronic format for reporting in XBRL. At XBRL Europe the developments of these directives are in particular followed by the IFRS, Securities and Markets working group co-chaired by Bodo Kesselmeyer (bodo.kesselmeyer@xbrl-eu.org) and

THE LONDON CRD IV BANKING CONFERENCE

Monday, 17th June 2013, 9.00am – 5.30pm, at The London Hilton on Park Lane This highly informative one day conference will explore the impact of new regulatory reporting around the Capital Requirements Directive (CRD IV) and will feature contributions from key organisations involved in the specification and implementation of the new reporting regime.

Aimed at regulators and the banking community, the conference will help you: Gain insight into the regulatory landscape Understand the approach being taken by major banks Learn about the solutions provided by services firms

• • •

Hosted by

XBRL UK with the support of XBRL Europe

insight

Pierre Hamon (hamon.pierre@etxetera.com).

Finally there is one more directive which could involve XBRL. This concerns the interconnection of the Business Registers in Europe (EC/2012/17) which was voted on in June 2012. This directive focuses on branches and cross-border mergers and divisions, but its technical implementation has to be made through delegated implementation acts negotiated between the 27 member states and the European Commission. They are under discussion and aim to develop a central platform to interconnect European business registers, but this is expected to be only operational in 2017/2018.

u p c o mi n g eu r o p ea n d i r ect i v es

connect local documents e.g. financial statements (many existing use case for cross border comparisons and ratios), company profiles, and data on officials, which would be the perfect tool for these interconnections.

Thus with all these texts and directives under implementation or preparation, you can see that Europe is paving its way to some kind of generalised adoption of XBRL and 2013 will be of utmost importance. www.xbrleurope.org Gilles Maguet

At XBRL Europe through its Business Register Working Group chaired by Thomas Verdin, we strongly promote XBRL as the best solution for interconnectivity, and we lobby the European institutions for that. We have developed a core taxonomy that we promote, named xEBR, to

Secretary General - XBRL Europe gilles.maguet@xbrl-eu.org

xbrl europe

ESMA (European Securities Market Authority) are regular observers of XBRL Europe events and Working Groups.

XBRL Europe, an affiliate of XBRL International based in Brussels within the Federation of European Accountants (FEE) Headquarters, has been set up to foster European XBRL efforts, to implement XBRL projects in Europe between its members, and to liaise with European Authorities and professional federations. Members of XBRL Europe are the jurisdictions XBRL Belgium, XBRL Denmark, XBRL Germany, XBRL France, XBRL Italy, XBRL Luxembourg, XBRL Netherlands, XBRL Spain, XBRL UK and XBRL International and the direct members, the European Federation of Financial Analyst Societies, Deloitte Innovation BV, Bermuda Monetary Authority, Fujitsu Poland EMEA, Infogreffe,THEIA Partners, Ernst & Young EMEIA, Bank Al Maghrib (Central Bank of Morocco)), BR-AG Poznan, Atos International and UB Partners. With their own members in the XBRL jurisdictions more 200 organisations are participating in XBRL Europe.

XBRL Europe organizes regular events and working groups’ sessions. XBRL Europe recently co-organized with XBRL France a Solvency II conference in Paris on 23rd of October 2012. XBRL Europe organized with Eurofiling the latest XBRL week in Frankfurt in December 2012 with its 10th XBRL Europe day. The next important event will be organized by XBRL UK and XBRL Europe about CRD IV/Basel III reporting in London on 17th of June 2013.

The European Commission (DG Internal Market), EBA (European Banking Authority), EIOPA (European Insurance and Occupational Pensions Authority) and

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Thomas Verdin European Business Register Working group Chair XBRL Europe thomas.verdin@xbrl-eu.org

XBRL Europe has assessed that more than 50 XBRL country implemented projects exist in 19 European countries which are spread over all sectors (the regulated - Banking, Insurance, Securities market sectors, and the Business registers, Tax and others sectors). Already millions (5 to 7) of XBRL Financial Statements per year are available in Europe where nevertheless apart from the supervisory sectors in Banking and Insurance, and apart from XBRL Europe xEBR taxonomy project, no specific cross-borders unified project for the exchange or information between countries exist.

opinion

A New Specification for a New Regulatory Environment Jon Siddle of CoreFiling, lead editor of the Table Linkbase Specification, discusses how this new technology broadens XBRL’s reach.

There are still a few people in the XBRL community who have been involved long enough to know that the standard hasn’t always been known by those same four catchy letters.

XBRL was born as eXtensible Financial Reporting Markup Language (XFRML) and the name was changed to eXtensible Business Reporting Language (XBRL) a few years later. Aside from the obvious benefit of being marginally easier to pronounce, the change of name also captured the intention to cast XBRL’s net a bit wider than the realm of the financial statements that was its founding purpose.

Despite the change of name, early development remained very much focused on the problem of modelling financial statements, and this is where the standard has seen the majority of its use to date. This is starting to change, and increasingly we are seeing XBRL being applied to a broader range of business reporting uses.

In the wider world, business reports come in many different shapes and sizes. In most jurisdictions, company financial statements are what we would call “free-form”. The content of the report is governed by the relevant accounting standard which lays down requirements about what must

be reported, but there are no stringent restrictions on the layout of that content. Modelling this poses significant challenges, and it is the ability to meet this challenge that has made XBRL, and more recently Inline XBRL (iXBRL) the obvious choice for such financial reports.

Many business reports are quite different. The alternative to free-form reporting is a “fill in the boxes” style report in which the structure of what must be reported is completely prescribed. Such form-based reports are common since they allow the quick and accurate collection of uniform data. Although modelling these forms does not present the same challenges inherent in free-form reporting, it can bring a different set of challenges resulting from the sheer complexity and volume of the data typically involved.

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In Europe, there are a number of projects working to address prudential reporting needs with XBRL. The type of data involved in these reports is very different from that which originally fuelled the creation of XFRML. The requirements for these projects are typically captured in templates – form-like tables arranging the data which must be reported. From these templates, XBRL taxonomies can be produced which describe the data being reported, but no current standard provides a way to describe the arrangement of this data into tables.

Dimensional Taxonomies (XDT) are now ubiquitous as they allow the multidimensional nature of the data to be captured, aiding in accurate modelling and analysis. Yet, currently, there is no specification addressing the requirement to present XBRL instance data which makes use of dimensional taxonomies. The Table Linkbase specification is being created to do just that.

Unlike a free-form financial report, there is no need to allow filers the flexibility to present the filing however they wish. On the contrary, it is desirable to define a uniform presentation of the data from all filers.

The complexity of the templates is in part due to the level of detail required by new legislation.

Banks and insurers are required to report data in The Table Linkbase is designed to capture the salient more detail than ever before. For example, when details about the arrangement of the data into reporting an exposure, in tables, without imposing addition to the value of the restrictions on minor exposure, other aspects presentation details such “While the existing XBRL 2.1 of the exposure such as as font or colour. Software and XBRL Dimensions rating, sector and currency implementing the Table must be included. The Linkbase specification has specification can accurately templates also break down some freedom in how it model the required data, the data in various ways. chooses to present the data Outstanding loans must so long as it honours the they cannot capture the be broken down by debtor defined structure.The result arrangement of that data type and age of the debt. of this flexibility is software The inclusion of this level which arranges the data in as reflected in the reporting of detail in the templates a way that is consistent with templates.” results in a large number the original template, while of columns and rows, honouring local conventions representing a complex, or user preferences.There dimensional structure. is no restriction, for example, on software allowing the user to swap the rows and columns of the table.

Existing XBRL standards on their own don’t address this need for form-based reporting. This need is One particular advantage that the Table Linkbase growing, and to a large extent is being driven by brings is a single definition for the tabular the Eurofiling project which coordinates the efforts arrangement of data which can be used either for of the European Banking Authority (EBA) and the displaying existing data or displaying a form into European Insurance and Occupational Pensions which new data can be entered. Combined with the Authority (EIOPA) to develop XBRL taxonomies that existing standards, this gives XBRL a hugely powerful address various prudential reporting needs within mechanism for capturing all aspects of a reporting Europe. These projects all use templates to define requirement in a single place: a XBRL taxonomy. their reporting requirements.

While the Table Linkbase has grown out of a need While the existing XBRL 2.1 and XBRL Dimensions identified by the Eurofiling projects, other projects specification can accurately model the required such as the Carbon Disclosure Project (CDP) and data, they cannot capture the arrangement of that Global Reporting Initiative (GRI) have identified a data as reflected in the reporting templates. XBRL similar need to address the gap between XBRL as

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A N ew Sp ec if icat i o n fo r a Ne w Re gulato ry Enviro nm e nt

used for free-form reporting and the needs of formbased reporting.

