ICAEW Roadshow – Demystifying XBRL – Notes from the Road

The CoreFiling Seahorse team is “Demystifying XBRL” all over the UK this week and next with the ICAEW and HMRC. Following the success of the London event on December 17th, which was packed to capacity, the ICAEW regional roadshows kicked off yesterday – aptly enough – in Manchester City Football Stadium. More than 80 people attended. Who would ever have predicted that XBRL would have such mass-appeal! Drama was heightened further by a brief emergency evacuation of the venue mid-morning; it seems that their smoke detectors are fully-functioning.

As the Manchester event wrapped up, one of the panellists drew the attention of the audience to the e-mail addresses of all the speakers listed on the Programme with the caveat that any hard questions should be sent to our very own John Turner! That’s fine by us, and if the questions are the kind of ones that might be of interest to lots of people, we may publish the answers, so please send them in or place them in the comments here.

Today’s venue is the Birmingham Botanical Gardens. On Monday, we have two sell-out events scheduled back-to-back in the splendid Chartered Accountants’ Hall in London’s Moorgate. On Tuesday, you can see us at The Bristol Golf Club. Then we travel to the north of England for a breakfast seminar on Thursday morning in the Ramside Hall Hotel, Durham.

The purpose of the Demystifying XBRL events is to help accountants understand what the iXBRL mandate means for them. We dispel fear and discuss solutions. The speakers cover everything from the high-level technical lingo to the finer details of the regulation itself. There’s also an opportunity to preview Seahorse, our iXBRL solution.

If you’re attending any of the events, please say hello to the Seahorse team!

Recap – why we will all use Inline XBRL

Today we round out our review of some of the main answers to Why should you use Inline XBRL?.

Inline XBRL means a simplified review and improved control. It is probably obvious, but the review of an Inline XBRL document is considerably easier than that of a native XBRL document, simply because you can skip a step – you can be confident that the facts that have been marked up are the same as the “original” because of the single document aspects of the format. It is still necessary to determine whether the document has been prepared using the right taxonomy, whether the facts have been marked up (tagged) with the right concepts and using the correct dates and other context information such as dimensions, but users are very much more comfortable dealing with an Inline XBRL document that you can look at and “touch”, rather than the somewhat more abstract idea of an XBRL formatted rendering of a document. Naturally, Magnify (Touchstone) can deal with either format.

Let’s recap.

  • Inline XBRL is about to be an official standard of the XBRL consortium and will be in use by several major regulators shortly.
  • Inline XBRL allows you to intersperse XBRL markup instructions inside an ordinary web page.
  • Inline XBRL is more accessible, and more easily understood for reporting professionals who are generally very concerned with the formatting of their documents.
  • Inline XBRL can be easier for Accounting Software Vendors to implement. And it can be easier to review.

Securities regulators, company registrars and stock exchanges should all consider adopting Inline XBRL as part of their transparency initiatives.

Easier for accounting software vendors to implement

The other day I asked the question, Why use Inline XBRL? A key reason is that is easier for Accounting Software Vendors to implement.

Many accounting software vendors, the firms that produce most of the GL systems, accounts production packages and ERP systems on the market, don’t use XML (let alone XBRL) on a day-to-day basis. Many systems are starting to, but the majority of vendors are hugely reliant on databases and third generation languages in the construction and maintenance of their software, which has often been working reliably for decades.

Inline XBRL is simpler for most vendors to deal with than raw XBRL, in part because it is generally a two step process:

  1. get around to producing that HTML (strictly speaking XHTML) report output format that has been on the to-do list for the last 7 or 8 years, and
  2. wrap the facts that are coming out of the core database in some fairly simple Inline XBRL tags.

Those tags, of course, use the XBRL mapping that is a fundamental part of coming to grips with structured business reporting. Note that many of these vendors don’t need to deal with extension taxonomies, as their target market is the small and medium sized business. Those that do will still need to construct them appropriately. Hey it’s good, but it’s not a magic wand!

In the next blog we’ll round this mini-series out by suggesting that Inline XBRL simplifies the review process and improves the controls for companies as they prepare their accounts.

Inline XBRL is easy for the preparer to understand

The other day I posed the question Why use Inline XBRL? Another key reason is that an Inline XBRL document is easy for the preparer to understand.

There is one major concern that we hear from regulators around the world as they introduce XBRL. It is that controllers, CFOs and FDs that are providing XBRL information that relates to a financial report (as opposed to a form, where this concern doesn’t exist) don’t know how to be sure that the “bag of angle brackets” that they are producing accurately represents their financial statement.

Modesty doesn’t stop me from mentioning that tools like our very own Magnify (Touchstone) help resolve this issue, but nevertheless, the use of Inline XBRL takes away almost all of those concerns. It makes this process much simpler. The information that is marked up can, almost trivially, be identified and, vitally, the marked up information is exactly the same as the information that you read, simply because it is the same information. It works for text as well as for numbers. Inline XBRL also lets you incorporate web friendly navigation. You can, for example, have a report span multiple pages of HTML but be collated on the fly at the time of consumption into a single XBRL document.

