XBRL Government Transparency
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Liv Apneseth Watson presented on how governments are using XBRL (eXtensible Business Reporting Language) at the 24th Annual ICGFM International Conference on Public Financial Management. XBRL allows for structured reporting of financial data and is being adopted by governments and agencies worldwide to increase transparency and reduce costs. Examples mentioned include the Standard Business Reporting initiative in Australia and legislation in the US to require federal agencies to collect financial data in XBRL format.
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XBRL Government Transparency
- 1. www.icgfm.org XBRL: A Language of the Government 2.0 World 24th Annual ICGFM International Conference May 16-21, 2010 (Miami, Florida, USA) Public Financial Management in the Era of "The New Normal" Presented by: Liv Apneseth Watson XBRL International Vice Chair & Founder Board of Director , IRIS Business Services Limited Board of Director, MediaTenor Board of Director,Institute of Management Accountants E: watson.liv@irisbusiness.com P: +1 203 856 8986 Skype: livwatson
- 2. XBRL a 2007 Breakthrough Idea!
- 3. Davos - 2010 “If you think about demographic changes and about climate change, none of these issues can be mastered without functioning capital markets. Demographic changes and the results on ageing societies and the funding of the old age pensions, which have to be paid out, by larger and increasing older generations is not feasible if it is not based on a well founded mechanism backed by papers generated by the capital markets.” Joachim Faber, CEO of Allianz Global Investors Leo Fuller, CEO Monitor Group during the Trust Meltdown launch in Davos, 2010 “More transparency is one key to restoring trust and executives have a fiduciary responsibility to their stake holders to learn more about XBRL and how this powerful open source royalty free information standard can help bring transparency and trust back to markets.” Liv Watson, Founding Member of XBRL, Board of Director IRIS Business Services
- 4. Today Objectives Discover how Governments are using XBRL Discover how XBRL will be instrumental in enhanced transparency of the public sector Discover how XBRL will help bridge the information gap between diverse information systems
- 5. Is there a problem with Electronic Data Today? Current accounting processes include largely manual , significant ‘cut and paste’ and manual data-entry that degrade the completeness, accuracy, and validity of information.
- 6. XBRL for Dummies ! XBRL is, fundamentally, an electronic language that helps both the private and public sector effectively and efficiently bridge the current gap between business systems by crossing artificial boundaries. Our governments, Your business operates on information, so you need to know the fundamentals of XBRL.
- 7. Compelling Reasons to Consider XBRL Making financial and business information exchange better, faster, and cheaper Making financial reporting more transparent and discoverable Explicitly articulating business meaning and thus enabling the exchange of that meaning between humans or between business systems Improving data integrity Integrating business systems Saving government agencies money and making them more efficient The following slides will highlight what XBRL can do for you. Better yet, the book fills in the details.
- 8. What is XBRL? ✔ XBRL(eXtensible Business Reporting Language) 1: The XBRL Specification (Technical stuff) 2: Taxonomies (UPC Codes with linked data attributes) ✔ XBRL is Tagged Data (Meta-Data - Machine Readable) Standard way to communicate business and financial information Defined by meta-data set out in taxonomies which capture the definition of individual reporting concepts and the relationships between them. XBRL - The “Bar Code” of the Business Reporting World. ✔ XBRL International Not-for-profit consortium of approximately 600 companies and agencies worldwide working together to build the XBRL language and promote and support its adoption.
- 9. Global Business Reporting Supply Chain XBRL GL Journal Taxonomies XBRL GAAP Taxonomies, IFRS-GP, US-GAAP, etc. XBRL Taxonomies and Extension Taxonomies (statistics, central banks, tax, others) Business Operations Internal Financial Reporting External Financial Reporting Economic Policymaking Investment, Lending, Regulation Processes Investors Financial Publishersand Data Aggregators Entities (Pubic Companies, SMEs, Public Sector) Central Banks Participants Auditors Trading Partners Regulators Management Accountants Software Vendors
- 10. Standardization Presentation Cash & Cash Equivalents References GAAP I.2.(a) Instructions Ad Hoc disclosures Label cashCashEquivalentsAndShortTermInvestments Calculation Cash = Currency + Deposits FormulasCash ≥ 0 Contexts US $ FY2004 Budgeted Validation Adding Meaning to Electronic Data Presentation Comptant et Comptant Equivalents Presentation 現金及び現金等価物 Presentation Kas en Geldmiddelen Presentation Деньги и их эквиваленты Presentation Гроші та їх еквіваленти Presentation 现金与现金等价物 Presentation Geld & Geld nahe Mittel XBRL Item XBRL Item XBRL – The Language of Financial and Business Reporting
- 11. Global XBRL Adoption Source: http://www.xbrlplanet.org/
- 12. Discover how Governments are using XBRL
- 13. Standard Business Reporting (SBR)Government 2.0 Government requirements to report financial information create administrative burdens for businesses throughout the world. The lack of a common reporting standard/language makes these burdens onerous, as businesses have to tailor, duplicate and individually supply information to meet the many and varied requirements imposed by domestic and international government agencies and regulators. Australian business will save around $800 million per year when SBR is fully operational.