The Table Linkbase specification addresses the need to accommodate form-based reporting within XBRL. It offers a comprehensive solution for defining the shape of the reporting templates and displaying the reported data. Like other XBRL standards already in widespread use, it builds on existing standards to address a specific

unsolved need. It will ensure that XBRL is the number one solution for all types of reporting, and opens up a wider range of possible new applications. By providing a standard solution, it ensures consistency between current and future template-driven projects within Europe and beyond.

Feedback can be sent to rendering-feedback@xbrl.org

What Is the Table Linkbase?

The Table Linkbase specification is a modular extension to the XBRL 2.1 specification and is currently being developed by the XBRL International Rendering Working Group. The current draft, which has Public Working Draft status, was released in January 2013. dimensional defaults and non-abstract concepts can be used to define aggregation columns.

The Table Linkbase itself does not place stringent restrictions on the precise format of the output rendering. This allows software to support a wide variety of output formats. For example, HTML output can easily cope with complex table headers, but CSV would require “The Table Linkbase the row and column headers to be simplified. Applications can be seen may also offer an interactive as the dimensional rendering, either for form entry or analysis.

Using a linkbase, it augments the information already present in an XBRL Discoverable Taxonomy Set (DTS) with additional information to enable the tabular presentation of existing parts of the DTS. The Table Linkbase can be seen as the dimensional cousin of the presentation linkbase.

The presentation linkbase caters for the arrangement of concepts into hierarchies, but it pre-dates the introduction of XBRL Dimensional Taxonomies (XDT) and does not cope well with increasingly common dimensional reporting.

cousin of the presentation linkbase.”

It provides a rich syntax for defining tables in terms of existing relationships in presentation and dimensional networks, or by explicit reference to individual concepts.

While allowing simple tables to be defined with a reference to existing networks in the DTS, it also has the flexibility to allow complex, tree-like table headers to be defined explicitly. Columns and rows can be grouped and existing XBRL features such as

There is a normative XML output format which must be supported to conform to the specification. This is in part to ensure conformance between implementations, but it can also act as a straightforward interchange format as it’s easily convertible into other renderings such as HTML. The current draft of the Table Linkbase specification is at: http://xbrl.org/Specification/ table-linkbase/PWD-2013-01-16/table-linkbasePWD-2013-01-16.html

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Towards a Sounder and Safer Financial System

John Dill, DIRECTOR, MANAGEMENT SERVICES AT the Bermuda Monetary Authority writes on inspiring performance through the application of data standards.

Since the start of the current financial crisis there have been many organisations that have formed, and others that have shifted their focus, to address issues specific to the challenges arising from the global financial crisis. In addition, the legislative frameworks of major financial centres around the world have been enhanced. Yet today there remains juxtaposition between the authorities who frequently refer to financial stability and safety systems, and the industry that mostly refers to protecting the consumers and shareholders’ interests. This juxtaposition is further complicated by the dichotomy of needs and approaches with prudential versus business conduct supervision.

Notwithstanding this juxtaposition and dichotomy, supervisors will be held to higher standards to ensure that changes to supervisory practices and business conduct endure. These higher standards will force unprecedented data interchange amongst supervisors, financial monitoring organisations and governments. For example, the European Union (EU) is in the midst of economic transformation and change that is increasing the demand for digital, analytically-

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towa rd s a s o u n d er a n d s af er financial syste m

Regulation (CRR) as well as Solvency II (SOLII) enabled business information. As this increased legislation, seek to create a sounder and safer demand for data has become apparent, the financial system. Under this legislation – which global emphasis on supervision being business covers the supervision of the financial services conduct and principles-based has also become sector (credit institutions and insurers) – all prevalent. Today there is a burden of compliance companies must demonstrate that they have and an effective risk function placed on the implemented an adequate and efficient risk management within the entity. Inevitably sound management system. Operational risk is now principles will lead to practices, practices will instil best practices, and ultimately best practices will “Operational risk is need standards in order to efficiently drive consistency and now such a significant comparability of application and factor for institutions output for national, regional, and global supervision – as well as that rating agencies for understanding multi-nationals are including enterprise and similar entities.

risk management

These challenges are further performance as an complicated by the fact that the volume of global data is increasing evaluation criterion.” exponentially; there is a need to john dill, bma balance regulatory intent with jurisdictional competitiveness and data security, as such a significant factor for institutions that rating well as the inevitable collision of international data agencies are including enterprise risk management standards, such as XBRL, SDMX etc. Ultimately today’s performance as an evaluation criterion. supervisors and the world’s monitoring mechanisms for financial systems are being hampered by a In the banking sector, CRD IV/ CRR: number of factors, of which information systems • strengthens regulation in the sector, and data architectures are at the forefront, and are • increases the capital requirements, preventing the global implementation of consistent • introduces a higher quality of own funds, and and comparable risk management practices.1 • places a higher governance burden on Boards and management for risks undertaken by the entity.

However, addressing global problems is a mammoth task that is best accomplished in In the insurance sector Solvency II: bite-sized chunks. This article will therefore focus • strengthens regulation in the sector, on one key element of this colossal supervisory • increases the solvency capital requirements, challenge – Adding structure and comparability • introduces a higher quality of eligible funds, and to qualitative self-assessments so that there is • places a higher governance burden on Boards consistency and comparability of supervision and management for risks undertaken by the across the various geographies, timespans, and entity. industries. In addition this article will address these challenges from an EU perspective.

There are clear similarities between the regulation and directives in the two sectors with effective risk In the EU, the Commission’s Capital Requirements management at the core of the intent.

Directive IV (CRD IV) and Capital Requirements http://www.financialstabilityboard.org/publications/ r_111104ee.pdf 1

To manage risk effectively, the right information needs to be presented to the right people at the

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right time, and risk reports based on risk data should be accurate, clear and complete2.Two main mechanisms are used to manage risk and capture risk data – regulatory frameworks and technical frameworks. The regulatory frameworks of CRD IV/CRR and Solvency II cover regulatory requirements relating to the operational structure of risk management, as does COSO’s Enterprise Risk Management – Integrated Framework; a technical risk management framework that is most often used to understand effective risk management criteria.

In the EU, open electronic reporting standards like XBRL are being introduced, with prominent users such as the European Commission (EC), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) leading the way. Such open electronic reporting standards when integrated with risk frameworks on one side, and internal and external reporting processes on the other side, will deliver accurate, clear and complete data that is consistent from entity to entity, and comparable across time for the same entity. In addition, such open electronic reporting when modelled by an appropriate taxonomy also allows an organisation to greatly improve information management, transparency and benchmarking capability.

2

http://www.bis.org/publ/bcbs239.pdf

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However, having accurate and clear data that is useable for effective risk management of entities does not ensure that such data will be used in decision making by management and oversight by the Board.

Consequently it is incumbent upon the data standards and technology community to innovate; to bring forward solutions that support and advance the intent of the established legislative frameworks to progress a sounder and safer financial system. There are opportunities for collaboration between the respective sectors of the financial services industry. There are lessons to be learnt from other industries, and existing solutions that can be adapted to address the needs of this prodigious supervisory challenge.

It will take time and a concerted effort to bring the relevant parties, technologies and solutions together in the EU to address this challenge.

There is also the need for an organisation with a singular focus to drive the adoption of an integrated electronic supervisory architecture and associated technological standards to assist policymakers in improving and maintaining the stability of the world’s financial markets. Such an organisation would need to: • build a network of stakeholders focused on enhancing global electronic supervision of financial markets, • develop a harmonised framework of information, technology and standards enabling efficient electronic supervision of financial markets, • promote the adoption of the uniform electronic supervision framework, and • propagate globally the electronic supervisory framework supported by technological standards and supervisory policies throughout developed, under-developed and emerging nations.

Ultimately using data standards for electronic supervision of the financial services sector will enhance business conduct and support progress towards a sounder and safer financial system.

XBRL International (XII) is the not-for-profit consortium of approximately 650 companies and agencies worldwide leading the effort to build the XBRL language and promote and support its adoption.

Membership in XII gives you the opportunity to influence the ongoing development of XBRL, position your company as a thought leader as XBRL adoption spreads and network with fellow experts around the world to advance your knowledge and business prospects.

BENEFIT FROM MEMBERSHIP IN

XII

XII is now offering a Direct Membership option for corporations, regulatory agencies, individuals and academics who are interested in participating in XBRL development on a global scale. Key benefits include: • Influence the development and maintenance of the international XBRL standard • Leverage the globally recognized XBRL brand for your own marketing efforts • Gain earlier access to emerging market opportunities • Publish links and information about proprietary solutions, tools, services, events and press releases on the XII website • Receive a free listing in the International Tools & Services Directory • Direct Members may also participate in the governance of XII and play a role in its various international technical working groups, committees and boards.

XBRL International members enjoy a host of additional strategic and technical benefits.

