Automating Manipulation

 
 
By John S. McCright  |  Posted 2004-06-14 Email Print this article Print
 
 
 
 
 
 
 


Companies have data warehouses of all kinds of business information, which they aggregate into a sort of master data repository for reporting purposes, Willis said.

That process works great for information that is simple, numbers-based data such as debits and credits. But a lot of the information stored in the primary data warehouses, such as lease constraints or cash reserve calculations, cant be automatically meshed in a master file if it has not been tagged with XBRL, he said.

"That [aggregation] is all done in what I affectionately call Excel spreadsheet hell," Willis said.

SarbOx rules allow a company to have manual processes like that, but it must assign a higher level of risk because manual processes can be prone to error and thus cost the company in the end.

Read more here about the struggle to comply with Sarbanes-Oxley. XBRL, particularly in Version 2.1 of the specification, automates that manual manipulation of data and not only helps with SarbOx compliance but also improves a companys overall control of their business, Willis said.

"Focus on manual data exchange" in XBRL pilot projects, he said.

XBRLs global impact

Sampling of regulators that have implemented the specification:

  • Australian Tax Office
  • Banco de España
  • Bundesbank
  • Chinese Securities Regulation Commission
  • Dutch Tax Authority
  • European Commission
  • South Korea stock exchange
  • Netherlands Ministry of Finance
  • New Zealand Exchange
  • South African Financial Services Board
  • Toronto Stock Exchange
  • U.K. Inland Revenue
  • Bank of Japan
  • U.S. FFIEC
  • Dan Bellerue has been on the front lines in preparation for the new XBRL reporting requirements. His company, DBI Financial Systems Inc., of Bradenton, Fla., helps banks automate the submission of the quarterly reports, known as call reports. The companys software collates data from a banks general ledger and other systems and performs more than 800 validations on it before routing it to the FFIEC.

    With XBRL, Bellerue sees fewer hands touching the data before it is submitted to the authorities, which means they have an easier time analyzing the reports.

    "Thats a big deal to regulators because they want to make sure the report has been validated before they see it," Bellerue said. "They have to be confident that the data has been validated in the way they want it to be."

    The evolving standard Modules due this year will enable extensions to XBRL 2.1

  • Versioning: Enables users, developers and applications to quickly update data that follows an older version of a taxonomy to a new version
  • Formulas: Lets organizations distribute identical validation criteria across many platforms and applications along with a taxonomy
  • Because XBRL is an XML variant, deployments generally dont require a heavy rewrite of applications, but programmers do get involved to rewrite interfaces, Bellerue said.

    The business process re-engineering that Willis advocates will take awhile to trickle down to his customers, most of which are small and midsize banks, Bellerue said. But even now, he suspects a few large banks are starting to require their large borrowers to submit quarterly reports in XBRL.

    All the major ERP (enterprise resource planning) software makers have XBRL-enabled their applications. Other software, including Microsoft Corp.s Office applications, are also gaining XBRL support.

    "In the next six months, as people have the tools and understand what this is, XBRL will get more traction," Willis said. "This will be pervasive in three to five years."

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