vrijdag 8 juli 2011

XBRL (1)

Just this week I heard that I might be assigned to an XBRL projecty, so time to have a look at it.
A fellow worker, Paul Diddnes, was kind enough to lend me "XBRL 4 dummies", by Charles Hoffman. This post contains the gist of what looks most important to me. In addition, I read some other stuff, mentioned at the end of this post.

1. What is XBRL?
Basically, XBRL (eXtensible Business Reporting Language) is a data interchange format, based on XML, and used in financial / business information. It is used widely by US SEC, and is also used by governments in the Netherlands (mainly Belastingdienst), Australia, Japan, India, China, and so on.
You may also think of XBRL as a reporting language, and the language defines meaning to its elements through something called taxonomies.

2. What are the advantages?
Current IT systems do exchange information, over a variety of protocols, in many different formats. XML is on the rise, but there are still many systems around that use apis and system specific formats.

3.Is it a fad? After all, it has been around for a while, and i don't hear any real success stories.
The book does not go into this, but I don't think this will go away soon. Many IT systems still use their own couplings: use tables directly, or views on its tables, export .csv files, exchange xls files, or any commons file format, or exchange custom handshake formats, apis, and are barely making the step to webservices and xml. This is the current step, and using XBRL is an extra step. Companies are not yet up to this step. Also, the early adoption by regulatory institutions, does not add to its popularity. It is perceived as an obligation, not as an opportunity.

4. What is a taxonomy?
A taxonomy can be regarded as a dictionary, and defines the meaning of the concepts. Examples of concepts are Net income, Sales, and so on.

5, Can you give an example?
Sure.
<gaap:NetIncomeOrLoss
contextRef="Period-2011"
unitRef="Euros"
decimals="Infinite">12345
</gaap:NetIncomeOrLoss>

<gaap:NetIncomeOrLoss : Gives a concept from the taxonomy gaap
contextRef: gives some context of the value 12345, in this case the period.
12345: the NetIncomeOrLoss
</gaap:NetIncomeOrLoss> : closing of the tag. Like in XML, every tag should be opened and closed.
unitRef: the currency of the value.

6. Are there any success stories?
Actually, yes. US Federal Deposit Insurance Company was an early adopter, and took time to collect and communicate information about its XBRL implementation.
They realized:
* TCO down from $65M to $39M, saving $26M
* Reduce time for making information available from 45 days to 2 days

7. Whats that about semantics?
We have syntax and semantics. Syntax is about form, semantics is about meaning. The example above shows form: 1 atom, one tag with data. Semantics is about meaning. That is why XBRL has context. Of course the example above still does not give you all the context you would like, without taxonomy available, you don't know it its expected or realized, and from which company or organization.
The taxonomy does allow rules: Assets MUST equal total liabilities PLUS total equity.

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