Join our global network of executives, accountants, analysts, technologists, consultants, regulators, finance professionals, and academic leaders today!

For more information on additional features and benefits of membership, please visit: http://www.xbrl.org/HowToJoin

focus on am e ricas: unite d state s

Using the 2013 XBRL US GAAP Taxonomy

By Paul Penler, Ernst & Young, and Louis Matherne, Financial Accounting Standards Board

The Securities and Exchange Commission (SEC) is expected to approve and post the 2013 version of the US GAAP taxonomy in time for calendar year registrants to use it for their 2013 first quarter XBRL submission. This will be the fourth major update to the US GAAP taxonomy, the official list of codes or tags that registrants use to create computer-readable XBRL exhibits.

When transitioning to the 2013 taxonomy, companies need to understand the extent of any changes to their existing XBRL tag selections. The Financial Accounting Standards Board (FASB) has updated the taxonomy to reflect new accounting standards updates and to make other changes to reflect common reporting practice and to improve taxonomy use. The SEC has made minor updates to some sections that it maintains. Although registrants are expected to be able to continue using the 2012 taxonomy, the SEC staff strongly encourages companies to adopt the latest version of the US GAAP taxonomy. The 2011 taxonomy is expected to be removed once the 2013 taxonomy is made available.

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Key considerations Companies should become familiar with the 2013 taxonomy by reviewing its contents using a taxonomy viewer (e.g. the FASB online taxonomy viewer). The release notes and supporting information on the FASB website describe the changes made to reflect accounting standards updates and highlight structural changes that affect existing tags.

Transition considerations Plan for the transition Companies should develop a plan for implementing the 2013 taxonomy, including steps to be taken, allocation of resources and timing.

U s i ng t he 2 0 1 3 XBRL US GAAP Ta xo n omy

Companies need to do the following: • Read the FASB’s release notes on the 2013 taxonomy changes and identify all of the major areas that are affected (e.g. the segment disclosure section was remodeled and could require some tag changes), • Identify any new accounting standards that will be adopted in 2013 and will affect financial statement presentation and disclosure (e.g.

Disclosures about Offsetting Assets and Liabilities), • Confirm any software used to create XBRL exhibits in-house has been updated to fully leverage the 2013 taxonomy, such as having support for all tag data types (e.g. duration string), • Consider any updated SEC guidance related to tag selection requirements.

Assess current US GAAP taxonomy tags Companies need to first look at the tags they use and compare them with the FASB’s updated definitions.

There are tools in the marketplace which can automate this process. For example, the FASB provides a free Taxonomy Change Application (TC App).

Due to structural changes in the 2013 taxonomy,

companies might need to significantly restructure their tags for some disclosures. A company might have to change its approach and use dimension members rather than line-item tags or use a combination of lineitem and member tags rather than a line-item tag.

To assess their current tags, companies should take the following steps: • Obtain or run a change report (available from service providers, software vendors, and the aforementioned TC App) to identify tags that are changing or have been deprecated, • Compare newly deprecated tags with existing tag selections and select new tags as appropriate, • Compare the tags the company currently uses with significant definition changes and assess whether continued use is appropriate, • Review the FASB’s list of significant changes, especially those the FASB says resulted from “Best Practices, Public Comments, and Internal Analyses”, • Consider more narrowly defined tags, which generally are found in new tag additions, • Identify any line item tags with balance type (i.e. debit or credit) changes and carefully assess the

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sign values (i.e. positive to negative reversal) for amounts that use these tags (i.e. review amounts with a negative balance, as most amounts are entered in XBRL with a positive balance).

Assess current extension tags Companies create extension tags when they cannot find a suitable tag in the taxonomy. This reduces comparability of financial statements. To assess their current extension tags, companies should: • Consider whether new tags can replace existing extension tags,

paul penler, ernst & Young

Characteristics of a good tag search and review Due to the size and complexity of the US GAAP taxonomy, companies need to focus on how best to find, review and select the most appropriate tag for each financial reporting concept in the XBRL exhibit.

Thoroughly reviewing the US GAAP taxonomy can result in more accurate selection and higher-quality XBRL exhibits.

When reviewing tags for an XBRL exhibit, a reviewer generally should use the following three items: • To-be-filed financial statements (e.g. HTML version) so they can review tag captions and understand the information in the right context, including management’s discussion and analysis and other information, • An XBRL review worksheet or other review mechanism (e.g. software viewer) that also can be used to document the thought process behind a selection, • A taxonomy viewer, such as the FASB’s online viewer or provided by software vendors, to navigate and search the taxonomy.The taxonomy is also available in a spreadsheet format that some prefer using to the XBRL specific taxonomy viewing tool.

Understanding the criteria for tag selection Tag definition A tag’s definition generally describes its basic concepts, including any restrictions on its use.

Reviewing the definition helps you determine whether a tag is appropriate. Using the most narrowly defined standard tag is preferable to extending a tag and creating a new one as long as the standard tag captures all significant information.

louis matherne, fasb

• Filter for new tags (i.e. 2013 change label), • Find new tags that reflect new accounting standards, new industry-specific content and best practices, • Compare extended tag types (e.g. integer) with new tag types and determine whether a new tag type (e.g. per unit) should be used.

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The tag must be consistent with the financial reporting concept in all significant respects, but it is not necessary for the definition to be an exact match. Not every item mentioned in a definition has to be included for the tag to be a valid selection, but the definition must not explicitly exclude significant components of the amount.

For example, a tag that is only for derivatives that are cash flow hedges should not be used to tag an

U s i ng t he 2 0 1 3 XBRL US GAAP Ta xo n omy

amount that includes other types of derivatives as well as cash flow hedges.

Tag type and period The tag type and period also must be appropriate.

The type identifies the kind of information being reported (e.g. monetary, share, per share), while the period indicates whether the item is reported as a point in time (e.g. a balance sheet concept) or over a period of time (e.g. an income statement concept). A tag that appears to represent a desired financial reporting concept should not be used if the type or period is not appropriate.

The structure for a given table, note or statement in the taxonomy consists of either line item tags only (e.g. income taxes) or a combination of line item and member tags (e.g. property, plant and equipment). Reviewing the notes and how they are structured in the taxonomy can help you understand when member tags are appropriate.

Some concepts require a line item tag and a collection of member tags along a classification dimension (axis). A key step in assessing tags is to understand which approach the taxonomy takes (or which approach is needed if the taxonomy does not explicitly state an approach).

Secondary tag attributes “If the taxonomy does not Some notes are structured Secondary attributes are cover the information, a with multiple dimensions not key criteria for selecting a tag. A tag that meets the company must determine requiring separate sets of member tags to convey primary criteria of definition, whether it needs to create the concept. Consider a type and period need company that is tagging not match all secondary a new member tag a note on the fair value of attributes. Examples include (using the taxonomy as a its pension plan assets. The standard labels, references company would first need to the FASB Accounting reference).” to tag each amount with a Standards Codification and single line item tag for the a tag’s natural balance fair value of plan assets. To (debit or credit). However, fully reflect the disclosure, the company would secondary attributes should be considered and if then add an axis and member tag for each of the inconsistent with the concept, the element should following: be examined carefully to determine if it is truly the • The measurement (level 1, 2 or 3), best selection.

• Type of plan (US or foreign), • Asset categories (e.g., cash and cash Identifying when member tags (dimensions) equivalents). are needed Member tags are those that represent complete Avoiding common tag-selection pitfalls financial reporting concepts when combined Common errors and steps companies can take to with line item tags and an appropriate dimension avoid them include: (axis) tag. Understanding when member tags are • Companies fail to read the entire definition needed can be challenging at times. The SEC staff and choose tags that do not apply. A software recommends that companies follow the structure company, for example, selected the tag for in the taxonomy. If the taxonomy does not cover “research and development expense” even the information, a company must determine though the definition specifically excludes whether it needs to create a new member tag “software research and development (R&D),” (using the taxonomy as a reference). Appropriately which was a significant component of the applying dimensions results in a more accurate company’s R&D expense, representation of the financial information and • Companies ignore additional information makes it easier for users of the data to compare in financial statement notes that could help financial statements.

