In This Chapter
Figuring out what XBRL user group you belong to
Understanding aspects of XBRL important to your viewpoint
Viewing XBRL from other perspectives
In this chapter, we examine XBRL from your perspective and how it may impact you and your organization. We can't discuss each individual person, so instead we categorize you according to patterns. This chapter helps you see specifics, such as how XBRL will impact you as a person and your organization.
XBRL is definitely not a fad, and it has a proven track record of providing significant benefits to those who have implemented it. In fact, Chapter 9 is packed with examples of all sorts of ways organizations are already putting XBRL to work for them. You may be introduced to XBRL because you're
Pushed in by a mandate: You may be using XBRL not because you want to, but because someone else mandates that you supply them with regulatory reports in an XBRL format. Why would people force you to use XBRL? First, they want to take advantage of the benefits XBRL offers. Second, they have the power to require you to bend to their will. You guessed it — big government!
In the United States, good examples of mandates to file information to governmental agencies is the SEC mandate for public companies and the FDIC mandate requiring all FDIC-insured banks to use XBRL to submit their regulatory filings.
Drawn in to proactively seek its benefits: XBRL isn't some useless government program dreamed up by politicians trying to help their constituents. XBRL was actually created by the market. Companies and individuals got together to create XBRL because of the significant benefits of global agreement and standardization as opposed to fracturing the business-reporting world into competing proprietary technology fiefdoms.
This same standard that helps companies exchange business information with those mean government regulators can also help you exchange business information within your own organization or with your business partners. You can exchange information from one department to another department; your company to a business partner; your company to your accountant; your company to your bank; or your government agency to another government agency or to your constituents.
XBRL is more than about the simple exchange of information (see Chapter 6). XBRL has other aspects that assist in improving the quality of information exchanged and decreasing the costs of information exchange. Many people decide to use XBRL even if they're not mandated to do so.
Not getting left behind: XBRL also has a bit of a "Let's keep up with the Joneses" aspect to it. Why would you want to keep up with someone else who is making use of XBRL? Well, because they can derive economic benefits that make competing with you easier. XBRL is one of those cases where you don't want to be left behind because the benefits are that profound. The risk, of course, is that waiting too long to adopt XBRL can cause problems for you down the road.
The type of organization and the individual role that XBRL will affect is broad. Pinpointing who XBRL affects is like asking, "Who will the Web impact?" XBRL's impact may not be as pervasive as the Web itself, but it will be rather pervasive. More than likely, you work within some type of organization, or you fulfill some sort of role within that organization.
All XBRL users have things in common. For example, each user exchanges information with someone else, whether it's up or down the information-supply chain. (See Chapter 7 for more on information-supply chains.) Everyone exchanges information, and we tend to have different roles in, and therefore different perspectives on, the process.
All organizations looking at XBRL will likely be in the following situations:
Change is challenging. You may not have the time to change, but you realize that change is the only constant. If you've been around a while, you may have exchanged business reports on stone tablets, like Fred Flintstone. You then adopted a new technology: paper. Now, you use a lot of electronic spreadsheets. With the electronic spreadsheet, paper became obsolete for some things. In turn, electronic spreadsheets solved a lot of problems, but caused many others.
You're facing information overload. You're now in the digital age. Some reports are no better than electronic pieces of paper. With the volume of information increasing at an estimated rate of 30 percent per year, you're becoming overwhelmed with all the information you need to consider when making decisions. Sorting through those zillions of results returned by your favorite search engine takes too much time.
You use information. Everyone is a potential user of information, no matter where you work.
The transition to XBRL is not without its bumps and bruises. Naysayers try to hold onto the status quo, evangelists push for a brave new world, and everything eventually works out. This transition may take 5 or 25 years, but the future is pretty much inevitable.
Looking at business information exchange holistically (that is, looking at the chain, rather than focusing on a single link), Table 5-1 outlines the general categories of the types of functions performed by those in different roles
Table 5.1. Types of Functions
Function | Possible Roles |
|---|---|
You define/specify information | Standards setter, a regulator, a corporate office, a boss |
You create business information to submit to others | Company, an employee, a subsidiary |
You receive information and store it somewhere | Information technology department, database administrator |
You analyze information created by others | Investor, broker, business analyst |
You're a third party, playing a supporting role | CPAs providing attestation, data aggregators making data usable, software vendors creating software |
Unless you have a trust fund and XBRL is just a hobby of yours, you probably work somewhere. Your perspective on XBRL will be different based on the type of entity you work for. For example, if you're in government, you may specify that companies give you information in a certain format. On the other hand, if you're in the private sector, you provide the information specified by some evil governmental agency. Your perspectives are definitely different.
