derek abdinor

From the Institute of Charted Accountants (Scotland):

ICAS objects to the additional burdens, costs and risks of this during the current recession – when many businesses are struggling to survive and should be concentrating their management expertise on the much more pressing and important task of maintaining productivity and employment.

Donald Drysdale, Assistant Director at ICAS and a Chartered IT Professional, said:

“In his Review of HMRC Online Services, Lord Carter of Coles recommended the use of XBRL, but emphasised that the new standard should not be imposed until it had been implemented and had bedded down. He also noted that other improvements would be needed before the service would meet the needs of tax agents.

“Many companies won’t be ready for this. It is absurd to require businesses struggling during a recession to introduce this. XBRL has been used relatively sparingly to date, and HMRC plans to adopt Inline XBRL (or iXBRL) would be the first large-scale iXBRL implementation worldwide, so the technology certainly hasn’t been adequately tried, tested and proven to be reliable. It falls far short of Lord Carter’s criteria.”

ICAS has been exploring this topic with HMRC for more than two years. The Institute was instrumental in establishing tripartite discussions among Government, the tax profession and software vendors, but now reports widespread concerns that software solutions for preparing iXBRL-based statutory accounts will not be available in time.

Drysdale added:

“It’s misguided and disproportionate to mandate iXBRL-based online filing by all companies as early as April 2011.
We’ve urged HMRC to reconsider its plans in the light of the relatively immature market position of XBRL, and we’ve asked that Ministers shift to a gradual voluntary adoption of iXBRL filing until the new software for tax and accounts preparation has been properly tried and tested.”

Via Twitter. Link to full article

Essentially, IRIS did a survey on the financials of 1500 Indian public companies. Discrepancies appeared in over 200 of them; figure differences as opposed to accounting interpretations.

One of the outcomes of the survey was to highlight the effect that XBRL will have in bringing such problems to light, and ultimately, to bring them in line.

In more XBRL-as-Superman news,  UBMatrix has a paper on how XBRL will help track TARP spending.

A few minutes ago the announcement was made that Pravin Gordhan, current Commissioner for SARS, has been handed the position of Finance Minister. Current minister, Trevor Manuel, moves on to run a new economic planning commission.

Pravin Gordhan

Gordhan has spoken at XBRL events in South Africa, and believes the standard will be an accepted mode of business reporting. He has approved XBRL activity at SARS, and may lead with accepting corporate tax returns.

Extensible Business Reporting has undoubtably got the kinetic energy to become a political football. XBRL seems to have been nurtured by outgoing US SEC chairman Cox, but owing to the fiascos that happened on his watch, it made sense that new chairman Shapiro would distance herself from it, saying it was not a priority.

What this will mean for XBRL adoption in South Africa is going to be a  question as big in these parts as the endless waiting for last year’s SEC mandate.

We are all analysts. We have all the information at our disposal and we will marry that to our experiences and opinions. We don’t have faith in the established financial, political, consumer and even sporting analys systems because they’ve proven fallible. Which is ok, but not when you’re taking a fee.

We’re in a world where:

1. There is general public mistrust of Big Bailed Business – in a world where information is a click away, citizens can see how companies are faring and paying themselves
2. Social media is a broadly accepted media channel. Pastor bloggers, mommy networks, Republican tweeters have skyrocketed in growth, and online has become flooded with “Hire me! I’m a social media and SEO Expert!”.
3. We have a stake in the tools that we use. Open Source software allows for tinkering, adapting and contribution. Users feel they can make their own software better, and therefore they can pass criticism on it.
4. Political analysis is quite detailed, but, like sports analysis, if you slap a 24-7 news channel on anything you can change your tune under the glare of the klieg lamps. Spotlights create more 360 degrees of shadow.

XBRLSpy: XBRL: An attempt to empower amateur analysts?
Dianne takes the view that the XBRL ruling in the US may mean many things, but it was not created to empower amateur analysts. That may be a by-product, but the millions of dollars pumped into XBRL had more upstream application.

Monkchips: Software ecosystems and convergence
James is an industry analyst for IT issues and Environmental issues – therefore you get a multisided take on both. Redmonk use the web natively, and are therefore specialists across a broad spectrum (no sic).

IR Web Report: Time to open up your earnings calls to bloggers
Dominic points out that Barack Obama called on a blogger for questions in his briefing. Research has also shown that blogs have become influential, and in many case, are as good a source for stock picking as the traditional sources. Companies should open up their calls to influential bloggers.