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organised by assets and liabilities, and the assets them choose the narrowest tag. One company section is organised into current and non-current. selected a general inventory tag defined as The location of some tags is more obvious than including raw materials, finished goods and work that of others. For example, cash-related tags are in progress, even though the text of its disclosure generally found in the cash and cash equivalents said only finished goods and work in progress section of the statement of financial position. Tags were included. The company should have for investments and derivatives require searches of chosen a narrower inventory tag, the entire taxonomy because they can be found • Companies reject a tag because the definition in several locations, is not an exact match. An appropriate tag • Software-assisted searches: Always perform a could include a broader array of items than software-assisted search and search the entire the amount being tagged or could exclude taxonomy for keywords in the immaterial components of tag’s label and definition. the amount, Some viewer software allows • Companies choose tags users to filter and search that do not include all “Companies creating by tag attributes (e.g. “significant” information. For XBRL exhibits need to period type), data type example, it is inappropriate (monetary, shares or text to use a tag that represents fully understand the block), deprecated status non-current accounts taxonomies and how best (i.e. a tag that should no payable if the line item longer be used) and other being tagged represents to align them with their attributes (line item, member current accounts payable. financial information.” or abstract). The use of logical operators (and/ Navigation and search or), wildcards (*.*) and a techniques synonyms (e.g. net income, Consider the following to help net earnings, net profit), along with the basic you navigate and thoroughly search the taxonomy: type of tag (e.g. member, text block, abstract), • Taxonomy views: The taxonomy has several can help narrow the results identified in an industry views that present tags with common automated search. relationships based on industry. To identify all tags to be considered, use the “Entire Taxonomy” view Companies creating XBRL exhibits need to fully in the FASB’s online viewer, understand the taxonomies and how best to align • Taxonomy trees: The taxonomy is divided into a them with their financial information. Unless tagging number of views (or trees) generally representing is correctly and consistently applied, the promised a primary statement or note disclosure. In the benefits of improved analysis of financial statements section on the statement of financial position, for will not be realised. example, the balance sheet line item tags are

What you need to know • The SEC is expected to post the 2013 version of the US GAAP taxonomy in early 2013.

• Companies should review their practices and tools for selecting as they move to the new taxonomy.

• When selecting and reviewing tags, companies should thoroughly search the tags in the 2013 taxonomy.

• New tags were added to reflect accounting standards updates and leading practices (e.g. new tags were created for common terms) which should reduce the need for extension tags.

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U s i ng t he 2 0 1 3 XBRL US GAAP Ta xo n o m y

More events, more audiences for XBRL Michelle Savage of XBRL US looks at upcoming events and training.

Training and education about XBRL continues to be Programs for developers, data consumers and in demand. With the SEC rollout of XBRL for corporate analysts: reporting, filers continue to need more in-depth, • XBRL and Financial Analysis Conference – held intensive training; data consumers and developers jointly with the NY Society of Securities Analysts are now looking for more awareness-building and (NYSSA), (learn more at http://xbrl.us/events/ instructional programs to help them understand how Pages/FinAnalysisConf.aspx) – for investors and to work with the vast amount of data now available. analysts.

Corporate actions and now government reporting are gaining in interest as more awaken to the benefits that XBRL can offer. “... data consumers

and developers are

Programs for public company filers: • 5th Annual XBRL US National now looking for more Conference in Las Vegas, awareness-building September 23-25 featuring keynote speakers US Congressman Darrell and instructional Issa and Craig Lewis, the US SEC programs to help them Chief Economist and Director of understand how to work the Division of Risk, Strategy, and Financial Innovation. This event with the vast amount of is the largest gathering of XBRL data now available.” vendors and public company filers in the US, featuring more handsmichelle savage xbrl us on practical training and best practice issues critical to preparers.

• XBRL Detailed Tagging Workshop, taking place • XBRL Data Forum, September 24, targeting May 23, before the end of the limited liability developers and IT professionals, will be held in provision for every public company filer, with conjunction with the XBRL US National Conference, an emphasis on training, best practices and with education on building XBRL databases and validation to ensure filers can create the best managing XBRL data. possible XBRL data (learn more at http://xbrl. us/DFTworkshop).

Later in the year, we will hold more programs • In late Spring, the XBRL US GAAP Certificate targeting the corporate actions stakeholder, to Program – an online training program created continue moving that important initiative forward. with the AICPA, providing 30+ hours of detailed We look forward to bringing together XBRL experts to instruction on creating high quality XBRL help educate and inform XBRL creators, processors financial statements. and consumers in the expanding XBRL market.

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focus on am e ricas

Rendering Corporate Actions Communications More Transparent By alan d. smith, Global Business Head, CITI

Alan D. Smith, Issuer Services, Global Business Head of CITI discusses reporting in a standardised, digital and computer-readable format.

What is the state of corporate actions communications today?

Whenever a public company acts in a way that might impact upon the holdings of its owners, it is obliged to report this information in a timely, accurate and unambiguous manner. But individual company-issued corporate action messages must travel a tortured and painful route, passing through multiple intermediaries along the way from issuers to investors.

infrastructure providers. And of course these individual parties are spread out across multiple geographic markets all over the world.

What kind of intermediaries are concerned with corporate actions?

Corporate actions communications are of critical interest to regulators, issuers, asset owners, asset gatherers, asset managers, custody banks and other administrators, as well as to a variety of

How is the industry addressing this challenge?

In December 2012, Citi, together with the Asset Managers Forum group at the Securities Industry and Financial Markets Association (SIFMA) sponsored a conference that included issuers,

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How can the communication of corporate actions be rendered more efficient?

As with most activity in an increasingly complex financial marketplace, the goal must be to standardise this reporting and render it both digital and computer-readable.

Ren der i n g C o r p o rat e Acti o n s C ommu n icat i o n s M o re Transpare nt

has increased the transparency of corporate communications through the creation of standardised reporting, such as 10Ks and 10Qs, in an effort to ensure effective corporate governance for a complex marketplace in which business owners and operators are separated by numerous layers of intermediation.

A critical part of this effort was the decision by the SEC to require all public companies to report their financial statements using XBRL. Today, XBRL is a mainstream communications technology used by public companies, data aggregators, regulators and others throughout the financial ecosystem.

What is the next step?

Company departments charged with investor communications should take a cue from those responsible for regulatory affairs and undertake to use XBRL to communicate corporate actions.

How soon will this take place?

While XBRL will deliver considerable benefits to all concerned, we should be mindful that during a transition period of a year or two, implementing the technology will mean additional work and cost for issuers. Over the longer-term, however, enhanced transparency and standardization will make markets more efficient for all concerned.

asset managers, regulators and others to consider the use of the eXtensible Business Reporting Language (XBRL) to render corporate actions data computer-readable and therefore more accurate, consistent, “...using functional and actionable.

We believe that using structured XBRL data would help reduce the need for intermediaries and deliver more accurate and consistent corporate action communications to investors, thereby dramatically reducing operational risk and systemic cost.

Isn’t the industry already using XBRL? For decades, the Securities and Exchange Commission (SEC)

structured XBRL data would help reduce the need for intermediaries and deliver more accurate and consistent corporate action communications to investors...” alan d. smith, citi

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focus on am e ricas: canada

The XBRL Canada Roadmap

By Geoff Zakaib, Chair and Gerald Trites, Project Director – XBRL Canada

Canadian businesses are required to file a wide range of information with numerous government departments and agencies. Often there is a need for businesses to assemble and present the same data several times over but in different formats.

This lack of a common format makes compliance expensive and time consuming as businesses have to tailor, duplicate and individually supply the information needed to meet the many and varied requirements of each department and agency. The Government of Canada has recognised that compliance is an expensive problem. In January 2011, Prime Minister Stephen Harper announced the creation of the Red Tape Reduction Commission to identify “irritants to business” and remove them “in order to reduce

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the compliance burden on businesses, especially small businesses”.

In response to the Commission’s call for submissions, XBRL Canada and the Canadian Institute of Chartered Accountants (CICA) strongly recommended the use of XBRL and subsequently prepared an XBRL Roadmap strategy document (XBRL Roadmap: Implementing XBRL for Electronic Filing of Information with the Government of Canada, available on the XBRL Canada website

focus on t he AM x b r lERICAS: ca na da canada roadmap

www.xbrl.ca). The Commission reported in January explore the possibility of standardising business 2012, and while it did not specifically recommend reporting; using XBRL to reduce compliance costs the adoption of XBRL, it left the door open for and heighten the efficiency and accuracy of the technology solutions to be adopted as red tape information collected. reduction initiatives are carried out.

The XBRL Roadmap was instrumental in showing how XBRL could be implemented “A growing number in government through Standard Business Reporting (SBR). of countries A growing number of countries are are currently currently implementing or have already implementing implemented SBR; an approach to filing with governments that involves adopting or have already XBRL across a wide range of government implemented SBR; departments and agencies. The experience of other countries indicates an approach that SBR could save Canadian filers as to filing with much as $1 billion a year in compliance costs. The XBRL Roadmap highlights the governments that savings available to government by using geoff zakaib, xbrl canada involves adopting technology to process those filings to a much greater extent than is being done at XBRL across a present. The cost of human error could be wide range of reduced and human resources redirected from administrative processing routines to government the more valuable work of data analysis.

departments and

The XBRL Roadmap encourages the agencies. The Canadian government to take the lead in experience of other adopting SBR and sets out a strategy for government to: countries indicates 1. Initiate a comprehensive SBR program that SBR could using XBRL across as many departments and agencies as is possible. save Canadian 2. Establish a core group to manage filers as much as the project from inception to implementation. $1 billion a year in 3. Encourage and engage the compliance costs.” departments and agencies to collaborate in the development of the gerald trites, xbrl canada SBR program.