- 14. XBRL at the IASB
- 15. Legislative approach Source: http://xbrl.sec.gov
- 16. Legislative approach H.R. 2392, The Government Information Transparency Act, and its companion bill, S. 303 passed by the US Senate, will require federal agencies to collect their data in a uniform, searchable format using XBRL thereby simplifying mandatory financial reporting for companies that receive federal funds. The bill calls on the White House to issue rules within 18 months that direct every agency to use XBRL. It would also require companies to file activity reports to agencies in XBRL and require agencies to make the reported financial information viewable by the public. H.R. 2393 and S. 303 are currently in Conference Committee, and once reconciled, will be passed to the President for his signature to become law. This would be the first approval of XBRL anywhere in the world by a legislative body. H.R. 4173, known as the Wall Street Reform and Consumer Protection Act, also encourages the use of the XBRL business reporting standard. The Act requires financial market regulators to make annual reports to Congress for each of the next five years on how they are “encouraging the use and acceptance of interactive data” to increase transparency in financial reporting. H.R. 4173 makes it easier to analyze and review complex financial statements filed by public companies with government regulators such as the US Securities and Exchange Commission (SEC), FDIC and others.
- 17. “The bipartisan measure, introduced by bailout-opponent Rep. Darrell Issa, R-Calif, calls on the White House to issue rules within 18 months for using, government wide, the same financial data format, called eXtensible Business Reporting Language (XBRL). The Securities and Exchange Commission and the Federal Deposit Insurance Corp. already use the standard to simplify the process of analyzing financial filings. But most agencies collect financial reports in many different data formats, making it hard to access and compare the data. The process is generally frustrating, time-consuming and largely manual, increasing the likelihood of human error, said Liv A. Watson, a co-founder of XBRL who serves on the board of director of financial information management firm IRIS India. “ Source: http://techinsider.nextgov.com/2009/12/house_oks_biz_filing_transparency_bill.php?oref=latest_posts
- 18. CESR call for evidence The European Parliament's Resolution of 21 May 2008 on a simplified business environment for companies in the areas of company law, accounting and auditing3, notes the advantages of XBRL and urges the Commission to actively promote the use of electronic means in relations between undertakings and public administrations. Also the European Parliament Resolution of 9 October 2008 on Lamfalussy follow-up: future structure of supervision4 called on the Level 3 Committees to design common reporting standards, preferably in a multipurpose format such as XBRL and calls upon the Commission to submit adequate legislative proposals. Source: http://www.cesr.eu/index.php?page=responses&id=154
- 19. Additional Resources “The adoption of eXtensible Business Reporting Language (XBRL) for financial reporting holds great promise as a source of efficiency, transparency, and comparability in the delivery of financial information.”
- 20. Europe XBRL Europe Getting better access to company information: Commission consults on the interconnection of business registers http://ec.europa.eu/internal_market/consultations/2009/interconnection_of_business_registers_en.htm
- 22. Global compatibility with Internet technologies and electronic platforms
- 23. Direct access to individual data in XBRL registered information, which in turn allows easy comparison of figures or characteristics from different companies
- 24. The use of multilingual labels, to facilitate the understanding of reported data throughout Europe
- 25. The ability to implement a common structure (described in an XBRL taxonomy), adjusted by local extensions, which is relevant to managing a dual approach combining global/European shared rules with local/national specificities
- 27. XBRL USA Issuer to Investor : Corporate Actions What’s the Problem? Approximately 200,000 corporate actions such as dividends, bond redemptions, rights offerings and mergers are announced each year by publicly traded companies and other issuers or offerors in the U.S. alone. Most of these announcements still require many manual steps, making the process error-prone, time-consuming and costly. Over the years, these issues have a negative impact on investors across the financial community. What’s the Solution? The resulting initiative builds on the work undertaken globally to promote existing ISO (International Organization for Standardization) standards for corporate actions and integrates the benefits of XBRL electronic data tagging technology. The collaboration promotes straight-through-processing by electronically capturing data directly from issuers at the point that a corporate action is announced and in standardized format. http://xbrl.us/i2i/Pages/default.aspx
- 28. XBRL USA Corporate Action – XBRL Taxonomies The Depository Trust & Clearing Corporation (DTCC) along with SWIFT and XBRL US
- 29. XBRL USA US Corporate Actions Announcements Flow
- 31. SEC Investor Advisory Committee
- 32. FAF FAF to maintain XBRL Taxonomy for US GAAP “The FASB team assigned to taxonomy maintenance will work closely with the SEC, investors, issuers, accounting firms, and other stakeholders to develop updates that are of the highest quality,” -- Jack Brennan, FAF Chairman NORWALK, Conn., Feb. 5, 2010