Re:The Auditors: Who Guards the Guardians?
Francine covers the big four accounting firms, and doesn’t let them get away with anything. Extremely influential. 

Alacra: A list of analysts
This list is of analysts in many sectors – some are formal analysts from firms (Gartner, Forrester, Redmonk) and others more informal.  

Remember desktop publishing? We don’t call ourselves Publishers. 

Blogging? Some call themselves Bloggers, but it implies “thinker and commentator” rather than a person who simply posts. Very like a poet.

This meme came about a week after finding some serendipitous links, usually via Twitter. I’m calling it to become big – especially as it is foreseen that people are going to get very pissed off this year.

Ok, the heading is misleading and would constitute baiting if I cared enough.

Found via Dianne Mueller and sure to become an internet meme. Explaining an accounting process need not be dry when you see these cartoons (click on the image). Sure to give the Plain English versions a run for their money.

From JICPA, the Japanese Institute of Certified Public Accountants.

On a related topic, the discussion is around Twitter replacing RSS as a news feed of choice for online media types. I dramatically cut my RSS reading time and use Twitter because the idea is germinated on Twitter before it becomes a post – So Dianne tweeted about this, and then did her post.

Apart from the fact that ou can pull RSS into Twitter,  expecting users to congregate around a news reader to passively consume media is actually, despite RSS and other add-ons, a very Web 1.0 concept. We ought to know better.

Last week the SEC formally published the XBRL mandate. While they released it in mid-December 2008, this was total ratification. Sound weird? Think of it just as  Barack Obama re-taking the oath of office after some minor fluffs

Of more interest to me is the ruling for non-US companies listed on the US markets. They file to the SEC in US GAAP, although many of them undoubtably are reporting in their countries in IFRS. The US will have to start reporting in IFRS in a few years, and therefore are open to foreing filers filing in IFRS XBRL down the line.

There seems to be confusion around this matter, so to highlight selected parts of the formal rule:
 

1. we believe that the updated IFRS list of tags will be sufficiently advanced to require that foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB provide their financial statements in interactive data format under the phase-in schedule we are adopting 
2. We also encourage foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB to provide financial information in interactive data format once EDGAR will accept such filings. (the footnote [94] to that says: Pursuant to the EDGAR Filer Manual, we will notify filers of the ability to file in IFRS on our Web site.)
3. Foreign Private Issuers with Financial Statements Prepared in Accordance with IFRS as Issued By the IASB will have to submit reports on Form 20-F or Form 40-F for fiscal periods ending on or after June 15, 2011

To summarise, from conversations with the SEC, they’re looking at possibly accepting IFRS (the official IASB version) in the third year (2011). Filing in IFRS to EDGAR is likely to happen before that, but as we know, EDGAR will probably not last long after June 2012.

The maritime Automatic Identification System (AIS) means that every seagoing vessel over 300 tons is required to transmit certain data every few seconds, including:

• Navigation status, e.g. ‘at anchor’ or ‘underway’
• Ground speed, from 0 to 102 knots in steps of 0.1 knots
• Rate of turn, 0 to 720 degrees per minute
• Position (GPS latitude and longitude)
• Heading and Course over Ground
• Time stamp

Then every six minutes “static” information is transmitted:

• MMSI number, Callsign, Ship’s name, Type of ship, Width, length and draught, Destination and ETA

Bear with me: the data gets written to a database and pulled out, probably as xml because the structure of the data is similar to the element/attribute/schema nature of xml. As we know, that’s all you need to start displaying that data in exciting ways. The result is a web-viewable mashup of all these vessels around the globe.

Like GPS, the information is largely open and available to the general public. Like financial information of funds, government and public companies should be? 

There have been concerns raised about XBRL having most of the specifications being tied down, but no software implementors to bring the solutions to market. While the tagging software is quite mature, there is a dearth of meaningful and fast analytical or comparison applications.

I still maintain that once the graduates of Web 2.0 find little appetite in the market for social media gadgets, they’ll turn their attention to Enterprise 2.0 applications. These excellent marine shipping examples put the implementation aspect of XBRL to shame.

ShipAis.com
MarineTraffic.com

It’s here: the mandate for XBRL to become an official filing process, alongside EDGAR, for listed companies in the US. 

