Why do we render XBRL?

As many filers are finding out during this filing season, XBRL rendering (making XBRL humanly readable) is not as sophisticated as we want it to be. In fact the most commonly used rendering engines have many problems that filers are experiencing as they review their XBRL exhibits. Let’s explore XBRL rendering using the SEC’s rendering engine as an example of the challenges posed by commonly used rendering tools.

When mapping company financial information (Facts) to the US GAAP Taxonomy (UGT), companies are following, or should follow, a process that includes planning, mapping, reviewing, testing, re-reviewing (as needed), approving and then filing. Notice that a part of that process includes viewing XBRL result`s. Inevitably, some form of rendering is the way we currently review amounts being tagged, the XBRL tags selected, the definitions and attributes of those tags and the interrelationships between the amounts reported (like calculation relationships and amounts in SEC filings that agree…or should agree).

We tend to think of financial reporting data in a visual way – in a way we can view it. That’s the old way of thinking about financial reporting. In the future people will be able to grab entire financial reports or individual amounts reported in a disaggregated way (i.e. if they want only EBITDA and Earnings per share, they need only grab the XBRL tags for those amounts for the periods they are interested in). Because XBRL tags the amounts being reported with contextual metadata, the individual amounts have meaning separate and apart from any financial report or software application. In other words, you may still want to think about data in terms of viewable renderings, but investors and other users of financial data are not obligated to do so.

What is XBRL filing? (Part 2)

Remember that as you complete your XBRL filing, that it is very important to get your facts and values right. Your data should be mapped to the appropriate element in the UGT or extension taxonomy. Make sure the definitions and attributes or properties of your selected elements properly represent what you are reporting. It is especially important to get the period type, balance type, data type and other taxonomy attributes (or properties) correct. In addition, the calculation relationships between your data must mathematically work. All of your facts and values should be mapped to the proper taxonomy at the appropriate level.

Your financial statements are required to be detail tagged and your footnotes must be tagged at the following four levels:

·         Level 1: Each complete footnote tagged as a text block

·         Level 2: Each significant accounting policy within the significant accounting policy footnote tagged as a text block

·         Level 3: Each table within each footnote tagged as a text block

·         Level 4: Within each footnote, each amount (i.e., monetary value, percentage and number) is required to be separately tagged

As you complete your XBRL filings, remember to focus on your facts and values and their relationships to the UGT or extension taxonomy. Also give significant consideration to the definitions and attributes of the elements chosen. By doing so you will emphasize the data being reported, not how poorly the formatting of a rendering tool is. Remember too that the purpose of your XBRL filing is to make your data machine readable, not beautiful to look at. We have HTML and PDF versions of your filings for view ability.

What is XBRL filing? (Part 1)

A user-friendly way to understand the concept of what is being reported is to think of the filing as consisting of your facts and values (the Instance file), the company specific taxonomy with all of its various attributes (the Extension Taxonomy) and the relationships between the two (the “Tags”). Technically speaking, your SEC filing consists of six electronic files. Each of these files has a specific role in defining your data. Here are the filenames and their roles.

XBRL Filename (1)	File Type	Purpose of file
xxx-yyyymmdd.xml:	Instance file	Contains the actual facts and values in your filing. Each fact in the instance document is related to an element in your company’s Extension Taxonomy.
xxx-yyyymmdd.xsd:	Schema file	Defines the actual concepts of an XBRL based markup language. It gives their names, their data types, whether you can report about them. I like to think of the Schema file like a traffic cap for the other XBRL files.
xxx-yyyymmdd_cal.xml	Calculation linkbase	Defines how values of concepts should sum up from one to another
xxx-yyyymmdd_def.xml	Definition linkbase	Allows users to define relationships between elements. For example a relationship can be defined that the occurrence of one concept within an XBRL instance mandates the occurrence of other concepts
xxx-yyyymmdd_lab.xml	Label linkbase	Allows the user to attach labels to a given concept
xxx-yyyymmdd_pre.xml	Presentation linkbase	Defines how concepts are ordered and nested

(1) The naming convention for these files is as follows: xxx = company specific identifier (like ticker symbol), yyymmdd = the report date and the remainder of the file name specifies the type and role of that XBRL data file

Transparency, Investors and XBRL (part 2)

Transparency is important to investors and security markets. Transparency is equally important within company operations. Companies seem to be focused exclusively on complying with the SEC’s XBRL requirements, but they should begin to think about ways to increase the transparency of their operations. A quick and relatively inexpensive way of gaining that operational visibility is to utilize XBRL. Use of XBRL within company operations provides many advantages including:

