Posts Tagged "sbr"
Standard Charts of Accounts in XBRL
In my professional engagements with global XBRL programs I am frequently asked the question: what is the best way to represent a chart of accounts (CoA) in XBRL? And how can we represent the mappings between each account in the CoA and reporting concepts in end reporting XBRL taxonomies – such as the IFRS or US-GAAP taxonomy –in order to communicate how to derive the XBRL financial statements from a trial balance that conforms to the CoA?
There are two approaches in XBRL to represent a CoA and its mapping to one or more XBRL taxonomies for end reporting:
- Use the XBRL Global Ledger taxonomy (XBRL GL). Each account in the CoA is a fact in an XBRL GL instance. The mappings between each account and concepts in the end reporting XBRL taxonomies to which the CoA is mapped to are also represented as facts in the same instance;
- Create a custom XBRL taxonomy. Each account in the CoA is a concept in the custom taxonomy. The mappings between each account and concepts in the end reporting XBRL taxonomies to which the CoA is mapped to are represented with an XBRL Formula linkbase.
From a technical standpoint there is no absolute best choice – it really depends on the specific requirements of the implementation where the chart of accounts will be used. There are, however, significant process benefits in using the XBRL GL approach, especially when we are talking about a Standard Chart of Accounts (SCoA) released by a regulator to make it easier for businesses to comply with some kind of reporting concern.
Benefits of the XBRL GL approach
- There is no need to create and maintain a custom taxonomy. XBRL GL exists and does not require any extension to represent both SCoA and mapping information;
- Representing the mappings between a SCoA and concepts in end reporting XBRL taxonomies in a way that allows users (businesses, organizations and accounting software developers) to automatically create the target XBRL instance documents is fairly complex, especially when the target XBRL taxonomies are dimensional. XBRL GL provides a straightforward way to do that. Processing software is fairly easy to create, and open source software is available;
- Once the mappings are created, they need to be deployed by users in their own environments. XBRL Formula is a complex technology, and requires specialized software and expertise. XBRL GL is very similar to a normal XML Schema – much easier to deal with both in terms of tooling and of availability of skilled resources. For the same reasons, extending the SCoA and the mappings to leverage them internally in different reporting processes will be much easier;
- The use of XBRL GL provides a greater value to the users community. In general, the XBRL GL model is re-usable in disparate internal data-related processes for companies and businesses as well as accounting software developers – the benefits of the “deeply embedded” approach to XBRL implementation that we have long discussed and that builds up the value proposition of using XBRL in the first place. The SCoA/Trial Balance level is the entry point for that, and using XBRL GL to represent the SCoA will provide a starting point for businesses and accounting software developers to more easily extend the use of XBRL GL deeper down – general ledger, sub-ledgers, invoices, inventory etc.
Exactly because of the greater value that an XBRL GL based approach provides to businesses and organizations using XBRL, there are additional benefits coming from the free availability of resources that help deploy XBRL GL CoAs:
- A free and community-supported web application called WikiAccounts enables the creation of mappings from a CoA/SCoA represented with XBRL GL and XBRL taxonomies for end reporting – see http://wikiaccounts.org for more information;
- Users of WikiAccounts can voluntarily choose to make the mappings that they create available to the community. As a result, WikiAccounts already contains a free library of mappings between a common SCoA and widely used XBRL taxonomies, such as the IFRS taxonomy, the US GAAP taxonomy, the Canadian GAAP taxonomy, and the SBR AU taxonomy. When creating a new CoA/SCoA, the user can opt to map it to the common WikiAccounts SCoA, which means that he will be able to leverage all the mappings already present in the WikiAccounts free library, enabling free conversion and reconciliation between all the taxonomies supported.
Features of a custom XBRL taxonomy that are not available under the XBRL GL approach
It is also important to consider the flip side of the coin – what features of a custom XBRL taxonomy are not available when using the XBRL GL approach:
- XML/XBRL validation of the data in the instance is limited to its conformance to the XBRL GL taxonomy. In other words, it is not possible to validate the content of the CoA, only its structure;
- It is not possible to use multiple labels, definitions and references for the accounts in the CoA.
In my experience the first feature can be useful, even though only for certain specific requirements. When that is true, its absence under the XBRL GL approach can be mitigated with the creation of external validation rules, using XBRL Formula or other XML-based rules language. The second feature is rarely relevant at CoA/SCoA level, since labels and references are normally more useful at end reporting level, and are still be available in the XBRL taxonomies to which the CoA/SCoA is mapped.
If you know of other key advantages of the “custom XBRL taxonomy” approach that I missed, please leave a comment below, I will be happy to include them.
Conclusions
In my experience there are clearly documented advantages in the use of XBRL GL to represent charts of accounts, as opposed to developing a custom XBRL taxonomy for the purpose. There are benefits for the regulators who are faced with the choice, and even more for their regulated communities – and the latter is usually a key factor in any XBRL initiative.