Some regulators, by the way, have been getting around this problem, with what is in effect a parallel process i.e.: by asking companies to file a PDF document with full visual fidelity at the same time as the XBRL document. After all, the PDF looks and feels the way the preparer wanted it to and the XBRL is structured and contains the same information in a format that can be easily analysed. Honestly, this is not a great idea. It adds work to already overworked finance and compliance teams and, perhaps worse, creates uncertainty – what do you do if you have inconsistencies between the documents? Inline XBRL solves these problems.

My next article will look at why Inline XBRL is easier for Accounting Software Vendors to implement.

Preserving company-specific formatting decisions

In my last blog, I posed the question Why use Inline XBRL? Of course, one of the key reasons is that you can incorporate company-specific formatting decisions in your report.

Inline XBRL allows people that want to get a business report across to one or more users, to format that document in exactly the way that they want. This might seem obvious but, to be honest, when XBRL was first being designed this very important – human – aspect of business reporting was not really captured. Most XML standards assume that it’s important to separate data from the rendering rules. That’s fine for an XML-based SWIFT standard that transmits information about a payment or receipt of monies, or a format like UBL, which allows the exchange of information about invoices, purchase orders and goods delivery. But business reporting actually involves not just the facts and figures but the way that information is presented. The vitally important thing for those producing the report, and indeed for many of the people consuming it, is the way it is laid out…

So Inline XBRL allows just that: XBRL business reporting with full visual fidelity.

Make sure you come back tomorrow, for the next motivation for using Inline XBRL: it’s easily understood by preparers.

Why use Inline XBRL?

The Inline XBRL specification will go to recommended status in the next few weeks. Over the last three years we’ve been very busy in this field: coming up with Inline XBRL, prototyping it, and designing the specification. Then nursing the Specification through the standards-setting processes, testing it exhaustively and improving it along the way. Working in collaboration with a number of other vendors, as well as a number of key projects around the world, not to mention implementing it in our own software, seems to have consumed an awful lot of time at CoreFiling. However, it is just the end of the beginning. In fact, it begs the question: Why use Inline XBRL? I thought I’d set out a few ideas here.

First of all – do you want to know what Inline XBRL is? Have a look at this article, or this article written by Andy Greener.

Fundamentally, Inline XBRL provides a way of intermingling XBRL with an HTML document. You lay out the information in HTML, whatever way you like. Want that table in 8 point, right justified, Comic Sans? In green? HTML has got you covered. The facts, though, are wrapped up inside Inline XBRL instructions. Let’s say the document says “Tax deductible donations to the Society for the Prevention of Facial Wrinkles, €3,000”. That amount can be wrapped up in an instruction that says, in effect, “The IFRS concept that marks up ‘3,000’ at this point is Charitable Donations”. In addition, there are some further instructions that point out that the amount is in Euro, relates to 2010 Q1, and that it is being made by ACME Corp. All of that information is hidden from the person who reads the web page. It can be used (together with the value 3,000) and converted into valid XBRL by the systems that consume the web page.

So, to go back to the question again, Why would you want to use Inline XBRL?

Here are a few reasons:

  • Incorporate company-specific formatting decisions
  • Easily understood by preparers
  • Easier for Accounting Software Vendors to implement
  • Simplified review, improved control

Over the next few days, I’ll post a short entry about each of these reasons for using Inline XBRL.

Inline XBRL and joint filing

Earlier this week XBRL International’s Rendering Working Group published the Proposed Recommendation for Inline XBRL. The standard is now on a track which will reach Recommendation by the end of March, in good time for HMRC’s Corporation Tax filing service to go live in the autumn.

Inline XBRL – or iXBRL – will be required for most of the Corporation Tax returns after April 2011. And, down the road, we expect Companies House to mandate iXBRL for filing of Accounts. What will this mean for the companies who have to file ?

I don’t think that the UK is going to see joint filing – making a single filing which will handle both Companies House and HMRC obligations in one go – for some time, if at all. Current legislation provides different filing dates for the two agencies and different filing content. Thus, for instance, companies which are allowed to file Abbreviated Accounts with Companies House will generally need to provide full income statements to HMRC.

But Inline XBRL does provide a neat way to simplify the filing.

Inline XBRL is an HTML document – a web page, if you like – which contains extra information, the extra information that you need to convert the data you see in your browser into an XBRL report. But financial reports are sometimes so large that they won’t fit into a single HTML document. So an iXBRL filing is allowed to consist of, potentially, a series of related HTML documents. This complete “document set” is used by the government agency to generate a single XBRL report.

Inline XBRL doesn’t mind much what goes into each part of the document set, so long as all the information is there. Equally, it doesn’t stop individual components of the document set from being complete document sets in their own right. In simple terms, iXBRL document “A” might be an income statement, and iXBRL document “B” might be a balance sheet. Together they would represent the full Accounts required by HMRC. Document “B”, on its own, would represent the Abbreviated Accounts required by Companies House.

In a world where major accounting firms routinely download clients’ Accounts from Companies House to make sure they have the correct version when preparing the tax return, the ability to use a single document set for different purposes is an important aid to clarity and accuracy.