XBRL – Revolutionary Digital Reporting to Publish Financial Information Michael Ohata Director...
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XBRL – Revolutionary Digital Reporting to Publish Financial Information
XBRL – Revolutionary Digital Reporting to Publish Financial Information
Michael OhataMichael OhataDirector Reporting StandardsDirector Reporting StandardsMicrosoft CorporationMicrosoft Corporation
ObjectivesObjectivesOutline trend that is changing Financial Outline trend that is changing Financial reportingreportingIdentify common business information Identify common business information problems that negatively impact reporting problems that negatively impact reporting and related control cost & effectivenessand related control cost & effectivenessDefine a business architecture that Define a business architecture that minimizes the riskminimizes the riskDescribe how open standards achieve Describe how open standards achieve lower costlower costUse these processes to better understand Use these processes to better understand your businessyour business
What is XBRL?What is XBRL?
Extensible Business Reporting Extensible Business Reporting LanguageLanguage
Reporting standardReporting standard
““Interactive data”Interactive data”
Predefined data tags, like a barcode Predefined data tags, like a barcode to facilitate comparisonto facilitate comparison
Vision for Interactive DataVision for Interactive Data
It should be easy to call up information about any company you choose. You should be able to download it and use it in the personal software of your choice. And you then should be able to easily analyze and compare the data with the same information from other companies. We want to make the numbers derived from financial statements vastly more accurate. And we want to allow companies to communicate with investors on a constant basis.
Chairman Christopher Cox to American Enterprise Institute, May 30, 2006
Market Context: Compliance, Market Context: Compliance, BIBI& Reporting Automation& Reporting Automation
Compliance & risk management
Reporting Efficiency &Reporting Efficiency &Electronic FilingElectronic Filing
Regulatory automated data aggregation &
analysis
Business Performance Management
Why Microsoft cares about Why Microsoft cares about XBRLXBRL
Customers tell us about internal Customers tell us about internal reporting painsreporting pains
We believe technology can lower cost We believe technology can lower cost of managing business informationof managing business information
It’s about market collaboration and It’s about market collaboration and providing industry feedbackproviding industry feedback
We all have an interest in the solutionWe all have an interest in the solution
A Typical Business A Typical Business ObjectiveObjective
““Increase production and Increase production and throughput by leveraging the throughput by leveraging the large warehouse engine. Tightly large warehouse engine. Tightly integrate critical business integrate critical business functions and align business functions and align business processes to enhance flexibility, processes to enhance flexibility, increase efficiency and increase efficiency and productivity.”productivity.”
Does this sound familiar to you?Does this sound familiar to you?
External Financial Reporting
BusinessOperations
Internal Financial
Reporting
Investment,Lending,
RegulationProcesses
Economic Policymakin
g
Participants
AuditorsAuditorsTradingTradingPartnersPartners
InvestorsInvestors
FinancialFinancialPublishersPublishers
& Data& DataAggregatorsAggregators
RegulatorsRegulators
Software VendorsSoftware Vendors
ManagementManagementAccountantsAccountants
CompaniesCompanies CentralCentralBanksBanks
Corporate Reporting Corporate Reporting ProcessProcess
Standard Taxonomy(Definition &
Access)
Common Business Logic
Every step along the way people collect, validate Every step along the way people collect, validate and analyze information repeatedlyand analyze information repeatedly
Common Business Data Common Business Data Integration ChallengesIntegration Challenges
Complex, heterogeneous back office Complex, heterogeneous back office environmentenvironment
Lots of data physically managedLots of data physically managed
And we replicate it for specific applicationsAnd we replicate it for specific applications
Common business rules/controls live within Common business rules/controls live within wide range of disparate applicationswide range of disparate applications
We use manual data validation processes We use manual data validation processes that are often circularthat are often circular
Poor reuse of data definitions & business Poor reuse of data definitions & business rules rules
Many Internal ControlsMany Internal Controls
SubsidiarySubsidiaryERPERP
CRMCRM
CRMCRM
ERPERP
ERPERP
ERPERP
SubsidiarySubsidiaryERPERP
ConsolidationConsolidation
Supplemental information
ControlControl
ControlControl
ControlControl
ControlControl
ControlControl
ControlControl
ControlControl
ControlControl
ControlControl
ControlControl
ControlControl
Controls located Controls located with data or with data or
supplemental, supplemental, manual processesmanual processes
InternalInternalControlControl
DocsDocs
ManagementManagementReportingReporting
Internal ReportingInternal Reporting
When you consider Compliance as When you consider Compliance as continual process, we begin to see continual process, we begin to see more clearly the need for better more clearly the need for better automationautomation
InternalInternal FinancialFinancial ReportingReporting
External Financial Reporting
BusinessOperations
Investment,Lending,
RegulationProcesses
Economic
Policymaking
Heroic Analytic Heroic Analytic Processes…Processes…Transaction
dataMultiple
departmental Excel
spreadsheets
Consolidated spreadsheets for
management
Beyond business data integration challenges…Beyond business data integration challenges…we often drive our businesses to new we often drive our businesses to new performance insightperformance insight
ManagementManagementReportingReporting
Lead to Risk of Manual Lead to Risk of Manual ErrorError
Transaction data
Multiple departmental
Excel spreadsheets
Consolidated spreadsheets for
management
Where Do You Want to Where Do You Want to Be?Be?