- 33. System Features State Controllerof Nevada Kim Wallin, CMA, CFM, CPA Based on the XBRL Standard XBRL Complexity hidden behind a simple user-friendly Spreadsheet, State Agencies need not know the XBRL standard Data encrypted and stored or transferred in the system Automated Debt Assigning Email alerts for every debt/payment update Capable of integrating with any State Agency’s internal system (DMV) Alerts for a extensive yet easy to use monitoring
- 34. State Controllerof Nevada Kim Wallin, CMA, CFM, CPA Debt Management System – State Controller’s Office, Nevada Secured .Net Framework 3.5 server MS Office Spreadsheet
- 36. Taxonomies Asset back Securities The mortgage-backed securities (MBS) market is frozen. There are perfectly good cash flows to be found in these investment vehicles, but the entire re-securitization market lacks the information and reporting standards necessary to untangle the good loans from the bad. As a result, investors will not buy what they cannot understand, the value of these assets is being marked to zero and the entire market has seemingly turned toxic. Source: http://xbrl.us/documents/RMBSwhitepaper.pdf
- 38. XBRL & Investor Relation Tools The new data needs to be analyzed and thought through for what it says: 1. How big are revenues? 2. How big are profits? 3. How big are profit margins? The new data must be compared to earlier data to answer these questions: 1. How fast are revenues growing? 2. How fast are profits growing? 3. How are margins changing? 4. How are growth rates changing? The company’s results must be related to other companies’ results: 1. How is this company doing relative to its competitors? 2. How is this company doing relative to other places the investor can place his or her money? How do they do that today? AS A RESULT
- 39. 24th Annual ICGFM International Conference May 16-21, 2010 (Miami, Florida, USA) Public Financial Management in the Era of "The New Normal" Questions ?
- 40. Liv Apneseth Watson Liv A. Watson heads Global Business Development for IRIS Business Services Private Limited. She is one of the founders of the XBRL Intentional Consortium. She has over 20 years of experience, in finding innovative ways to bring together technology, accounting and financial and business reporting. Working globally with leading market regulators, accounting associations and institutions, Ms. Watson has traveled to over 80 countries presented XBRL to a wide range of audiences from international standards bodies to Fortune 1000 companies and speaks with authority about its benefits, potential applications, and broad adoption. Liv authored one of IMA's most successful CPE courses "Accounting System Technology for the 21st Century". She has also published several articles on for international publications and journals including Harvard Business Review, Strategic Finance. She also writes a monthly column of financial and business reporting trends for CPA2Biz. She is the co‐author and contributor author to several of books including “XBRL for Dummies” and Governance, Risk, and Compliance Handbook published by Wiley. Member of the Board of Directors, IRIS Business Services Member of the Board of Directors, IRIS Business Services Member of the Board of Directors, MediaTenor Member of the Board of Directors, Institute of Management Accountants (IMA) Member of IASC Foundation XBRL Advisory Council Vice Chair of the Institute of Management Accountants XBRL Working Group XBRL International Steering Committee Member Vice Chair of XBRL International Membership Working Group Past Vice Chair of XBRL International, Inc Past Chair of the XBRL US Adoption Committee Past Vice Chair of the XBRL US Jurisdiction Advisory Board Member – University of Southern Indiana Advisory Board Member – University of Albany, New York International Journal of Disclosure and Governance Editorial Advisory Board Member
- 41. Additional Resources XBRL International: www.xbrl.org US Securities Exchange Commission: www.sec.gov/spotlight/xbrl.shtml XBRL EU: www.xbrl.org/eu/ XBRL at IASB: www.iasb.org/xbrl/xbrl.htm
- 42. “The bipartisan measure, introduced by bailout-opponent Rep. Darrell Issa, R-Calif, calls on the White House to issue rules within 18 months for using, government wide, the same financial data format, called eXtensible Business Reporting Language (XBRL). The Securities and Exchange Commission and the Federal Deposit Insurance Corp. already use the standard to simplify the process of analyzing financial filings. But most agencies collect financial reports in many different data formats, making it hard to access and compare the data. The process is generally frustrating, time-consuming and largely manual, increasing the likelihood of human error, said Liv A. Watson, a co-founder of XBRL who serves on the board of director of financial information management firm IRIS India. “ Source: http://techinsider.nextgov.com/2009/12/house_oks_biz_filing_transparency_bill.php?oref=latest_posts
Notes de l'éditeur
- The Carnegie Endowment for International Peace1779 Massachusetts Avenue, NWWashington, DC 20036
- In his preface former UN Secretary-General Kofi Annan points out the scope of the challenge for governments and financial businesses around the world: “There are many who rightly see the crisis as the consequence of failure to put economic policies at the service of the common good. As Adam Smith wrote over 250 years ago in his Theory of Moral Sentiments, universal values far beyond the profit motive – including humanity, justice, generosity and public spiritedness – must provide the framework for markets to work effectively. Now, he might argue, is the perfect moment to ensure that such core values are finally hardwired into public policy and international relations. In a highly interconnected world beset with shared problems, we cannot afford to get this wrong. And if we get it right, then we might finally have learned the lessons that Smith was trying to teach us.”
