XBRL Formula: Start Your Engines

It’s a hard road, taking standards forward, but also a rewarding and ultimately positive one. This is a call for your help. The XBRL Formula Working Group has been working hard on a tightly related set of specifications that allow for the definition and creation of facts (numerical or Boolean) using XBRL instance (data) documents as input. The Public Working Draft (PWD) is now out and it needs input from engineers and technical architects with a firm grounding in XML Schema, XPath and XLink. The rewards? Kudos, good karma and (ok, this is a stretch but you never know) possibly undying adulation from a grateful world.

Formula is a pretty obvious add-on module for XBRL: creating analytics and imposing sophisticated validation constraints, with a full set of mathematical functions at your disposal to produce exactly what is needed. There have been proprietary efforts to use XBRL in this way and now, learning from those implementations, the consortium is seeking to define a standardised approach.

Who will use it? Regulators, banks and others collecting large amounts of financial and performance information will use it to impose complex validation rules to both improve the quality of data that arrives and automate the promulgation of those rules so that they can be executed in a distributed manner.

Professional analysts, broker/dealers, hedge and mutual funds as well as a wide range of financial infomediaries will use the formula specification to define proprietary analytics that can be used to add value to raw performance information.

What needs to be done? Well, the specifications themselves need a thorough review. There is a range of functions that need to be written. The largest chunk of work involves creating a conformance suite of tests that can be executed by software that support the specs. Obviously it will work best if the volunteers creating the conformance suite are also creating conforming software. And even better if the volunteers doing that work are not the same people that wrote the specifications in the first place. Practical, sometimes tough work. Need a way to convince management that it’s a worthwhile use of your time? Proven time and time again to be the very best way to learn XBRL at a deeply technical level.

Fall into any of those categories set out above? Pitch in please! Member of the XBRL consortium and either haven’t contributed to a working group yet or tend to do your analysis in-house? Step up to the plate! Software vendor that plans to support this stuff in your products? No excuses: Now’s the time. Join in!

Fast close

Late last year I spent some time with Gary Simon, previously a Deloitte partner of 17 years standing and now the Group Publisher at FSN. Gary is the ultimate insider’s expert in the financial reporting and consolidation game and now he has written a book about the Fast Close. I haven’t reached the XBRL parts yet, but the first half is a terrific description of the close and is filled with lots of good examples. Go buy it.

Please make Tony Fragnito very welcome

It’s a very real pleasure to welcome Tony Fragnito to the XBRL consortium. Tony started in his new role as CEO on Monday, although he attended the international conference last month where he was introduced to the deep end of the pool. Tony brings a formidable set of skills and terrific experience in managing associations. His initial statements about priorities and improvements to the professional capabilities of XBRL International are a breath of fresh air.

Beer from Munich

A month has passed since the Munich XBRL conference and for some reason the slides have not yet been posted. I’ve had a few requests for my talks, so here they are.

Michael Ohata and I gave a joint talk about XBRL International, with my section on the background to and current priorities of the Standards Board. I’m going to write some more about that elsewhere in the near future, but for the moment, here are the slides (PDF).The bottom line is that while we have a terrific community, we still need more volunteer experts who are responsible for XBRL technology inside their own shops, simultaneously working inside the consortium to help improve the level of testing and review that is conducted on modules that cover requirements such as versioning, formula and rendering.

Ralf Frank (who is the very articulate MD of the DVFA) and I co-chaired a day and a half long session on External Reporting. The track brought together professionals that work with business reports from a number of perspectives (exchanges, analysts, infomediaries, credit ratings agencies and the audit profession). I spoke about managing expectations in an XBRL-enabled world. Today the first thing that investors see (and that the entire process is geared around) is EPS. The day you get an entire earnings release marked up in XBRL you can do a lot more analysis than has ever been possible in the past. Sorry about the lack of beer – but I got your attention, didn’t I? Drop me a line if you want to discuss, disagree, or explore.