4. Initiate collaboration with market intermediaries This is an important step toward the adoption of and suppliers, including software developers, to XBRL in Canada and is the result of efforts made by build the SBR filing requirements seamlessly into XBRL Canada and the CICA to raise awareness of their products.

XBRL and SBR. Subsequent to the recent conference, an XBRL Canada Ottawa Working Group has In December 2012, the House of Commons been established in order to facilitate the planning Standing Committee on Finance issued a report and implementation of SBR initiatives within the recommending that the Canadian government Canadian government.

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t he x b r l ca na da roadmap

Canada XBRL Update Efficient and effective government reporting, by Gerald Trites, Project Director – XBRL Canada in Australia. This was ably handled by Gianluca The XBRL Canada Annual Conference was held Garbellotto, who acted as a consultant in the in Ottawa on the 17 October 2012. As the capital design and implementation of the Australian of Canada, Ottawa is the centre of the Federal SBR program. (Gianluca also led a lively seminar Government, and the conference was attended the morning after the conference, which dealt predominantly by representatives of some of with SBR in more depth). David Blaszkowsky, the largest departments of government. They of the US Department of Treasury outlined key included the Canada Revenue Agency (CRA), initiatives of the US Government and how XBRL the department that administers the income tax has benefitted them. system, as well as other key taxes like the GST/HST (a value-added tax), estate taxes, etc. Statscan, One session described how the Federal Deposit the national statistics agency of Canada was Insurance Corporation in the US has used XBRL also well represented. A few years ago, Statscan and as a result has saved had launched a pilot program millions of dollars in filing costs using XBRL, but then dropped it “The conference and achieved much greater because of other priorities. The brought together effectiveness. That presentation Office of the Superintendent of was followed by Bill Foster, Financial Institutions also sent key members of the Chief Technology Officer delegates to the conference. government and of the Deposit Insurance They are the Office that Corporation of Ontario (DICO), oversees the various banks, offered a forum to discussing their successful insurance companies and highlight XBRL/SBR as implementation of an XBRL other financial institutions that filing program for Ontario are federally regulated. a solution to some key Credit Unions. government initiatives...”

The conference program In the afternoon there was featured the use of XBRL for a panel discussion led by Gary Walker of Standardised Business Reporting (SBR) purposes.

OSFI. The panel was made up of many of the The government is currently working on a major speakers as well as senior representatives of key initiative – The Red Tape Reduction Initiative – which government departments and agencies. They is intended to streamline processes and cut costs discussed the issues around implementation of within the government.This is a prime objective of Standardised Data.

SBR, and so several presentations at the conference were focused on how XBRL could be used to help The conference brought together key members meet the objectives of this program. of the government and offered a forum to highlight XBRL/SBR as a solution to some key Daniel Kelly, President and CEO of the influential government initiatives and showed how it has Canadian Federation of Independent Business helped in other countries. The extent of the made an eloquent plea for better government administration in order to cut the costs of compliance, discussion during and after the conference showed that the conference added real value and pointed to the use of XBRL for this purpose. and that it will act as a launch point for further initiatives by XBRL Canada in fostering the use of Progress across other countries was also XBRL for governmental purposes. discussed, including notably the SBR program

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focus on am e ricas: canada

xbrl canada day

By Gianluca Garbellotto, CEO, IPHIX

Gianluca Garbellotto looks back at the event shaping XBRL in Canada.

I have been following, and hopefully contributing to, the progress of XBRL in Canada for quite a few years now, and I believe that the XBRL Canada Day that took place in October 2012 in Ottawa has provided significant momentum to that progress.

I also believe that it represents a model for similar initiatives in other countries that are considering the introduction of an XBRL initiative, especially if based on the Standard Business Reporting (SBR) model, in terms of successfully attracting the relevant audience – mainly executives from multiple government agencies – by offering a program with the right mix of conceptual overview,

lessons learned globally that resonate in the local environment, and practical answers to the key project implementation questions.

My contribution to the event included an overview of the existing global SBR programs, and in particular of the Australian one, and a half day workshop on XBRL Project Implementation, which also featured some topics closely related to the implementation of an SBR program. SBR is a relevant topic in Canada because of the focus of the government on the reduction of the reporting burden for citizens and businesses, following various

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initiatives among which the creation of the Red Tape Commission in 2011.

The first session covered the key features of existing SBR programs as well as the results achieved by those programs so far and expected in the future, in other words, an overview of what is possible and what is now reality in other countries that already went through the experience.

x b r l ca na da day

programs, and is sometimes less present in other XBRL regulatory initiatives – normally at the price of creating pushback instead of buy-in from the regulated community.

Like all my presentations, the workshop was designed to provide the opportunity to ask questions on practical implementation issues of specific interest, and I have to say that the audience took full advantage of that. The result was a very interactive session, and the quality of This set the stage for the XBRL Project the issues raised showed that many people in the Implementation workshop that followed in the room already did a lot of thinking not only on the afternoon, a set of sessions designed to provide business case for an XBRL/SBR project in Canada, practical insight on what should be done, and but also on the issues “...my experience is that while related to its deployment.

This is perhaps the main many recognise the value of reason why I considered the experience a success, XBRL, and even more agree and I am thrilled to that the SBR model brings see that, thanks to the initiative of XBRL Canada, immediate and significant the contact and the benefits to a country both conversation with a part of that group continues. for its government and

gianluca Garbellotto, iphix

its business community, gathering the right group of stakeholders from key government agencies that have the vision and the ability to act as advocates and “make it happen” is a slow and challenging process.”

how, in order to achieve the results that an XBRL project promises. Basically, after an introduction to XBRL and SBR concepts, the workshop covered the key enablers of the benefits that a government or a regulator seeks in terms of optimisation and cost reductions in the collection of compliance data, and how the technical components of an XBRL program should be designed in order to maximise those benefits both on the regulator and on the business community side. A specific focus on benefits for businesses is typical of SBR

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In conclusion, my experience is that while many recognise the value of XBRL, and even more agree that the SBR model brings immediate and significant benefits to a country both for its government and its business community, gathering the right group of stakeholders from key government agencies that have the vision and the ability to act as advocates and “make it happen” is a slow and challenging process. I think that Canada is slowly but surely reaching the tipping point of that process and that the XBRL Canada Day has contributed by bringing together a group of potential advocates and providing practical answers to their very good questions, lessons learned in similar environments, and the tools to conceive a vision that makes sense to them and ultimately works for Canada.

focus on e urope

Solvency II Pillar 3

A Solution for Supervisory Reporting, Public Reporting, QRTs and XBRL

By Gerrit Vogt and Dr. Maciej Piechocki, External Reporting and Regulatory BI at cundus AG Germany and Paren Shah of cundus Ltd Great Britain

Politics, society and above all the state have recognised crucial deficiencies after the latest financial crisis. The implementation of Solvency II shall ensure the required transparency and homogeneity within the insurance business. The European commission justifies the necessity of the Solvency II implementation inter alia with the increased creative leeway of the several EU member states in the previous Solvency I approach.

The Solvency II directive is almost fixed into European law and will become applicable in January 2014. Based on the special implementation complexity for all stakeholders (regulators and insurance companies) a temporary shift of the full Solvency II implementation in Europe seems realistic.

However, the European supervisory authority EIOPA (European Insurance and Occupational Pensions) will use the interim phase, which will start 1st January 2014, for publishing measures which will be applied during the introductory phase. Thus, the National Supervisory Authorities (NSAs) can already start implementing substantial components of the Solvency II directive into national laws.

The legal requirements regarding Solvency II present many insurance companies with major challenges. Therefore, the subject should be addressed in advance and as part of a separate project where business works closely with IT. Certainly, the integration of the Solvency II requirements into the IT corporate landscape in

order to realise efficiency benefits, often remains disregarded within the project planning.

Solvency II is based on a three pillar principle. Within Pillars one and two of Solvency II the quantification of the own funds and the qualitative configuration of the risk management are primarily described.The ORSA (Own Risk and Solvency Assessment) report which is part of the Pillar 2 specifies the mandatory estimation of the internal risk and the solvability. However, Pillar 3 describes obligatory requirements for the reporting to the creation of market transparency.To fulfil the requirements of the Solvency II framework insurance companies have to generate quantitative as well as qualitative reports.The following reports will be required: • Report forms - Quantitative Reporting Templates (QRTs) • Supervisory reports - Reports to Supervisors / Regular Supervisory Report (RTS/RSR) • Reports on solvency and financial position to the stakeholders – Solvency and Financial Condition Report (SFCR)

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The focus of the quantitative requirements (QRTs) is the representation of current insurance information and key performance indicators whose submission is very challenging. The considered information in terms of reporting templates must be submitted regularly (see diagram 1) and for each subsidiary in XBRL to the supervisory authorities (albeit some NSAs could opt out from XBRL and remain with their proprietary reporting formats). Using the Solvency II XBRL taxonomy from the EIOPA, the templates will be populated with data.

