Philly was the venue for the 14th International XBRL Conference. Here's a snapshot of companies who have ventured into this brave new world of XBRL so far. .
Chris Cox was the headliner on Day 2.5 and just gave a flawless
speech on his heightened intent to see interactive data institutionalized at the SEC. If this was a tech conference, I would imagine CEOs of startups running up to him and kissing him on both cheeks, but I was amongst financial accountants and they gave him a civilized applause and went about their business to the next speaker from Edinburgh -- "Sir Tweedle Dee", someone who had been on the fence about promoting interactive data but now wants to join the global wave. Sir David Tweedie as Chairman, International Accounting Standards Board, has been cited as "the most powerful accountant on the planet." He is charged with overseeing the launch of a new set of international accounting standards (IAS), which will hold sway in as many as 92 countries, from Bahrain to Belgium to Bolivia. "With one core set of standards, any company using them can list on any stock exchange anywhere in the world without having to reconcile their accounts to local standards, as they do now," Tweedie says.
XBRL-US - the non-profit consortium officially turned a new leaf by hiring a CEO and re-launching itself as a for-profit organization. Here are his credentials: Mark Bolgiano, was Vice President and Chief Information Officer, Council on Foundations. He supported the Council's mission as the executive responsible for IT infrastructure, online services, digital media, and knowledge management. He has twenty years of experience in non-profit information technology and operations management. As president and founding partner of Radicle LLC, he provided consulting and applications development services to non-profit institutions with a focus on data-driven web applications and knowledge management systems. A winner of the annual American Society of Association Executives Award of Excellence in Information Systems, Mark founded, and for 17 years has moderated, the Non-Profit Technology Best Practices Study Group, a colloquium of chief technologists at non-profit institutions dedicated to the improvement of the discipline through the sharing of knowledge and experiences.
Interestingly Oracle Chief Architect gave a very poorly delivered talk on Oracle's strategy for integrating XBRL into their stack. It was profoundly unimaginative and so very Oracle.
I dropped into one of the Development workshops to get inside the fabric of how the standards for taxonomy extensions were coming along, and also to see the self proclaimed "father of XBRL." With enough seating space for 50 people the room was mobbed with almost double the number and Charlie Hoffman was totally blabergasted -- so much so that 15 minutes into his talk, he hesitated and stopped and asked a question "why are you all here ?" It was not a rhetorical question.
The level of interest has suddenly spiked and interactive data appears (on the surface, at least) to be on a tear to be deployed in various ways.
The following web-article by Institutional Risk Analytics better captures the overall status . .
XBRL and Sarbanes Oxley: The Content is KingDecember 7, 2006 The 14th annual XBRL International conference was held in Philadelphia this week, bringing together some of the leading figures in the government, accounting, financial services, and technology sectors to laud the development and prospective adoption of eXtensible Business Reporting Language or XBRL in the US.
SEC Chairman Christopher Cox led a parade of notables to the podium, all confirming that the XBRL standard has support from some of the most powerful agencies in the US government. The SEC has thrown its financial support behind the XBRL standard and is preparing to finalize contracts with XBRL US and the Financial Accounting Standards Board to complete the accounting taxonomies which are, in theory, needed to truly begin the adoption process.
Of note, to accomplish this task, the SEC is relying upon two entities with little commercial or technical contracting experience, XBRL US and the FASB, to complete the construction of the XBRL GAAP taxonomies that will be integrated into the EDGAR system. This choice creates considerable technical, legal and political risks for the SEC, for Chairman Cox personally and for the adoption prospects of XBRL.
As Chairman Cox noted in his remarks, an optimist is someone who, when told that things can't get any worse replies: "Yes they can." On those terms, we're optimistic about XBRL. Stay tuned.
Besides the immediate technical obstacles facing the SEC in preparing XBRL for broad adoption by public companies, there is a more fundamental issue, a flaw in the grand design that may ultimately doom XBRL in the US, namely the fact that the community of corporations and other filers of SEC documents remain largely indifferent to and ignorant of this process. Fewer than 40 companies have joined the SEC's voluntary filer program over the past two years. Downstream users of financial data are even less aware.