- You’ve probably already heard a lot of the hype and maybe even some of the compelling things that XBRL can do for you:But all those reasons may seem esoteric and perhaps even too far-fetched for most people to get their heads around. We want to provide you with some pragmatic, down-to-earth ways that XBRL can be good for you today. The following sections highlight what XBRL can do for you. (Better yet, the rest of the book fills in the details.)The following sections highlight what XBRL can do for you. (Better yet, the rest of the book fills in the details.)
- across agencies to agree with a single set of definitions of the information being reported from businesses to various government agencies.
- Corporate Actions initiative, both Chris Church, CEO Americas of SWIFT, and Don Donahue, CEO of DTCC, have joined XBRL US as founding members. Also, Jamie Shay, Head of Standards for SWIFT has joined the board of XBRL International.Issuer to Investor: Corporate Actions By electronically connecting the Issuer and Investor through the use of global standards, the 'Issuer to Investor: Corporate Actions' initiative aims to ensure the Issuers' intention and information are simply, accurately and effectively delivered throughout the communication chain, while driving towards complete straight-through-processing sought by the investing community.In your capacity as a senior manager at SWIFT, you are working with the DTCC and XBRL US "to fundamentally change corporate actions announcement processing" by integrating XBRL into the system. To begin with, could you explain what corporate actions are and what activities they entail? A corporate action is any activity that impacts a security that has been traded, cleared, and settled on behalf of the investor. Typically initiated by the public company issuing an equity or offering a bond, the action needs to be described and communicated to all investors and holders of the security as well as the public. The announcement of the action can include dates, rates, periods, prices, options, conditions, terms, exclusions, identifiers, and other characteristics.So there’s a lot of data that is often wrapped deeply in legal verbiage to prevent or mitigate any potential litigation for the action. The more complex the action, the longer the document will be, often into hundreds of pages. The tradition and even regulatory mandate is all paper-oriented, hence the interest in XBRL to identify unambiguously the embedded data in accordance with a widely used standard. There are more than 50 types of events that are considered a corporate action including dividends, interest payments, name changes, splits, tenders, mergers, redemptions, calls, spinoffs, warrants, exchanges, Dutch auctions, bonuses, repurchases/bids, and bankruptcy notices.Globally, about one million corporate actions are “announced” each year, 400,000 in the U.S. There are several times as many “scheduled” corporate actions for fixed income securities with periodic distribution of payments, but these are very straightforward so not the focus of our initiative.2. The data standard ISO 20022 is already in widespread use for corporate action events announcements. Why is an additional data standard like XBRL needed?First, as an aside, let me say that ISO 20022 is not yet in widespread use for corporate actions; rather, ISO 15022 is the core securities standard that is currently being used by the SWIFT community. However, ISO 20022 was developed to be easily translatable with ISO 15022 to help support a period during which both standards will coexist. As such, we’re avoiding a ‘big bang’ approach to the migration of a few thousand global institutions using ISO 15022 to XML-based ISO 20022. As these institutions asynchronously obtain funding and transition their messaging technology to XML, they can expect to either translate or interface with translated messages for a period of time. SWIFT is preparing support for this transition in consultation with our members and will address other message domains as well, such as clearing and settlement messages.Now, to your question: First, it is important to understand that XBRL corporate reporting taxonomies are inherited from underlying GAAP or IFRS accounting standards. XBRL doesn’t attempt to create accounting standards; rather, through the design and linkbases of XBRL, it enables the use of existing standards for extensible data reporting that enhance and add value to the human readable form of business reporting. So the XBRL taxonomy for corporate actions doesn’t start from scratch; it begins with the ISO 20022 standard and, by design, will maintain through the label linkbase and style sheets the alignment with ISO 20022. The growth of COTS (commercial off-the-shelf) software tools for XBRL, facilitating a marriage between “paper” and “data,” is the value that XBRL brings to the table beyond ISO 20022. The genesis of ISO financial messaging has been the enabling of standard business workflows between financial institutions based on a common business model and data dictionary. ISO 20022 is emerging for corporate actions, and will be live in late 2010, built on the very solid basis of ISO 15022, a tag-value messaging standard that was widely adopted in the early 2000s for securities, currently with several millions of messages processed globally each month. Another several million corporate actions messages per month are not ISO, but proprietary within several markets, including the U.S.’s DTCC messages. The advent of ISO 20022 means, with XML and a more robust business definition basis, that virtually all markets globally are committed to the new standard. DTCC will begin with corporate actions announcements in 2010. This is a large part of the opportunity to concurrently roll out a corporate actions taxonomy aligned with ISO 20022 in 2010 and reap the rewards of clean data from the source using the most advanced standard available.3. So ISO 20022 will be the basis for the XBRL data elements, structures, and validation in the corporate actions taxonomy? Yes, that’s right. Additionally, market practice guidelines help define entry points in the taxonomy, making tagging eminently more usable by the issuers and their agents. I think this compares favorably with the way US GAAP governs the financial reporting taxonomies where XBRL only expresses data elements that are meaningful from a GAAP viewpoint while implementing entry points that are useful by the reporting industry, such as energy or airline manufacturing. Interestingly enough, we expect fewer than 500 data elements for corporate actions whereas US GAAP currently exceeds 17,000 data elements.4. Could you describe the "scrubbing" process that corporate action announcements now undergo? How