This data set will be received, validated and analysed by the regulator.The objective of the submission is the universal reporting of individual risk of the insurance companies to the regulators.This process will enable an adequate monitoring and a preventative intervention if necessary.To fill the template with solvency and financial data an insurance undertaking could consider basically two options: The first option is the pre-preparation of the data within the existing source systems so that the output can be directly entered into templates (mapping process). These templates will be transformed in a XBRL data set, validated and submitted to the supervisory authority. Therefore, the XBRL tool used has to fulfil all functional and technical requirements of the EIOPA regarding the submitted data. The current taxonomy allows the structured collection of metadata, whereas, the assigning of these metadata to the right solvency and financial data in the templates of EIOPA is ensured by the Data Point Model (DPM). A Data Point is used only once and has an explicit assignment

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of attributes (name, structure, definition). The EIOPA provides two different types of Solvency II taxonomies, the Highly Dimensional taxonomy (HD) describes the data modelling and the Moderately Dimensional taxonomy (MD) is similar to the structural architecture of the QRT´s. The choice of the taxonomy that should be used is decided by the NSA. In the MD taxonomy every concept includes, for example, the position description (e.g.

‘Debt securities’) and appropriate code (e.g. x120) which is language-independent and shortens the individual name. This way, the respective code is easier to recognise and the further calculations of this concept will be facilitated. Every concept (principally each cell of each QRT) is mainly defined as a taxonomy item. This definition is quite easy, but because of the large number of cells/items the maintenance is difficult. If the regulator will change the QRTs only marginally significant effects are to be expected. In the HD taxonomy every data point is defined as combination of the taxonomy items and a definite member of breakdown. Thus, the supervisory authority can consider the data from multiple points of view. If changes in the ORTs occur the data points (items) will not necessarily be adapted if logic stays unchanged from the previous version. Finally, the used software tool has to validate the data of the template using adequate validation rules from the Data Point Model, the mathematical correctness of sub-totals, as well as the accurate creation of the overall XBRL data set.

The second option includes a more manual mapping process which could be facilitated by a software solution. That means the data of the source system does not have to match exactly with the templates. The assignment of the corresponding data to the QRTs is part of an automated process. If changes in the regulatory requirements occur the validity of the templates has to be ensured. Because of the manual mapping process, the compliance with the required validity is quite difficult. In the second option the analysis and the update of the templates is ensured by the software supplier.

Qualitative reporting In regard to the qualitative reporting, a large portion of the Solvency II requirements are fulfilled

S o lv enc y II P i l l a r 3

Gerrit Vogt cundus AG Germany Authority

Dr. Maciej Piechocki cundus AG Germany Authority

Paren Shah cundus Ltd Great Britain

reports. More synergy effects can be achieved if by the means of conventional (Word, PDF) reports. equal report components are interlinked. Hence Using qualitative reports, solvency and financial the re-entering of the data is no longer required, information is made available to the supervisory and the error probability decreases. authorities (supervisory reporting, RTS/RSR) and to the public (public disclosure, SFCR). The As part of quantitative supervisory authority will reports, it is also necessary announce further guidance that the data provided to for creating qualitative the NSAs is transparent and reports during 2013. In any “Sustainable investments comprehensible. Therefore case, these reports require in appropriate software revision-based reporting the latest figures from the systems are a must. data sources and have to be solutions that can consistent with the figures of meet the regulatory Sustainable investments the quantitative templates (QRTs). Thus, for example, requirements are the best in appropriate software solutions that can meet the certain data requirements of possible approach.” regulatory requirements are the Disclosure QRTs can be the best possible approach. integrated into the appendix Ideally, the reporting system of the SFCR report. Therefore, should create all supervisory it deems reasonable for reports, publications and reports from a single insurance undertakings to integrate this creation source to avoid losses of information. In addition, process of the qualitative reports with the one of the system should support the company in the the QRTs. The reporting system should be able optimisation of their external and regulatory to directly connect to the existing operational reporting processes also for future requirements. systems, to specifically employ existing synergies.

Most of the data which is required for the reports One goal of insurance companies is to accomplish and the templates should already exist in the regulatory requirements of Solvency II and to source systems. A direct data connection to respond to risks as soon as possible. Accordingly, the source systems leads to cost reduction and the IT landscape should be built dynamically, quality improvement and also a simultaneous sustainably and sufficiently professionalised. use of the data for quantitative and qualitative

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XBRL reporting for SMEs in Denmark

By Lise Fode and Niels-Peter Rønmos, Danish Business Authority and Poul Kjær, Chairman of XBRL Denmark

The Danish government has an ambitious goal: In 2015 80% of all communication between citizens and the public sector should be digital – this includes the filing of annual reports. In 2012/13 more than 190,000, small companies have to file the annual report in XBRL – by 2014 all Danish companies will be covered.

In Denmark one of the biggest XBRL projects has been the filing of annual reports from companies to the Danish Business Authority (Erhvervsstyrelsen). The key people in the Danish Business Authority are Lise Fode and Niels-Peter Rønmos who have been the key drivers in implementing the monumental task of making the XBRL filing a success.

In April 2011 the Danish parliament (Folketinget) made a small but significant change to the regulation of annual reporting in Denmark: starting from June 2012 Danish companies should also file an XBRL-instance document besides filing the annual report in PDF. The XBRL-instance document reflects the content of the PDF for the users. Nothing else was changed. Both financial and non-financial information were covered.

Accounting legislation in Denmark allows companies to adapt their annual report in relation to their own specific needs, so as to achieve a true and fair view.

Companies actually have the duty to disregard the legislation, if the rules are contrary to the requirement of a true and fair view.This means that Danish companies prepare many different annual reports in many ways. In the annual report the companies

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have to include non-financial information such as auditors’ reports, management’s review, a statement by executive and supervisory boards, and accounting policies etc. In most cases the auditor prepares the annual report for the company.

But how is it possible to go from less than 3% voluntary XBRL-filings in 2011 to mandatory (95%) filings in just over a year?

Three things made it possible: • Several transitional arrangements, • An online “light” filing tool designed for the smallest companies,

• And not least: Hard work.

The transitional arrangements • Small companies, who prepare annual reports according to not-so-comprehensive legislation, were the first companies to file the annual report digitally. Then bigger companies followed, who prepare annual reports according to more comprehensive legislation.

• A deadline for mandatory digital filing was set, so there is a gradual phasing in of the companies.

This means that the large group of companies

X BRL r ep o rt i n g fo r S.M .E .S in de nmark

Lise Fode Danish Business Authority

Niels-Peter Rønmos, Danish Business Authority

with annual reports, which follow the calendar year are covered last.

• CLOB-tagging (Character Large OBject) is allowed regarding the management’s review, statement by executive and supervisory boards and disclosures including accounting policies.

Also companies are able to send a request • arguing their special needs for an exemption of digital filing, and the Danish Business Authority will then process the case. The Danish Business Authority has so far only received a very small number of requests.

The online filing tool The Danish Business Authority offers several solutions for filing the annual report.

• It is, for example, possible for the filer to create the XBRL and the PDF-files locally and then upload them.

• An online “light” filing tool for small companies.

The online filing tool allows companies or their auditors to, free of charge, produce the annual report. Many companies and auditors suddenly went from copy’n’paste in word, straight to an (inline)XBRL tool, without knowing it! After approval of the annual report at the meeting of the general assembly it is easy to log back into the system and press submit.

The online filing tool helped ease insecurity with regard to the cost of producing XBRL-instance documents. It was also a helpful tool for many filers, who realised they were delayed with the implementation of their local tool.

Poul Kjær XBRL Denmark

Since June 2012, 95% of all filings (over 60.000 filings) to the Danish Business Authority have been XBRL filings, and as the transition time passes, 100% of all Danish companies will be filing digitally in 2014. But this is only the first step.

Tax and statistics The Danish GAAP-taxonomy has from the start been prepared for tax and statistics filings. Instead of integrated reporting Denmark has chosen an integrated taxonomy. The Danish legislation is simply not prepared for integrated reporting – not yet. When the user tags information in the annual report, then shared information is also tagged for statistics and tax, helping the user to complete this filing faster.

Instead of having to wait for new legislation for integrated reporting, a major showstopper, the users’ systems are prepared to handle the integration.