The following different types of entities use or may use XBRL:
Public or listed company: If you work with a publicly traded or listed company on some stock exchange, you're probably at least aware of XBRL because some regulator has been knocking on your door asking for XBRL-based information. If you're a listed or public company, you'll probably be reporting to your regulator and/or stock exchange in an XBRL format soon, if not already. If you're a financial institution, the chances are even higher that you report to your regulator by using XBRL.
Private or unlisted company: If you're a private or unlisted company, you may not be submitting information using XBRL yet, but then again, maybe you are. Many private/unlisted companies in Europe, Singapore, and other countries already have to use XBRL to submit information to government agencies.
Note
Feel left out that you don't have to use XBRL? No need to worry; your time will come — probably sooner than you might think. Governments all around the world are understanding the benefits of XBRL. As they do, more government agencies are dropping their proprietary electronic filing formats in favor of XBRL or moving from paper-based filings to e-filing. Pretty soon, your banks will probably be using XBRL, requiring you to submit your initial financial information for obtaining a loan in XBRL. Heck, even those quarterly financials you probably have to provide will be in XBRL; you may even wind up doing these reports monthly because the job is so much easier.
Not-for-profit entity: Not-for-profit entities also answer to someone: their contributors, foundations who provide grants, government agencies who provide grants, and so on. Yup, they're interested in XBRL, too.
Regulatory government agency: If you're with a government agency that regulates others in some way, you're on the specifying side of the table, communicating what information others must provide to you. Sometimes this collected information is available to other governmental agencies or, if you're an elected official, your constituents, such as voters. Other times, the information isn't shared.
Nonregulatory government agency: Even if you're a government agency that doesn't regulate others, guess what? There is no "get out of XBRL" card. Federal, state, regional, and local governmental agencies all answer to someone and exchange information with someone. For example, in the United States, approximately 88,000 state and local governmental entities report financial information to the U.S. Census Bureau. Similar types of arrangements exist in most countries. These agencies also exchange nonfinancial information.
Individual: The final entity type is the individual. Yes, you'll be impacted, too. We're all pretty much in this category even if we fall into other categories as well. If you interact with some governmental agency (who doesn't?), chances are you'll likely be submitting information to them in XBRL someday.
Additionally, you'll likely use XBRL. XBRL levels the playing field, which makes getting information about, say, how your government is spending your money easier than ever. Also, all information submitted by organizations to regulators and stock exchanges will be available to you — helpful for making investment decisions!
Within your organization, you perform some role. Your role interacts with those who perform other roles. The following sections describe the roles of others you may encounter.
You're in the C-suite — you're the CEO, the COO, the CFO, the CIO. Or perhaps you're known as president, vice president, your majesty, or some other name. No matter what you're name, you all have one thing in common: The buck stops with you.
You're at the top, and it can be lonely up there. You have to make the tough calls. Will your strategy be that of a leader, or will your strategy be more of a follower? You may answer to shareholders if you're a public company or a bank if you're a private company. You may answer to contributors if you're a not-for-profit, your partners if you're a partnership, or taxpayers if you're in government. But one thing is for sure: You do answer to someone.
Just like everyone else, you have long-term strengths, weaknesses, opportunities, and threats to consider. But you also have short-term realities. Truth is, every one of these groups into which you may fit has a little CEO in them; we're all in charge of something. We may not steer the ship, but we are ultimately responsible for something.
As an executive, you probably think concretely and want only the big picture. So how will XBRL affect you?
You'll realize that XBRL will be part of your future because someone will require you to submit information to them in the XBRL format. You can meet that challenge in several ways by analyzing your situation. Some approaches will save your organization a boatload of money over the long haul, but they're time consuming and expensive to implement. Over the longer term, however, they provide the most net benefits; they have the highest return on investment (ROI). On the other hand, maybe long-term ROI isn't the most effective solution, all things considered. You have some choices to make!
Warning
You won't like XBRL if you've been trying to hide things in your financial statements or subscribe to the practice of earnings management. Information analysts will be able to reconfigure your financial information as they want to see it, rather than simply accepting it as you want them to see it.
If your company is performing well, you'll really like XBRL, particularly if you're an under-analyzed company or a company outside the mainstream capital markets. Your company will get more attention, and investors may discover that your company is a good investment. In that event, the capital markets will likely reward you. XBRL makes getting noticed easier because analysts don't need to rekey data to perform analysis, which changes the cost benefit model of analysis by significantly reducing its costs.
If your company is underperforming, you won't like XBRL so much. It will be easier for analysts to discover that your company is underperforming and also easier to find better investments. Don't blame XBRL for this issue, though; perform better.
You probably won't like that lenders and investors are going to eventually start demanding financial information monthly rather than the current standard of quarterly.
As an accountant, you're conservative (and should be). If change is too easy, mistakes get made; the wrong path is taken more times than necessary. You care about the bottom line.