will XBRL remove the problems associated with it?Good, now we’re at the heart of the matter. Many different institutions have the responsibility of monitoring securities for announcements of corporate actions. Upon discovering an action announced for a held security, a custodian gathers feeds from multiple sources, each of which has attempted to send the correct data in a message. The core problem is that each source manually entered the data by reading and interpreting the source document. This is a recipe for discrepancy, thus scrubbing is necessary to create the “golden copy” which is really just the best version of the truth based on all these indirect feeds. If the issuer or their agent tagged all the key elements of data and attached an XBRL file to the filing, press release, or prospectus with which they currently announce to the market, then there could not be any discrepancy because there would be data from the source. The additional information that a financial institution, like a custodian, adds to the message is all specific to the institution’s accounting and servicing of the holdings related to the event, not the event itself. One important aspect to remember is that a complex corporate action event may take several months to complete from start to finish, with many documents filed and many updates. Each update is repeatedly going through the “scrubbing” process without core data from the source. This is the source of tremendous risk, as well as all the additional time necessary to manually check, rekey, validate, and try to prevent a costly error that could be in the millions of dollars.[Editor's Note: The Corporate Actions 2009 backgrounder is an excellent resource for more in-depth discussion of these topics.]5. Slide 7 of the corporate action presentation you made in July to the XBRL technology workshop held in Santa Clara states that "Institutional investors often use multiple custodians with the potential for conflict in the custodians’ descriptions of the corporate action." How will XBRL help to overcome this challenge?This is a very deep problem and not easy to explain. The best analogy is a variant of the “telephone” or “whispers” game, except beyond the single chain of a game, it begins with the same complex information from not one, but many origins and then, through several daisy chains, the messages are concentrated into the investment manager. The unavoidable misinterpretation drives errors, thus the need to “scrub” to figure out which of the conflicting data is correct, requiring significant time and introducing risk. So the proposed solution is that, instead of a “whisper,” we’re asking for a standardized “form” of the data instance to be given once from origin of the message. If each custodian and data provider and broker/dealer starts with the same data, with standard-driven precision, at the same time (via XBRL) then how much risk remains?6. Why is XBRL particularly useful for the technology needs of corporate action announcements? What other technology solutions were considered and rejected? Why is XBRL superior to these alternatives?XBRL is tailor made for “pointing out” the data of interest within a report. It has huge technical and business momentum. The data can be identified without disturbing the conditional and legal necessities wrapping the data in human readable reports. The issuers are already being enabled to use this technology, so adding a bit more seems achievable for a great deal of investor value. There are tools to help with tagging and reading/rendering. The only other options might be (a) messaging from agents using the ISO 20022 Issuer Agent Corporate Actions messages that Euroclear is deploying for communications between registrars and their depositories, (b) some kind of paper form, or (c) re-inventing some kind of tagging interface to build into or around the ISO 20022 messaging. Corporate actions announcements are business reports for public availability and investor consumption, like corporate reporting. So XBRL is a neat solution7. Could you describe a bit of the history behind using XBRL for corporate action communications? When was XBRL first considered as a possible solution? How have developments in the XBRL field – such as the SEC mandate and US GAAP taxonomy creation – affected the assessment of XBRL for the corporate action process? There have been several threads behind looking at XBRL for corporate actions. The problem is long-standing and multinational. It is all driven by “there’s got to be a better way” and “can’t we just get data from the source?” I personally heard the idea of a technology to tag key data within documents in the UK about three years ago. Soon after, I wove it into some presentations I made at Sibos (SWIFT’s annual international conference of financial institutions) and to ECSDA (European Central Securities Depository Association). At the Sibos presentation, DTCC’s CEO, Don Donahue, was in the audience and the first to comment on the approach. I believe the wheels were already turning there. And SIFMA’s Corporate Actions Division had already made unsuccessful overtures to the SEC asking for issuers to provide a cover form of key data for filings under the mergers and acquisition regulation. So the need for data from the issuers was well established. David Hands of DTCC had been discussing this in professional groups for the last ten years. The advent of XBRL for SEC filings obviously stimulated interest because the same entities produce corporate actions and, sometimes, even using the same documents. So it was the program, the sponsorship of serious work by XBRL US, the strong leadership of its CEO, Mark Bolgiano, and finally the mandate that created an environment ripe for corporate actions. The rest of what we call the “perfect storm” to get the project underway was, unfortunately, the financial crisis. This fueled both the drive for transparency and significant loss of revenue to apply manual effort to address shortfalls in corporate actions processing. The need, plus the right technology, plus the development of ISO 20022 corporate actions messages in XML format, became a foundation when corporate financial reporting in XBRL was mandated. Underwriting the commitment of SWIFT and DTCC, beyond the formation of the Issuer to Investor: Corporate Actions initiative, both Chris Church, CEO Americas of SWIFT, and Don Donahue, CEO of DTCC, have joined XBRL US as founding members. Also, Jamie Shay, Head of Standards for SWIFT has joined the board of XBRL International.8. How would the adoption of XBRL for the corporate action process occur on a global basis? Would it be adopted country by country, jurisdiction by jurisdiction? Could the XBRL taxonomy currently being created in