It is the typical situation where there are multiple technical solutions to a problem that are all viable – but not because something is technically possible it is also necessarily the best solution. In the same way, you CAN use spreadsheets to create, say, an accounting system, but after a while you would probably wish you had used a relational database instead.
New IPHIX Corporate Blog
With the release of the new IPHIX website we are also starting a corporate blog. I will keep writing on the GLG Repository and my posts will show up in the IPHIX blog as well, or at least the XBRL related ones. In addition, the IPHIX blog will from time to time have posts from guest bloggers – and by the way, if you are interested in posting something you can contact us.
If you are a reader of the GLG Repository for professional reasons you may want to subscribe to the IPHIX blog instead. The current skin of the GLG Repository may have already suggested that the tone of the blog will slightly change, to become a little more personal. At least this is one of my New Year resolutions, we’ll see if time allows.
So I hope to see you there… and here, if you care to stick around.
Incorporating XBRL Into the Regulatory Environment
Just in case you missed my post on the topic in the Hitachi Data Interactive blog.
If you are interested in this discussion and in general want to learn about the broader role that XBRL plays in the regulatory environment, in particular in Standard Business Reporting (SBR) projects and tax and statistics related initiatives, there is still time. If you plan to be in Brussels for the 22nd XBRL International Conference, you can register for Session 3 of the pre-conference training: XBRL’s Global Ledger: Incorporating It into the Regulatory Environment – Standard Business Reporting, Tax and Statistics is scheduled for 1:30 to 5:30 pm CET on Monday, May 16, 2011.
XBRL, XBRL GL, SBR…
If you look at the program of the upcoming 22nd XBRL International Conference you may notice that the traditionally offered XBRL Global Ledger training will be a little different this time.
On Sunday May 15 Eric E. Cohen and I will present the usual introduction to the basic “why and how” of XBRL GL – why it is necessary, where it fits and how it works. On Monday May 16 though there will be an additional session focusing on the role of XBRL GL in supporting XBRL adoption, especially in non-strictly financial statements oriented compliance – such as within Standard Business Reporting (SBR) programs.
I particularly look forward to this session. I have been significantly involved in the SBR community for many years, working in existing projects (both NL and AU – I am pretty sure that nobody else has similar bragging rights) and in a number of countries where SBR initiatives are currently under evaluation. I am eager to share the insight and experiences accumulated and to discuss some key points that I know will be beneficial to the audience in very practical ways.
The introductory class is not a pre-requisite – of course it would help achieve the tools for a better understanding, but if you are not in Brussels on Sunday and you are interested in these topics do not be discouraged. This session is designed as a stand-alone class.
If you plan to be in Brussels and you have an interest in XBRL GL, you are probably already registered for the training. If you have an interest in topics such as XBRL implementation, SBR, tax reporting, statistical reporting… you probably should register now.
I hope to see you in Brussels!
Good XBRL Things Are Coming
When the Convergence Assistant experiment started back in 2007 it was an exciting time. It was conceived as an awareness tool to help Canadian businesses understand the implications of the transition from the local GAAP to IFRS. It soon became one of the first publicly available applications that leverages the power of XBRL Global Ledger as the “great reconciler”, allowing a business to map its own chart of accounts to the GIFI, a standard chart of accounts used in Canada, and leverage pre-defined mappings (expressed as XBRL GL instances) between the GIFI itself and both the Canadian GAAP Taxonomy and the IFRS Taxonomy to generate the two sets of XBRL instance documents, and automatically reconcile them.
The experiment was successful, and since then I have been thinking that it could, and should, be applied on a broader scale – to any standard chart of accounts, and to any taxonomy. The enabler for this ambitious project is the availability of a broader set of those pre-defined mappings mentioned above, a sort of global knowledge base including sets of standard accounts and their mappings to multiple XBRL taxonomies – enter WikiAccounts.
And now it is becoming a reality, with various groups already working at the creation of those pre-defined mappings and beta-testing the IT infrastructure that will make it happen.
Good things are indeed coming for that part of the global community that truly believes that open standards can make a difference not only in e-filing, but also in day-to-day internal business processes, where any improvement leads to very significant cost savings and greater efficiencies. It takes some vision, like in the case of the Professors and students of the Franklin P. Perdue School of Business that I have the privilege to work with – check on Page 3 of the March 2011 issue of the Perdue News. Or like the CPA that decided that his clients, mainly small businesses, would benefit if he started using the IFRS for SMEs Taxonomy to prepare their financial statements even before they knew what it is, and thought that a good way to start was to leverage the standard chart of accounts approach, create the mappings and contribute them to WikiAccounts.
If you want to get involved too, the time is coming. Select and visionary beta-testing projects on the footprints of the ones described above will be warmly accepted and supported to the best of my possibilities. Or, wait just a bit longer – maybe around May, when the XBRL winds will blow on Brussels - and you will be able to join the WikiAccounts community after its official launch.
Good XBRL things are coming, and I can’t wait.
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