You're most likely going to be the last group to adopt XBRL, particularly for financial reporting. You don't even want to move your financial reporting into business intelligence-type application because you don't think that it'll work. Eventually, you'll realize that using XBRL is a good thing, but adjusting will take time.
You're practical, think concretely, and can certainly relate to the big picture, but you really like details. You love electronic spreadsheets!
Here are some other things about you, the accountant:
You'll like the business rules you can create with XBRL Formula. You'll realize that you can replace the manual disclosure checklist with an automated process for many, if not most, things.
You'll enjoy the productivity increase you experience when you make the shift to XBRL. The quality will be incrementally better (your work is already high quality), but the effort to attain that level of quality will be reduced by an order of magnitude. You may not believe this good news, but it's true!
You won't like all the efficiencies XBRL brings to the table because you worry you'll lose your job or, if you're a public accountant, you fear the hours you can bill will be reduced. However, you'll eventually realize that you're not going to lose your job, but simply change the tasks that you perform and the way you perform those tasks. You'll like that you'll do your external financial reporting monthly rather than quarterly. This increase in frequency means more work and more job security for you.
You'll find XBRL somewhat frustrating in the short term. Making the transition to creating structured information, rather than unstructured information, will be a hard mental shift. Over time, you'll make this shift and see the benefits of structured information.
You'll have a hard time understanding why XBRL is a good thing until you actually use good software that uses XBRL the right way. One day, you'll realize XBRL is a good thing.
Eventually, you'll realize the possibilities and benefits of standardized audit schedules. For you, XBRL is a means to an end. Whatever the role you play, be it as an internal accountant, an internal auditor, or an external auditor, XBRL will stress your world like few other things have, but you will survive.
As an analyst, you're at the end of the supply chain, an information consumer. You may not be at the very end; instead, you may summarize information for others, such as the CEO, who rely on your judgment but who don't do the detailed work you have to do.
You spend hours cleansing data or working with technical people to cleanse the data for you. A lot of garbage comes into your system, which makes your job harder. You also spend a lot of time rekeying information. You're beginning to like business-intelligence software more and more. You don't particularly care for relying on others to build your data models in business-intelligence applications. You're pretty good with both the big picture and details and tend to be a fairly concrete thinker.
Here are other things about you and your likely relationship to XBRL:
You'll thoroughly enjoy business rules, particularly after the software used to create the business rules matures.
You'll likely be frustrated by XBRL's extensibility in the short term because of the way taxonomies use this extensibility. Over the long term, you'll like the extensibility more as the modelers of taxonomies learn to use the extensibility correctly.
You'll like XBRL's ability to help you model data. You'll likely become frustrated in the short term with how complex XBRL is, but over the long term, you'll discover ways to make this process easier.
As a project manager, you spend much of your time in meetings or talking to people about what they've done or when something will be done. Your focus is narrow. You care about timetables, milestones, deliverables, and accomplishments.
You're probably a generalist, a jack of all trades and master of none. You manage the specialists, but you have to understand the specialists to make sure that they're serving your needs effectively and efficiently. You have deadlines. You have legacy systems that you wish you could throw out, but can't. The systems have to keep running.
You have to deal with consultants, or so-called hired guns, who may not have your best interests at heart. You have to deal with software vendors who seem to always believe that the software they sell is the best software. You're a practical and concrete thinker:
You'll like the leverage you can get from XBRL, but you'll realize that XBRL won't be able to provide you with a 100-percent solution out of the box.
You'll find that software vendors tell you that they can provide a 100-percent solution, but you'll find out that they're misrepresenting their software. This mistake will likely cost you.
Others on your project team will likely try to convince you that they can do things with XML or SQL that instead should be done with XBRL.
As a consultant, you're a hired gun. You're an expert in your area. You spend most of your time at work consulting on and championing for the application of emerging practices and technologies to make improvements. You spend much of your time attending meetings, reviewing research reports, and preparing briefs for stakeholders of your projects.
You have a toolkit that you try to keep current, but sometimes find keeping it updated difficult because you have to keep your billable hours up. You move from one process re-engineering project to another. Or you move from building one solution to building another. You move, move, move:
People rely on you. You have to make the right choices. You realize that XBRL is about making yourself and software integrators like you more dispensable by lowering maintenance and total cost of IT ownership for your clients. But you realize that you can apply your skills in more interesting ways, particularly now that you have XBRL in your toolset.
You'll eventually discover that XBRL can provide you with a lot to leverage. Chapter 2 discusses how you can leverage XBRL (particularly the part about how XBRL builds on XML). You may resist taking full advantage of this leverage because you bill by the hour and leveraging cuts your hours. Do your customers a favor and don't make this mistake.