conjunction with XBRL US be adopted by other countries in whole? Or would different corporate action taxonomies be needed for different regulatory regimes, which would then need to be harmonized, similar to US GAAP and IFRS?This is a challenge, but the approach we’ve taken in the US is resonating in many markets. Each market would have some differences, but if we are skillful with maintenance of the core taxonomy as aligned with ISO 20022, then the biggest differences would be entry points based on templates appropriate to the market. This kind of work goes on already via the Securities Market Practice Group (SMPG) for corporate actions. However, each market and jurisdiction would need to work together to establish the templates and then build out the entry points needed for their country. Given the international vitality of ISO messaging, ongoing work to harmonize market practice, and the discipline being demonstrated within the industry, this is a very achievable goal. The power of the regulators and market infrastructures, since they are charged with protection of investors and market strength, will have an unavoidable role creating the incentive necessary for success.9. How would the implementation of an XBRL solution to corporate action events proceed? For example, might it first be adopted for relatively simple and data-specific events (like dividend announcements) and then be implemented for more complex, text-heavy events (like M&A activity)? Would it be comparable to the SEC mandate, i.e., implemented in stages with the largest companies going first? Or would it be adopted by all parties for all events in one fell swoop? Do you anticipate the need for an equivalent of the SEC’s Voluntary Filing Program (VFP)?Good set of questions. For the moment, we don’t know. One factor: how compelling is the business case? Do the desires of the financial institutions processing corporate actions meet well with a roll-out strategy? The SIFMA Corporate Actions Division effort was focused on the most complex as being the highest risk – the situations wherein a mistake can incur major damage through claims. However, these are also the less frequent type of corporate action events compared with dividends and payments which, though simple, cover the lion’s share of all corporate action volume. I would definitely imagine at least a pilot or voluntary program to demonstrate value and work out any bugs since this is the first ISO 20022-based XBRL implementation. The best answer is that the Issuer to Investor team of DTCC, SWIFT, and XBRL US are working with our Stakeholder Group to determine the best way forward.10. What kinds of government action are required to adopt XBRL for corporate actions? What changes are required in legislation or regulation that must meet SEC approval? Do you believe the regulatory environment is conducive to adopting XBRL? The discussion is open at this time and pending completion of the business case. The regulatory environment appears conducive. At a minimum, it seems straightforward to require XBRL filing for all current required corporate action disclosure. Adding XBRL to corporate actions announcements that are not required for SEC filing may take more effort, but the result may indeed justify this kind of requirement. Why announce some corporate action event types with XBRL to identify key data, but not the rest of the event types? (By the way, please check out The Asset Managers Forum (AMF) website; AMF is a part of SIFMA and has recommended the Issuers to Investors program for corporate actions to the SEC.)11. In contrast to the strong and consistent support for XBRL voiced by the prior SEC Commissioner, the current Commissioner Mary Schapiro has been notably less vocal in her support for interactive data. Do you see that as a significant roadblock for implementation? I would refer readers to the three-part interview this blog did with Paul Wilkinson in October and November, particularly question 5 in Part 1. Paul very clearly elucidates Mary Shapiro’s challenges as well as those faced by Christopher Cox at the end of his term. And, as widely reported at the XBRL US conference in November 2009, the second mandatory filing revealed significant improvements over the initial 2Q filing in cost, speed, and quality. The term “pleasantly surprised” came from many quarters, including, unofficially, the SEC representatives. With the program launched and moving forward – the proof is in the pudding, they say – success will breed the enthusiasm that the XBRL community would like to see.12. Maintenance has arisen as a significant issue for XBRL financial reporting (FR) taxonomies. Do you believe maintenance will pose a similar challenge for corporate action taxonomies?Maintenance is absolutely a significant challenge. How do we avoid a diverging new taxonomy for every market adopting XBRL for Corporate Actions? Luckily, this is an area where ISO and SWIFT have been working together successfully for a long time: global standardization. I am certain that there will be significant opportunities to share in this area. The notion of extensibility is already beginning to be accepted and institutionalized for ISO 20022 messaging, strongly driven by the DTCC, but like XBRL will need a mechanism to manage the extensions and collaboratively fold back into the core standard. It is a must that we implement a global maintenance scheme to ensure corporate actions taxonomies remain aligned with ISO 20022 while the core taxonomy is adopted and adapted for new markets. I won’t speculate on the solution details because this is another area wherein there is significant ongoing discussion, but maintenance must be solved in a professional, efficient manner or risk moving toward entropy.13. Are you concerned that companies may simply have had enough XBRL with the mandate for financial reporting and do not want to hear any more about it at this time? Or do you sense an eagerness to leverage the XBRL investment that has been made by extending the data standard to new areas like corporate action events? I don’t know — we haven’t gone far enough yet. Let’s hope it will be old hat and easy to do by the time we show up with a demand, or rather, an opportunity to expand on clarity and efficiency in communicating the financial corporate activities that affect their owners, the shareholde
- The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with financial firms and third parties that market these products. DTCC's depository provides custody and asset servicing for more than 3.5 million securities issues from the United States and 117 other countries and territories, valued at $27.6 trillion. Last year, DTCC settled more than $1.88 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas.