In a joint venture – XBRL Denmark, FSR (Danish Auditors in Denmark),The Danish Tax Authority (SKAT), Statistics Denmark (Danmarks Statistik) and the Danish Business Authority are implementing and testing tax and statistics filings.The first filings are expected in the first half of 2013.The filings are all passing through the same end user systems, the same taxonomy, the same filing platform and the same tags.

Adding value to the readers of annual reports The annual reports are intended not only to bring information to the authorities, but also to investors, customers and suppliers etc. Therefore the Danish Business Authority will make it possible to access the

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everything at the same time, prepare for long and hard work. When you have implemented XBRL, you can easily build on the change.

• XBRL should not be the goal itself. XBRL should be seen as a tool meant to make the filing digital, standardised, interoperational etc. If your senior management talks about “tagging” and “XBRL”, Filers will experience that the rusty old annual report instead of “digitalisation” and “standardisation”, suddenly has regained life and is broad in action in then you are heading down the wrong path. numerous situations, which is bound to increase the • As a regulator you should be aware that you quality of annual reporting in Denmark. “suddenly” also become”a service provider” with providing the users with a Adding more validation taxonomy, a filing platform etc.

The Danish Business Authority Being an IT-service provider calls has taken a cautious approach “Filers will experience for new ways of doing things, to validation. The full set of rules that the rusty old new processes and a change of has NOT been implemented. It’s a fundamental principal for the annual report suddenly attitude.

• Use and participate in the Danish Business Authority that has regained life and local and international XBRLrules are made in legislation, community. Here you will find the and not in the taxonomies. is broad in action in experts and consultants, who numerous situations.” know all the pitfalls but on the After the first year of filing more other hand also know how to find rules will be implemented, where the right solutions and you can it brings most value to the entire find tools that will help you reach your goal faster system. In the same way new tagging will be and meet other regulators with similar challenges implemented, decreasing the CLOB-tagging. It is as your own. a balance between adding value to the system without enforcing unnecessary administrative To cut a long story short, the implementation of XBRL burdens on the companies. in Denmark for filing to the Danish Business Authority has been a great success. We have not finished down Conclusions: Lessons learnt this path.The other XBRL projects in Denmark look also Some advice from the Danish Business Authority to very promising and with an eye on winter 2013 we are other regulators wanting to make XBRL mandatory; busy with bank projects and a project with the Danish • First: Keep in mind that XBRL is a big change. Don’t Tax Authority and Statistics Denmark. In the coming change everything at the same time. It is tempting, years other projects will come, for example in the insurance sector. We look forward to continuing our but foolish. Filers need to relate to the world they work with these XBRL projects in the years to come. already know when shifting to XBRL. If you change filed reports. Soon banks will have easy access to all their customers’ annual reports, and new services will be provided from data distributers and credit rating bureaus. Banks and major data suppliers are already preparing for this to come.

Facts about XBRL Denmark The XBRL community in Denmark is organised by XBRL Denmark, which is a member of XBRL International.

XBRL Denmark has been member of XBRL Europe since the start of XBRL Europe. XBRL Denmark was founded in 2004 and has around 20 members, who meet on a regular basis to exchange views on different topics. Besides that XBRL Denmark holds seminars and other events for both the XBRL community in Denmark but also with participants from the international XBRL community. Poul Kjær has chaired the Board of XBRL Denmark since 2011.

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focus on e urope : ne the rlands

Dutch businesses benefit from XBRL

By KARIN WALLAGH and DAVE VAN DEN ENDE, Deloitte Netherlands

From 2013 onwards, companies in The Netherlands will be required to use SBR (Standard Business Reporting) for filing tax declarations, statutory accounts and credit reports to government agencies and banks.

DELOITTE CTRL IS THE PORTAL SOLUTION FOR SMALL AND MEDIUM SIZED ENTERPRISES (SME) TO COMPLY with these mandates and at the same time lower their administrative burden.

GERT DE JONG Deloitte Netherlands

In 2004 Deloitte Netherlands launched the Ctrl Portal to enable entrepreneurs to maintain their accounts and communicate with their advisors through the internet. Since 2009, entrepreneurs can inspect and authorise various SBR documents through the portal, and submit these to the requesting parties.

Gert de Jong, senior manager of Deloitte Netherlands notes that “In the current economic climate SME entrepreneurs need up-to-date management information. Technological developments make recording this information far easier. The portal is clearly ready for XBRL. All interaction between our clients, Deloitte controllers, and third parties such as the Chamber of Commerce and the Dutch Tax Administration is based on SBR/XBRL.” How the portal works Deloitte has standardised the compliance process and arranged it as a reporting chain, of which SBR/XBRL is a core element. The Ctrl

platform has been integrated into our working processes as “Sets for filing purposes can be made available to our clients just by clicking a button”, says De Jong.

Clients link their financial accounting records to ctrl, for instance using online accounting packages such as Twinfield or Exact Online.

Deloitte then links the data from these systems to management reports and reports used for filing purposes. Clients provide additional information that is not available in the accounting packages by using the online questionnaire on the portal.

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The reports produced can either be financial statements, tax returns or credit reports. The client receives an email as soon as Deloitte has made

available the respective report in the portal. The client then reviews and authorises the report online, after which it is automatically sent to the requesting party in XBRL, using digital signatures for authorisation. The status and any notifications from the requesting parties can be viewed at any time and reports remain available through the portal.

The online questionnaire, structures the additional data to be submitted by the client in order to prepare all reports required.

Dashboard displaying status of various report submissions and Management Reports

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How entrepreneurs benefit Entrepreneurs gain from SBR by the fact that the portal provides a clear overview of all the data necessary to prepare multiple reports required by regulators. The Dutch Taxonomy is used for

D u tc h bu s i n es S b en efit fro m XBRL

agencies. This uniform infrastructure makes it highly efficient to implement system-to-system communication protocols between the portal and government agencies. The result is that clients can authorise and submit, for instance, statutory accounts to the Chamber of Commerce in a simple, transparent and uniform way. Data is no longer exchanged through the mail.

“For example 50-80% of the data needed by banks for credit reports is similar to statutory accounts data. To prepare the credit report, the portal reuses the overlapping data from the statutory report.”

On top of that, the client’s administrative burden decreases significantly as formal records become available online and are easily dealt with digitally.

This is time-effective and helps entrepreneurs concentrate their efforts on what they do best: doing business.

guidance to define this dataset. As overlaps between different reports are accounted for in the Dutch Taxonomy, efficiency gains are made possible by SBR through the reuse of information. For example 50-80% of the data needed by banks for credit reports is similar to statutory accounts data. To prepare the credit report, the portal reuses the overlapping data from the statutory report. De Jong adds “It becomes possible that the standardised credit report enables our clients to file the same credit report to three major Dutch banks. This is a very convenient functionality for clients who hold accounts with multiple banks.”

The SBR program not only standardises the data to be reported, but also standardises the process infrastructure to file reports to all government

Entrepreneurs not only benefit in time efficiencies. Since the banks can now process the credit applications more efficiently and swiftly, this will result in much shorter lead times for entrepreneurs to receive a response on their credit application.

More value from the accountant The transformation to a digital reporting and filing process provides entrepreneurs with quicker access to their business data. Clients are continuously informed about their business and financial performance, and how they perform in comparison to their peers. This enables them to take well informed decisions. On top of that, the quality and quantity of client data available to Deloitte enables the development of new data analytics solutions.

The portal hides much of the complexities of SBR and XBRL from the client, but maximises the benefits that entrepreneurs can gain from SBR.

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focus on asia: japan

XBRL In Japan

By MR. Ito, Financial Services Agency, Japan

Mr. Ito, Director of the Development of Electronic Disclosure System, Corporate Accounting and Disclosure Division, Financial ServiceS Agency, Japan details the principals and developments of the EDINET System What were the principle events in the creation and adoption of the EDINET system?

In Japan in 1996, as part of an effort to reform our financial system, with the aim of creating an open and fair financial system, comparable to that of New York and London and providing the public with a vision of realising a more open, free, and globalised environment of asset management and finance, we began to examine an electronic disclosure system.

On the basis of this examination, we carried out changes in our legislation and IT systems, and in June 2001 we started operation of the Electronic Disclosure for Investors Network system (EDINET) to offer users rapid and simple access to corporate information, and to relieve the administrative burden when filing disclosure documents.

Upon adoption of EDINET, originally only the annual securities reports, quarterly securities reports, and extraordinary securities reports were filed optionally through EDINET, but later securities registration statements and major shareholding reports were also gradually brought under the scope of the system. Then in June 2004, it was made compulsory for all items other than major shareholding reports, and amendment reports for major shareholding reports to be filed through EDINET. Furthermore, in April 2007, it was made compulsory

x b r l in japan

for the aforementioned items such as major shareholding reports and amendment reports for major shareholding reports to be filed through EDINET, and now all disclosure documents are required to be filed using this system.

