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TECHNOLOGY

MACPA project serves as XBRL case study for private companies, nonprofits

 

By Bill Sheridan
June 2012

XBRLIn an effort to demonstrate XBRL’s scope and versatility, the Maryland Association of CPAs has begun using the technology to populate its financial information and key performance indicator reports. The project could become a blueprint of sorts for how private companies and nonprofit organizations can take advantage of XBRL’s power.

With XBRL, the association is producing better financial information faster and more efficiently. The nonprofit might eventually begin filing its Form 990, Return of Organization Exempt From Income Tax, via XBRL as well, turning a lengthy filing process into one that can be done “with the press of a button,” said Skip Falatko, CPA, the MACPA’s director of Finance and Administration.

“XBRL would be an excellent application for the nonprofit community,” Falatko said. “There are about a million and a half nonprofits in the United States, and probably hundreds of thousands of them file Form 990 every year. If they were to file those reports via XBRL, it would greatly increase and improve accountability, transparency, and comparability in the nonprofit world, so you would have a much easier approach for comparing nonprofits than we currently do.”

The benefits go well beyond the data itself, though.

Before XBRL, compiling and disseminating data ate up huge chunks of an accounting department’s time, leaving finance folks with few opportunities to do what they do best—analyzing the data and adjusting business processes accordingly.

XBRL solves both problems. It compiles and communicates data almost in real time, puts it into users’ hands quickly, and lets them make informed decisions. It even allows them to nimbly address unique challenges by creating custom reports.

Most importantly, it frees CPAs to focus on high-level analysis and decision-making.

“There is more pressure on business models today than ever before. They are changing faster than ever,” said MACPA CEO Tom Hood, CPA. “That means analytics are much more important than ever. This is not about XBRL; it’s about performance-management excellence. XBRL is the tool that gets us there.”

The main challenge for a nonprofit in implementing XBRL is learning and applying the technology. In the MACPA’s case, the nonprofit helped keep the project’s costs low by enlisting the skills of intern Thomas Hood, son of CEO Tom Hood and a Salisbury (Md.) University accounting student with an extensive technology background. Thomas Hood volunteered to learn XBRL, which he did quickly with XBRL co-founder Eric Cohen providing guidance and advice along the way.

“Our ability to take this in-house, implement it, and see benefits fairly quickly at a pretty low cost made us realize that XBRL is real and can really help,” Thomas Hood said. “The key to our success has been to start our mapping using XBRL’s Global Ledger taxonomy—or XBRL GL, as it is called. This allowed us to easily connect the data from our Association Management System to our General Ledger accounting system.”

Altova, which supplied software for the XBRL project, has produced a white paper that examines the MACPA’s project in detail. Read it at tinyurl.com/7enp9ko.

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—Bill Sheridan

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