- The Global Reporting Initiative (GRI) is a network-based organization that has pioneered the development of the world’s most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide.Most information today moves in a digital format. When searching for information on organizations or products, people often go to the internet. Companies use extensive ERP systems to manage information across units and across countries. Researchers and analysts typically have services that provide packages of reports and data sets and other information via terminals. Consumers are even turning to web-enabled devices like cell phones to answer whatever questions they have, whenever they have them. Sustainability information, however, has largely remained in print, but report preparers and users have much to be gained by moving environmental and social performance information into the wider digital flow of information. This has already started with increasing use of web-based reporting. However, there is even more potential to be unlocked by enabling people to put their specific information into a widely-accepted format that can also give readers more flexible access to the contents of reports. Introducing XBRL This movement towards interactive reporting and data has already begun in the financial sector and is currently focused around the buildup of XBRL. XBRL stands for eXtensible Business Reporting Language and was originally developed for transmitting financial information. XBRL offers a way to put an electronic “tag” on numbers or other qualitative information in the report. That way, computers can recognize the information select it, analyze it, store it, exchange it with other computers and present it automatically in different ways. The main benefits of using the XBRL include: - Greater reliability and consistency of information;- Faster data collection, aggregation, sorting analysis for in-house purposes;- Enhanced ability to customize reporting to meet the specific needs of information seekers such as investors and analysts; and- Compatibility with financial reporting systems and requirements (e.g. SEC, IFRS, Basel II). What does this mean in practice? In practice, a report preparer would use an existing taxonomy to place XBRL tags on specific contents of their report. These tags could be placed in a web page, a PDF file, or any of several other standard file formats. If, for example, a user wanted to focus specifically on greenhouse gas (GHG) emissions, XBRL would enable a user to immediately find the "GHG emissions" information in the document, extract it, and present it as raw data, analyze it based on the user’s predefined interest (e.g. amount of GHG emissions per product). The user could apply this to multiple reports to compare emissions information across different reports. GRI’s XBRL Project In 2006, GRI released the first version of XBRL “taxonomy” for the G3. A “taxonomy” simply means a list of tags organized into a single set. GRI is now convening a group of investors and companies to identify how to further improve the taxonomy such that it can become a routine tool to support company-investor exchange of information; The output of the project will be a 2nd version of the taxonomy that can potentially reduce the time needed to respond to many of the basic information needs of investors.Statement of support from investors "We welcome the development of an XBRL taxonomy for the GRI Sustainability Reporting Guidelines, and plan to work further with GRI to develop it into an effective tool for communicating sustainability performance information. At the moment, investors and companies face a challenge: more information is available than ever before, but companies and research providers are unable to gain the best value from this information. Researchers find that sustainability reports and associated data aren’t yet comparable enough and are often delivered in formats that are difficult to use. Companies have expressed the view that their existing published information is not sufficiently utilized and that the number of requests for information continues to grow. Investors and research agencies will always need to ask questions about companies’ sustainability practices. However, a well-written GRI report that is tagged to an appropriate level of detail could meet many investors’ basic information needs. By reducing the time and effort required by companies to meet the information needs of investors and research agencies, an XBRL taxonomy has the potential to increase ease and efficiency for all who use the information. We would like to work towards a future where: - Companies release a standard set of ESG information prepared according to generally-accepted reporting standards that meets many of the basic information needs of investors;- Companies apply a common digital protocol for labeling and communicating this standard information; - Researchers can directly access and import a company’s sustainability data into their systems for analysis; and- Companies can be confident that their publicly disclosed information quickly and easily reaches investors. Just as information technology has been essential to making the distribution of financial data efficient, we believe that it also has a crucial role to play with sustainability information. We encourage the GRI to continue developing its XBRL taxonomy and we will work to see how it can best be used in our research process." Signed by: Calvert Group JantziKLD Asset4 SAM EIRIS RiskMetricsInvestissment Responsible IWFinancialGet Involved GRI is seeking companies to participate in the project. The company will need to make two commitments: 1) Use the current taxonomy to tag as much of their most recent G3 report as possible; and2) Participate in teleconferences (and possibly 1-2 meetings) to discuss how to further improve the taxonomy. If you would like to participate in the project or are interested in more details on the, please contact Bastian Buck or Sean Gilbert