As of March 2008, to enhance reusability of disclosure information and then to improve convenience for those filing disclosure documents, we adopted the XBRL format into EDINET. What is the overall status of XBRL in Japan?

Presently, annual securities reports, semi-annual securities reports, quarterly securities reports and securities registration statements are handled in XBRL “A through EDINET.

they wished for consideration to be given to developing international compatibility and an easier search function. Subsequently, from 2011 we proceeded with development to increase the scope, search functionality, and analytical functions of XBRL to a global standard, and in 2013 we are going to be moving to a new system (Next Generation EDINET).

There are three focal points to the development of Next Generation EDINET: 1. At present, only the financial tables of the annual report, semi-annual report, quarterly

large number of information vendors have taken positively to accessing data through XBRL and it is being used as a way to transmit and make available financial information to other users.”

XBRL has enabled investors and analysts to have the option of processing and transforming the numerical value of financial statements into preferred data type; saving a significant amount of time in processing and analysing the information. Furthermore, a large number of information vendors have taken positively to accessing data through XBRL and it is being used as a way to transmit and make available financial information to other users. For administrative authorities, we are increasing the efficiency of our supervisory functions, and as a result, in 2009 EDINET received, on average, over 6,000,000 hits a month. In 2011, the monthly average exceeded 18,000,000, and with a large number of users using this facility, XBRL is functioning as an important part of the infrastructure in EDINET. We are also collaborating with the stock exchange to ensure compatibility with the “EDINETTaxonomy” to enable listed companies to submit brief announcements of their most recent financial statements to the exchange.

What are the proposals for the ‘Next Generation EDINET’?

In March 2008, after the implementation of XBRL into EDINET, many users responded that

MR. ito Financial Services Agency, japan

report, along with securities registration statements are processed with XBRL, and we are increasing our scope to areas such as risk information and the corporate governance information. We have also received numerous requests for XBRL to include the major shareholding report and tender offer notifications and decided to adopt these reports to be covered by XBRL. 2. In addition to the revisions to the present EDINET browsing and search functions, we have also added a function in XBRL to search for specific items and compare companies along with tools to convert XBRL data into CSV. 3. By updating the terms and conditions of our present system operating contracts, we plan to reduce our operating costs.

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focus on asia: japan

x b r l in japan

Period

Details

Oct 2009 – Mar 2010

Examination of XBRL scope and data extraction

Apr 2010 – Mar 2011

Development of a pilot version of the Next Generation EDINET Taxonomy.

Participation of users, such as those filing disclosure documents, implementation of pilot test with them.

Apr 2011 – Dec 2012

XBRL eligibility scope created based on the pilot test, detailed tagging range, and determination of technology required to adopt XBRL.

Jan 2012 – Jun 2012

Official announcement of the first version of the Next Generation EDINET Taxonomy.

Necessary modifications made based on first round feedback.

Oct 2012

Announcement of a second version of the Next Generation EDINET Taxonomy.

Jan 2013

Announcement of a third version of the Next Generation EDINET Taxonomy.

Necessary modifications made based on second round feedback.

Mar 2013

Announcement of a fourth version of the Next Generation EDINET Taxonomy.

(Scheduled)

May 2013 – Jul 2013

Implementation of a general running test. (Scheduled)

Aug 2013

Announcement of the Next Generation EDINET Taxonomy. (Scheduled)

Start of the 2013 fiscal year

Commencement of the start of the Next Generation EDINET Taxonomy.

(Scheduled)

What is the process of taxonomy development and revision?

We are procuring qualified vendors who have experience with accounting standards, business disclosure and XBRL to continue our maintenance and development of the EDINET Taxonomy.

Since March 2008, there has not been a single alteration to our framework, and the only updates we have been making are necessary revisions to reflect the changes in laws and accounting standards and addition of common-practice concepts. In order to extract new common-practice concepts, we search for the elements newly added by companies during the past year and select the most frequently used and suitable as a standard element. As a rule, the EDINET Taxonomy is updated once a year.

After the publication of the provisionally updated draft in January, we receive public comment, add necessary modifications and then announce the officially updated version in March. Considering that most Japanese companies settle their accounts at the end of March, this officially updated version is applied for the business year which ends on and after the March end. The following chart outlines the process from development to the commencement of the Next Generation EDINET Taxonomy.

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What issues still need to be resolved for XBRL in Japan?

Firstly, we expect that there will be considerable technological advancement in XBRL, and therefore, an increasing need to improve its international compatibility. Subsequently, we will continue to work closely with supervisors in each country on our exchange of information.

Next, we are monitoring overseas securities regulations and markets, and by continuing discourse with domestic stock exchange representatives and those filing disclosure documents, we would like to develop a more user-friendly system. Additionally, although the use of XBRL in EDINET is gaining recognition, it is still not at the stage where it is easily accessible to all.

To increase recognition of EDINET data and to make it more widely used, we intend not only to educate and inform users on the appeal of XBRL, but also to conduct research and work with the relevant organizations and vendors and find new creative data applications which will enable users with no knowledge of the XBRL language to be able to read, and access data.

in the world of...

Hudson Hollister, Founder and Executive Director, Data Transparency Coalition

My Job I run the Data Transparency Coalition, a trade association that seeks to persuade policymakers to adopt data standards for government reporting.

I spend much of my time meeting members of the US Congress and their staffs to explain the benefits of standards like XBRL. I draft legislative recommendations (and supporting documentation), which, if accepted, would require the adoption of standards in particular areas, such as securities reporting and US federal financial management. I use social media in order to build awareness of the need for data standards and of course, I’m always working to recruit corporate support to fund the campaign.

My World I believe data standardisation will transform government and business. Once they are adopted for all government reporting, standards like XBRL will open up the information for easy reuse – bringing transparency and efficiency for regulators and reducing filers’ compliance costs through automation.

The US government has only just begun to adopt data standards in areas where they are likely

to have the most impact: financial regulation, spending, program reporting, legislative actions and judicial documents. The government is not going to standardise these domains without clear direction from its leadership.

To persuade politicians to embrace data transparency – to the point of passing laws and exercising oversight about it – supporters must lay out the business case for standards like XBRL.That is what I try to do.

What Makes My Job Easier There are many groups and industries that understand the potential of data standards for government reporting and they become enthusiastic about data transparency legislation once they find out about it. They include financial companies seeking better regulatory data for their research and investment, the global open data movement being led by Sir Timothy Berners-Lee, non-governmental organisations campaigning for government transparency and technology companies looking for new business opportunities.

Interestingly, these different constituencies often don’t know about each other. One of the most

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In The World Of...

i n t he wo r l d of. . .

and Transparency Act – or DATA Act. The DATA Act will establish data standards including common identifiers and mark-up languages for US federal financial information. The US House The Coalition’s work would be impossible without of Representatives passed the DATA Act in the support of its members which include Teradata, April 2012 and a different WebFilings, RR Donnelley, version was introduced in Adaptive, Level One the Senate in September.

Technologies, IPHIX and “The DATA Act will The chief sponsors in the Smartronix.Their support is not House and Senate are now solely financial – it also means establish data standards working together to create a these companies are involved including common consensus version. The DATA in meetings with policymakers Act could well become law to provide an expert perspective identifiers and mark-up this year. and the creation of case studies languages for US federal that show the insights and At the beginning of 2013, efficiencies their products could financial information.” the Coalition signed an achieve if data standards were agreement with the Object adopted by government.

Management Group (OMG), the world’s leading governance organisation for How Has My Job Changed enterprise and modelling standards, to provide The Data Transparency Coalition is in start-up mode, discounts to one another’s members and to having been launched in April 2012, so every month work together for the adoption of standards in brings new and interesting challenges. government. That partnership has brought about a great deal of interest in our campaign from new It has been exciting to see the progress of our parts of the tech industry. first legislative project – the Digital Accountability exciting aspects of my job is the opportunity to bring them together.

The Data Transparency Coalition The Data Transparency Coalition (datacoalition.org) based in Washington, DC, is the world’s only trade association dedicated to persuading policymakers that government data should be published and standardised.

The Coalition calls for publication mandates to make government data accessible and standards (including mark-up languages like XBRL) to make data useful.

The Coalition hopes to see structured data replace paper and plain text as the medium for transmitting all regulatory filings. One of its policy goals is for the US Securities and Exchange Commission to expand its XBRL reporting requirement to include all information submitted by public companies under the US securities

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laws, rather than just financial statements and notes as it does today.

The Coalition also supports broad disclosure requirements and data standards for other government databases and filings, including government spending, management, legislative and judicial materials. The Coalition’s first campaign in the US is for the passage of the DATA Act, which will require the US government to adopt common identifiers and markup languages throughout its own financial management system.

Coalition members collaborate with members of the US Congress and key agency officials to create data transparency policies.

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