·         Ability to access business and financial information from disparate computer platforms or applications

·         Ease of access to business and financial information including through use of existing desktop tools (like MS Excel)

·         Improved accuracy in the business and financial information obtained because amounts are selected using the related XBRL tag

·         Increased consistency of business and financial information because the information persists from its original source to its ultimate use

·         Speed of access to business and financial information

·         Increased automation and less manual data review, especially in handoffs of data from application to application

·         Increased ability to automate reporting

Transparency, Investors and XBRL (part 1)

The Financial Crisis Inquiry Commission has been meeting to look into the recent financial crisis. The Financial Crisis Inquiry Commission (the “Commission”) website says: “In the wake of the most significant financial crisis since the Great Depression, the President signed into law on May 20, 2009, the Fraud Enforcement and Recovery Act of 2009, creating the Financial Crisis Inquiry Commission. The Commission was established to examine the causes, domestic and global, of the current financial and economic crisis in the United States.”

It is clear that our markets and the risks associated with them are enormously complex. Individual investments of various types can be understood, but when investment banks pool assets, especially sub-prime assets, then package them into investment grade vehicles through strategies like over-collateralization, senior and subordinated holders or insurance vehicles, the investments and underlying risks become more complex. To make matters worse, these pooled assets are then exploded apart, packaged with various derivative products, and sold to investors.

Perhaps the most important way to protect investors is to give them visibility into the risks of the investments they choose. When an investor understands the risks, he can take action to mitigate it. The transparency of investment vehicles and the underlying risk factors is an extremely important component of a robust investor protection approach and a healthy securities market.

IFRS and XBRL go hand to hand

Companies around the world are working to increase transparency in their financial reporting while also reducing the regulatory burden. Two global standards help enable these objectives: International Financial Reporting Standards (IFRS, a set of accounting standards) and eXtensible Business Reporting Language (XBRL, a technology standard). These distinct yet complementary standards often work hand in hand; for example when IFRS-based financial statements are submitted electronically in XBRL.

Organizations all over the world are adopting IFRS, a set of methodologies and disclosure requirements for the preparation and presentation of financial statements. With the goal of implementing a common set of accounting standards worldwide, regulators and standards setters are increasingly requiring companies to use IFRS.

To cope with the systemic demands that IFRS and XBRL impose, companies must prepare their infrastructures for these changes. SAP (Systems Applications and Products in Data Processing) provides the software and solutions to help simplify transitions to IFRS or XBRL reporting.

If adopting IFRS or XBRL is in your company’s future, your mission is clear: Begin treating the transition as an opportunity rather than just a mandate. With careful planning and thoughtful execution, you can use the adoption of IFRS and XBRL as a chance to review and improve your financial consolidation and reporting systems and enable rapid legal compliance.

The National Standardization Administration and Ministry of Finance of P. R. China released the Chinese National Standards on Extensible Business Reporting Language (XBRL) Specifications and General Purpose Taxonomy of Chinese Accounting Standards

On October 19, the National Standardization Administration and Ministry of Finance of China held the Release Ceremony for the Chinese National Standards on Extensible Business Reporting Language (XBRL) Specifications and General Purpose Taxonomy of Chinese Accounting Standards (CAS) in Beijing. The national standards and general purpose taxonomy have defined the elements of XBRL and the basic requirements of preparing XBRL financial reporting based on CAS, thus laying a solid foundation for building a scientific, sophisticated and universal accounting information standards system. The national standards and taxonomy have become a milestone and starting point of China’s accounting information undertaking. Vice Finance Minister Wang Jun and Administrator Ji Zhengkun of National Standardization Administration attended the ceremony and delivered an address.

Wang Jun said that XBRL has effectively enhanced the accuracy and timeliness of information disclosure. It is helpful to conduct profound and meticulous information processing from various perspectives and levels, thus significantly scaling up the width, depth and accuracy of information usage. XBRL can not only be applied in the financial accounting sector, but also be extended to fiscal management, taxation, financial regulation, state-owned assets management, risk management and internal control. He pointed out that the establishment of the national standards and general purpose taxonomy is a trail-blazing cause.

The formulation and implementation of the standards and taxonomy demonstrate inclusiveness, consistence and authority. The design of the standards and taxonomy is in line with the development trend of XBRL, which is forward-looking, flexible and open. In the next step of implementation, it is imperative to continue playing the synergy effect of the Accounting Information Committee, improve the coordination mechanism, and ensure proactive and orderly implementation.