The SEC announced this in a long-awaited roundtable today, 17 December 2008.  The IDEA system was launched today too. This has followed on the completion of the US GAAP taxonomies. 

Immediate impact: 
Companies that are listed in the US (even foreign-owned) will have to begin a process of filing in XBRL in addition to current EDGAR requirements. It will not replace EDGAR at first, and will have to be placed on the company website (if it has one). Mutual funds will have to do same for risk-return summaries.

This is a phased approach, beginning with companies with a worldwide float of over US$ 5 billion and a december year -end. There will be limited liability, the same as in the voluntary filing program. If you satisfy these requirements, talk to your EDGAR vendor tomorrow.

The big picture
XBRL software vendors will see some consolidation in the market; I believe an influx of developers from the consumer-centric web 2.0 world  may find that XBRL combines their aspirations of mashups and service oriented achitecture, and financial analysis apps will experience a steep innovation curve.

At the same time, SAP and other ERP vendors will escalate XBRL within their products, for internal analysis and risk management presented in visual fashions.

Foreign markets will see the world’s biggest endorsing XBRL unconditionally, and rush to complete their taxonomies.

There is likely to be too much credit given to XBRL in the early , pre-and post inauguration days: it is not a panacea, but currently it looks like the best idea going. The ultimate aim, though never stated, is 24-7 disclosure: from the General Ledger to the markets

After weeks of speculation and false starts, it became clear that this would be a political decision. The lack of oversight in Wall Street and Washington is clearly an ethical and governance issue, but it has become clear that XBRL could go a long way to allow for better analysis, rapid decisions and early warning systems. It may not be the sherriff, but it’s the sherriff’s mustang.

This post first appeared in XBRL Blog 

XBRL deployment is a long river, and you need to keep that in mind regardless if you’re focussed on the (downstream) regulatory filing and analysing components or the (upstream) ERP integration and general ledger design.

I’ve put together a list that takes into account technical, accounting, filing and investor relations. The point is not to compare software or even mention any of the brands out there. To keep this as theoretical as possible, you have to ask yourself:

1. What is the scope of the application?
   If the application reaches right into the CFOs domain and into the enterprise system, it will have affect all parts of the business. Expect a high initial cost, but other functions like filing and internal analysis will (theoretically) be very fast and automated.If the application is for tagging financials for filing, expect low costs and quite a few players in this field.
2. What is the format of the application?
   Is it accessible on the desktop or web-based? Does it accept CSV, PDF, HTML or your proprietary formats? This is of critical importance when it has to fit into your organisation, not your organisation having to fit around it. Check your process flows and your IT systems for compatibility.
3. Is the vendor a thought-leader?
   If the vendor has been developing XML products for some years, and has now created an XBRL product with a tweak here and there, you may struggle with the software down the line. Check the personalities who work at the organisation, read their blogs and white papers, engage them at conferences.
4. Is the vendor likely to be around in a couple of years?
   A tough question to ask. Perhaps their XBRL offering is simply a version of their Edgar offering. We have to accept that while some consolidation will happen in this space, we will get wanderers from the Web 2.0 world (mashups etc) with new and competitive offerings.
   
5. How will future filings/creations happen?
   Either tagging starts from the beginning again, or the system has built-in logic that allows tagging to go much faster from the second time around.
6. Does it have all the necessary tools?
   Taxonomy designers, viewers, analytical tools may appear peripheral to the actual tagging, but no successful xbrl project can occur without them. Determine if they are part of the software or if they require a seperate investment.
7. Does the application offer support?
   You’ll likely have all kinds of questions when you begin using the product. Seperate the accounting, regulatory and business rules from the actual software and see if the company offers support for those. Don’t confuse an accounting issue with a software issue!
8. Is an evaluation version available?
   Video demos are great for initial analysis, but they follow a script. You may have different processes or document formats, and you need to test these. Ask upfront if you can have a limited copy for 30 days.
9. Does it match my existing resources?
   You cannot expect your accounting professionals to use software where they have to delve into the XML side of the code, or your technical staff to make decisions on line items. What works for your team and departmental career development plans should integrate with the software. Again, get an evaluation version on board.
10. What is the cost?
    We all have different requirements and different plans. You have to ask yourself “what is xbrl worth to us?”.

I have 10 questions simply because it makes for a nice headline; please comment on the evaluation criteria you have used or are using.