- The XBRL ChallengeUntil now, individual investors could obtain only high-level key financial figures for large companies with stock price history from sites like Yahoo! Finance and MSN Money. Institutional investors and research firms with deeper pockets could obtain real-time financial data feeds from pay-per-view data aggregators like EDGAR Online. However, these data sources are highly normalized, disconnected from the source and lack any semantic annotations. In greater detail, these data sources are fed by automated screen-scraper aggregation applications culling information from the HTML or ASCII filings and then are mapped to the data aggregators’ various relational databases. This extraction process is expensive and error-prone — especially when data has to be remapped to data aggregators’ relational databases prior to distribution to their various subscription-based data feeds. Also lost in this aggregation process are essential features of financial information: access to the reporting entities’ ‘as-reported’ stories, trust in the authenticity of the content, and granular detail. Data aggregated in this manner is not able to reflect the reporting entities’ as-reported financials.The SEC ruling introduces a phased mandate for filing in XBRL starting with the largest companies in June 2009, and the ruling will extend to companies of all sizes over the next three years. As a result, we can expect to see very large amounts of financial data becoming available in a machine interpretable format (XBRL). The challenge is to exploit this data to provide new kinds of services to investors.With XBRL, financial data has become a lot more interactive, with an emphasis on helping users make sense of the data. What distinguishes XBRL is the precise semantics attached to every reported fact. This makes it easy to pull out specific figures and concepts, and facilitates accurate comparison. XBRL metadata also enables both drill-down to granular detail and linking to reference sources like definitions, rulings and accounting standards documentation sets.How to Take Advantage of this OpportunityNow is the time to get your IR web site compliant with the U.S. SEC mandate.First, you need to ensure that your IR web site is ready and able to accept and post XBRL filings in an easily discoverable and permanently linkable manner. It is important that you clearly identify the data that you control on your IR web site. By assigning URIs (hyperlinks) to resources (actual XBRL-tagged filings), you enable other people to talk about and even share ‘as reported’ views of your filings using social networking applications.URLs like this are not useful for XBRL filings:http://www.mycompany.com/IR/b518b359b4abd4df0d6f7f129770b078/compdetailsA better approach is to use a URI scheme like this:http://www.mycompany.com/IR/{CompanyId}/{filingtype}/{year}/{number}Using a numerical-based canonical URI provides an explicit hierarchical scheme that is much easier for search engines and other web browsing tools to discover. This approach represents the data in a way that people can use easily, and it will enable you to expose the data to a wider audience in a repeatable fashion.Secondly, you should also consider delivering a rendered view of your XBRL-tagged SEC filings alongside the raw XBRL filings. Simply posting the raw XBRL files may not be enough. At this early stage in adoption, there are only a few desktop applications available to consume the XBRL content, and you will want to make sure that your site’s visitors can take advantage of the interactive data and access the rich semantic metadata-enhanced XBRL-tagged financial reports on demand.Finally, although the SEC ruling only requires that XBRL data be made available for at least 12 months on an issuer’s web site ², it would be wise to continue to host the data on a longer, more permanent basis. Links that disappear after 12 months can be very frustrating for users of that content and can create broken links in search engines. Also, keeping the data around long-term allows you to continue to control the data and allow for your site’s visitors to perform a historical analysis of your financials without having to search for each filing individually on the U.S. SEC EDGAR site or subscribe to expensive data feeds.In addition, by hosting your XBRL financial content on your Investor Relations web site, the data becomes infinitely more discoverable by search engines. The U.S. SEC blocks all search engines, including Google, MSN, Yahoo, and so on, from indexing any files at the SEC.gov web site. This practice impedes individual investors from easily linking to and aggregating the content on their own.This new approach will enable your content to remain connected to the original source — improving ‘trust’ in the provenance of the source of the information and enabling a previously unattainable level of information granularity.If you take these few important steps, you will vastly improve the findability of your financial information, enable your site’s visitors to view your filings in real-time, share them with colleagues across social networks, link to the filings directly on your site and eliminate the barriers to access by your key stakeholders.¹ The day the registration statement or report is submitted electronically to the Commission may not be the business day on which it was deemed officially filed. For example, a filing submitted after 5:30 p.m. generally is not deemed officially filed until the following business day. Under the new rules, web posting will be required at any time on the same calendar day that the related registration statement or report is deemed officially filed or required to be filed, whichever is earlier.² The inital proposing release did not specify that the XBRL data would be required to be posted for at least 12 months on an issuer’s web site, but commenters requested clarification and the SEC did make a clarifying amendment to the ruling.About JustSystems and XBRLAlong with the SEC, the International Accounting Standards Committee (IASC) Foundation, XBRL International, and many other organizations worldwide, JustSystems has been aggressively supporting the development of the XBRL standard and integrating the interactive data format into its xfy platform. JustSystems’ software solutions work with XBRL to enable a richer way of working with and utilizing information, leveraging our technology around information search and retrieval, semantics, document management, and data integration.