TechnologTechnologyy
Financial Financial ReportingReporting
……Observation from Observation from CFO.comCFO.comPerformance management is to performance Performance management is to performance data what ERP is to transaction data: data what ERP is to transaction data: Relevant information, fully integrated Relevant information, fully integrated providing a single view tailored to the needs providing a single view tailored to the needs of finance & operating executives.of finance & operating executives.
Goal: “Common, standardized databases to Goal: “Common, standardized databases to establish and maintain a single, unimpeachable establish and maintain a single, unimpeachable
version of the truth about company operations and version of the truth about company operations and performance”performance”
From IT, Compliance, and Performance Management
Business Business Performance Performance ManagementManagement
Competitive Competitive AnalysisAnalysis
Risk ManagementRisk Management
Auditor toolsAuditor tools
404 Monitoring404 Monitoring
Real-time Real-time ConnectionConnection
Services Oriented Services Oriented ArchitectureArchitectureA “Web service” is a standard A “Web service” is a standard
communication protocol that can communication protocol that can be used by applications to: be used by applications to:
Publish informationPublish information Enable discovery of information Enable discovery of information communicate over platforms communicate over platforms
using open Internet standardsusing open Internet standards
Data
Business Business OperationsOperations
Acquisition Acquisition IntegratioIntegrationn
ExternaExternal l
ReportsReports
SEC SEC FilingsFilings
SEC SEC DisclosurDisclosure e ChecklistChecklist
Dept of Dept of CommercCommercee
BanksBanks
Internal Internal ReportsReports
DataData
Data
General General Ledger Ledger
ConsolidationConsolidation
General General Ledger Ledger
ConsolidationConsolidation
Drill Drill downdown
Enterprise Use of SOAEnterprise Use of SOA
General Ledger consolidationsGeneral Ledger consolidationsMany subsidiary companiesMany subsidiary companies
AcquisitionsAcquisitions
Integrating internal systemsIntegrating internal systemsLanguageLanguage
Lack of a standard chart of accountsLack of a standard chart of accounts
Real example (Fortune 100 Company)Real example (Fortune 100 Company)72 instances of SAP72 instances of SAP
14 days to consolidate the books14 days to consolidate the books
90 employees in G/L consolidations team to load, edit 90 employees in G/L consolidations team to load, edit and validate the subsidiary ledger mapping and loadingand validate the subsidiary ledger mapping and loading
SOA & Common SOA & Common TaxonomiesTaxonomies
Transactional & subsidiary data
ControlsControls
ControlControl
ControlControl
AggregatioAggregation,n,
Analysis,Analysis,ViewingViewing
ManagementManagementReportingReporting
“Wrap & Map” - Standard data
definition XML/XBRLXML/XBRL
Web Services
An Analogy for Standards in An Analogy for Standards in Business IntegrationBusiness IntegrationCargo Containerization: Data Cargo Containerization: Data EncapsulationEncapsulationUp until the 1960’sUp until the 1960’s
Shipping individual pieces of Shipping individual pieces of cargocargo
Loaded, packed, arranged and Loaded, packed, arranged and unloaded separatelyunloaded separately
Significant breakage and Significant breakage and pilferagepilferage
Today, ContainerizationToday, Containerization90% of world trade moves in 90% of world trade moves in containerscontainers
Shipping costs reduced by 70%Shipping costs reduced by 70%
More reliable and efficient end-More reliable and efficient end-to-end transportto-end transport
Enhanced controlsEnhanced controls
Web ServicesWeb ServicesIntegrationIntegration
Reporting Reporting SystemSystem
Sales SystemSales System
ERPERP
Integrated PlatformIntegrated Platform
Leverages All Leverages All Enterprise Enterprise
AssetsAssets
Captures New Captures New Opportunities Opportunities
& Creates & Creates Value from Value from
Existing Existing InvestmentsInvestments
SubsidiarySubsidiary
Current Technology Current Technology ApproachApproach
So, Why XBRL?So, Why XBRL?
Collaborative market effort Collaborative market effort – 450 member – 450 member organizationsorganizations
Open standard based on Open standard based on XMLXML
Implemented across Implemented across applicationsapplications
Crosses all industriesCrosses all industries
Designed for extensibilityDesigned for extensibility
Includes XBRL GLIncludes XBRL GL
Standardization
CalculationCash = Currency + Deposits
CalculationCash = Currency + Deposits
FormulasCash ≥ 0
FormulasCash ≥ 0
ContextsUS $
FY2006, Budgeted
ContextsUS $
FY2006, Budgeted
ReferencesGAAP I.2.(a) Instructions
Ad Hoc disclosures
ReferencesGAAP I.2.(a) Instructions
Ad Hoc disclosures
XBRLItem
XBRLItem
LabelCashCashEquivalentsAnd
ShortTermInvestments
LabelCashCashEquivalentsAnd
ShortTermInvestments
Validation
Presentation現金及び現金等価物
Presentation現金及び現金等価物
PresentationCash & Cash Equivalents
PresentationCash & Cash Equivalents
Technology standard Only one for financial & business reporting
SummarySummary
XBRL is here and nowXBRL is here and now
Efficient corporate reporting Efficient corporate reporting demands better business information demands better business information integrationintegration
Internal control discipline drives Internal control discipline drives continuous monitoring and process continuous monitoring and process automationautomation
Break-through performance Break-through performance management is about standardizing management is about standardizing information information