You may make the mistake early on of trying to use SQL or Schematron to validate XBRL. If you do, you'll wind up wasting a lot of time and then realize that an XBRL processor can do the same type of work in a fraction of the time.
As a technical architect, you're most comfortable using cutting-edge technology, and all the legacy systems you have to deal with drive you nuts. You can create a mean whiteboard model and enjoy debating concepts, the more theoretical and abstract the better. You're big on theory and hate the fact that you have legacy systems built with outdated technology.
You think abstractly and are effective at communicating abstract concepts to concrete thinkers. You concern yourself with exploiting patterns, using industry best practices, and creating an efficient and agile organization:
You'll see and like the leverage XBRL offers.
You'll like the discipline best practices XBRL provides.
The flexibility of XBRL is a concern for you. However, you'll understand that open standards are good things, and you can find ways around many of the challenges XBRL poses.
You'll like the stability of XBRL. However, you'll soon wish that you could adjust certain things, and you could use some direction in certain areas. You'd settle for a detailed roadmap from XBRL International so that you can do a better job of planning your architectural strategies.
You'll like the separation of business rules from programming logic that XBRL Formula provides. You'll change your perspective on how you can perform common tasks. (Separation of business rules from programming logic is a little similar to the separation that has occurred between business applications and the databases those applications use.)
As a developer, you're a geek. You're incredibly smart, think abstractly, and don't understand why others can't do the same. You have a toolset you're used to, and you don't particularly care to deviate from that toolset. You either love Microsoft, or you hate Microsoft. You have to love Java and Linux, whether you like it or not. You spend a lot of time writing and debugging code, which you like and you find challenging and satisfying. You tend to do things the quickest way you can, sometimes not considering long-term ramifications:
You may not take the time to learn about XBRL. You look at it and see it as nothing more than a complex XML language for those guys who like debits and credits.
You'll like the intellectual challenge of trying to understand XBRL, but you'll probably make (or have already made) a bunch of mistakes figuring out how to best use the technology.
You probably think you understand XBRL if you understand XML, but you'll most likely be incorrect. (Be sure to read Chapter 2.)
You may want to build your own XBRL processor. If you go down that path, you'll regret that choice in about six months to a year.
After some missteps, you'll eventually get on track and take advantages of XBRL and create software helpful in enabling business users to make use of XBRL.
As a database administrator, you hold the keys to the castle's data. Users and developers depend on you. Users drive you nuts with all the different ways that data is modeled. XML is also driving you nuts; you're trying to get that XML data into your data warehouse and then subsequently off to your OLAP applications and business-intelligence applications. The different data models make things more and more complex. Writing all that SQL to get some of the funky data models into the data warehouse is challenging, to say the least:
You'll like the ease of getting XBRL taxonomies and XBRL instance data into and out of a relational database.
If you like the multidimensional model for storing data, you'll really like XBRL.
You'll be frustrated by the slow pace at which software vendors implement XBRL ETL (extract, transform, load) functionality within their products, but you'll be happy when they do.
You'll be frustrated by the lack of a clear logical model for XBRL, which makes some information challenging to store.
You work in government, be it federal, state, regional, or local. You answer to taxpayers, and you're a public servant. You specify data that others submit to you, either directly or via some legislative process. You may make this data available to others inside government or to the public. You interact with other government agencies, and you sometimes have turf wars with these other agencies. The legacy systems you have to deal with are the oldest in existence. Your budgets are the tightest around, in many cases.
Everything you do seems to be scrutinized. You have an exaggerated need to be transparent, so all your actions need to be out in the open.
You'll like that when you talk to other agencies about exchanging information, you don't have to start from a clean slate. Instead, rather than discussing their proprietary solution or your proprietary solution, you can start with XBRL and examine why it will or won't meet your data-exchange needs.
You'll like that you don't have to try to figure out whether you should provide information in Excel, Word, PDF, or HTML; you can just provide everything in XBRL.
You'll like the information-modeling capabilities of XBRL, particularly if you're familiar with the multidimensional model.
Think about how blogs have changed news reporting dramatically. Anyone can be a reporter. In the same way, XBRL will change investing. Anyone can be an analyst. Anyone can be a regulator.
Many believe that the market is the best regulator. XBRL helps make every investor a regulator, keeping tabs on companies. In addition, every taxpayer can keep better tabs on how their government spends their money, every contributor can better see how a not-for-profit utilizes their contributions, and so on.
How can individuals become better analysts and regulators and therefore better investors?
Access to information will never be easier. Whether you access the information yourself or whether you use third-party software application, it will be easier.
Transparency will dramatically increase. You'll have better visibility into what is going on within the companies you invest in, the governments you pay taxes to, and the non-for-profit organizations you contribute to.