As a representative of one of the largest SEC filings vendors in the US told The IRA this week: "We hear almost nothing from our clients regarding XBRL. Most don't understand the benefits of the technology or participating in the SEC's voluntary filer program. Those few corporates which do have an understanding of XBRL seem content to wait for the SEC to mandate the technology and do nothing until then."
Over the past month, we have interviewed members of the XBRL consortium about the pluses and minuses of the XBRL effort to date. Almost universally, we hear our colleagues describe the challenge facing the SEC effort in technical terms; as being to rationalize a "document centric" view with the need to gather financial statement data in a way that is structured and machine readable. Most believe that if the XBRL US/FASB team complete the GAAP taxonomies needed to structure SEC filings, adoption will follow. Like the film Field of Dreams: "If you build it, they will come."
We respectfully disagree. Part of the reason for the failure of the XBRL effort in the US to catch the imagination of public companies is the assumption that the technology of XBRL, which combines the transport capabilities of XML with accounting definitions, will somehow define and control the process of disclosure by public companies.
Nope. Repeat after us: the content is king, the content is king, the content is king.
Fact is that financial reporting is an ever evolving process; a process that balances the legal requirement of disclosure with the business cases needs of companies to manage their public image before investors and markets; that is, to be opaque and thereby maximize market value. Trying to make the content fit into a pre-conceived technology framework strikes us as both arrogant in technical terms and unworkable in political terms.
IRA's independent explorations outside the Beltway reveal some very rational questions about the business case value of XBRL. Compliance specialists note to us that XBRL still deals with too narrow a range of reporting items that must be delivered to regulators. They have little choice, at the moment, but to concentrate their infrastructure investments elsewhere; more precisely, on tools that facilitate delivering broader spans of reporting and compliance obligations.
Technologists in the EDP and ERM words tell us that the true landscape of information interoperability starts at the transaction layer and that the real drivers of systems development priorities remain setting up least cost automation to, for example, confirming Sarbanes-Oxley internal controls. Further, the pressing financial interoperability challenge lies more in the area of exchanging data using least cost means between disparate legacy systems.
Interoperability is still a game of CSV, vanilla XML and SQL interconnections; a game that is driven very much by internal business process integration needs of enterprises seeking to remain competitive. Many view the complex overlay of XBRL transmission as potentially adding to as opposed to managing down their project risks and financial burden. One has to admit that such concerns do have "to the bottom line" poignancy -- just like the objections to Section 404 of Sarbanes-Oxley.
Advocates of adoption of XBRL in the US need remember that the customer here is not the SEC, but the US economy. The public good objective is to craft a technology that is such a clear improvement over the current text-based standard used for meeting the requirements of the Securities Act of 1933 as to be self-evident. More, to avoid being thrown into the "bad" Sarbanes-Oxley 404 bucket, XBRL must demonstrate that it provides cost savings and other efficiencies.
In our view, the biggest obstacle facing the SEC as the champion of adoption of XBRL in the US is to craft a compromise that helps rather than threatens filers, not just corporate filers, but the funds and other entities which use the dozens of forms currently filed with the SEC. If the tool that results from the development effort supports the evolving conversation between filers and investors, then the XBRL standard will be adopted and enjoy success.
If XBRL fails this test, then the SEC and Christopher Cox will be in the same position as is the Bush Administration is in Iraq: looking for a face-saving way out. Indeed, the failure of the XBRL adoption effort in the US could be a considerable blow to Chairman Cox's rising political star. The operative timeframe here is the next six months.
The SEC already is fighting a rear-guard action with respect to rolling-back Sarbanes-Oxley, which both parties in the Congress look ready to eviscerate in 2007. We have some ideas on how the SEC might combine the need to drive greater awareness and adoption of interactive data (but not necessarily XBRL) with the impending reform of Section 404 of SOX, but we ain't talking till somebody makes it worth our while.
