| ccountants spend too much time moving data from one financial reporting spreadsheet to another, leaving less time for analyzing information to enhance reporting integrity and improve management’s decision making. The extensible business reporting language (XBRL) can reduce time spent manually finding and preparing information and improve data quality through fully automated information exchanges among disparate software applications. Once CPAs can electronically receive, validate and send standardized information, they can more quickly analyze and confidently redistribute it to managers, stakeholders and others for use in better informed decision making.
This article describes how XBRL-enabled data standardization maximizes speed and accuracy as information moves between one or more organizations’ accounting or analytical software. While these programs may be flexible and convenient, they often can’t detect or prevent transcription errors that commonly occur in manual data transfers.
The accounting profession and those it serves benefit from standards governing reporting and auditing. It follows that standardizing information formats would help CPAs gather, manage and report information more quickly, efficiently and accurately.
|XBRL: A Structure for Business Data |
This article continues the JofA ’s coverage of how XBRL can help CPAs, their clients and employers, regulators, investors and others issue or obtain complete and accurate business information usable on any computer system.
Consider how much CPAs could enhance their analysis and recommendations if the information they need was transferred automatically from its respective sources into company spreadsheets without the hands-on validation and manual transfer accountants and others commonly perform. Imagine further that data sources could automatically export new information to a range of designated spreadsheets as soon as it was created. In such a scenario, CPAs routinely would have the latest version of available data from all sources and thus be able to expand the scope of their analyses and to report more frequently for little or no added cost. Improvements like this are possible with the help of standardized data formats, XBRL-compliant software and reengineered corporate reporting and analytical processes.
XBRL-enabled standardization makes it possible to use the same data seamlessly on any computer hardware, operating system or application. This simplifies the information transfer process, or “supply chain,” by making it easier to automate the procedures that shuttle data among spreadsheets, databases and publishing programs. It’s easier to design such programs when the data elements they process are clearly defined in terms of their meaning, currency, period and type, and that’s exactly what XBRL does.
But such advances won’t happen without active support for the widespread adoption of XBRL, which CPAs can provide by working to
Understand XBRL. Accountants should expand their knowledge of XBRL and other information and Internet standards that improve reporting processes.
Make XBRL tools more accessible. CPAs should encourage software vendors to embed XBRL capabilities as standard features in their products.
Move XBRL into the supply chain. CPAs must understand the extent of human intervention in the data access, validation and analysis aspects of their clients’ and companies’ reporting processes so they can make informed recommendations on deploying XBRL in accounting software and information processing systems.
TAKE A CLOSER LOOK
Ask the following questions to assess your organization’s dependence on manual steps in reporting processes:
How many spreadsheets are involved in company reporting processes?
How are changes in those spreadsheets managed?
How many staff members are involved in producing company reports?
Do reports and analyses appear with sufficient frequency and contain adequate data?
Are there sufficient controls over current manual data transfer processes?
Your answers may reveal that some ostensibly automated operations actually involve manual processes with weak controls. Numerous public companies made such discoveries during Sarbanes-Oxley compliance examinations, and similar inefficiencies may also exist in private entities’ reporting processes. XBRL-based standardization can help CPAs serving or employed by any organization analyze business information to guide CPAs’, investors’ and management’s decisions.
VOICE YOUR NEEDS
Developers of all kinds of software are rapidly revising their products to support XBRL. CPAs should tell software vendors exactly what new capabilities are necessary to make their products more useful. The profession’s input will help ensure that upcoming software versions will facilitate standards-based streamlining of data throughout the business reporting supply chain, enhancing the accuracy, timeliness and usefulness of the information CPAs provide.
MIKE WILLIS, CPA, was founding chairman of XBRL International and is a partner of PricewaterhouseCoopers. His e-mail address is firstname.lastname@example.org .
|XBRL International Inc. Resources |
The group’s Web site ( www.xbrl.org ) provides
An overview of XBRL’s functions and capabilities ( www.xbrl.org/whatisxbrl ).
Questions frequently asked about XBRL ( www.xbrl.org/faq.aspx ).
A technical information center ( www.xbrl.org/technicalinformation ).
Details on how to create an XBRL-compliant financial statement ( www.xbrl.org/specifications ).
Description of XBRL-enabled applications ( www.xbrl.org/tools ).
Showcase of XBRL in action ( www.xbrl.org/showcase ).
Descriptions of the benefits as well as the issues involved in adopting XBRL, with sections focusing on special interests groups ( www.xbrl.org/xbrlandbusiness ).
An explanation of why CPAs need to be involved in XBRL, how it will help those in industry and public practice, and descriptions of potential XBRL uses—for example, in financial statements, tax returns, regulatory filings, accounting and business reports, authoritative literature and audit schedules ( www.aicpa.org/innovation/baas/xbrl/homepage.asp ).
A Web-based video, “XBRL—Real Solutions, Real Time” ( www.aicpa.org/video/xbrl ).
Prior JofA articles on XBRL: “ Finally, Business Talks the Same Language ” (Aug.00, page 24); “ A Napster for Financial Data? ”(Jan.03, page 66); and “ Tap Into XBRL’s Power the Easy Way ” (May04, page 32).
The World Wide Web Consortium’s site provides information about the extensible markup language (XML), of which XBRL is a subset ( www.w3.org/xml ).
The 11th XBRL International Conference will be held in Boston, April 25–29, 2005 ( www.xbrl.org/upcomingevents ).