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1 ESSENTIALS of XBRL Financial Reporting in the 21st Century Bryan Bergeron John Wiley & Sons, Inc.

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3 ESSENTIALS of XBRL

4 Essentials Series The Essentials Series was created for busy business advisory and corporate professionals.the books in this series were designed so that these busy professionals can quickly acquire knowledge and skills in core business areas. Each book provides need-to-have fundamentals for those professionals who must: Get up to speed quickly, because they have been promoted to a new position or have broadened their responsibility scope Manage a new functional area Brush up on new developments in their area of responsibility Add more value to their company or clients Other books in this series include: Essentials of Accounts Payable, by Mary S. Schaeffer Essentials of Capacity Management, by Reginald Tomas Yu-Lee Essentials of Cash Flow, by H. A. Schaeffer Jr. Essentials of Corporate Performance Measurement, by George T. Friedlob, Lydia L. F. Schleifer, and Franklin J. Plewa Jr. Essentials of Cost Management, by Joe and Catherine Stenzel Essentials of CRM:A Guide to Customer Relationship Management, by Bryan Bergeron

5 Essentials of Credit, Collections, and Accounts Receivable, by Mary S. Schaeffer Essentials of Financial Analysis, by George T. Friedlob and Lydia L. F. Schleifer Essentials of Intellectual Property, by Paul J. Lerner and Alexander I. Poltorak Essentials of Knowledge Management, by Bryan Bergeron Essentials of Patents, by Andy Gibbs and Bob DeMatteis Essentials of Payroll Management and Accounting, by Steven M. Bragg Essentials of Shared Services, by Bryan Bergeron Essentials of Supply Chain Management, by Michael Hugos Essentials of Treasury and Cash Management, by Michele Allman-Ward and James Sagner Essentials of Trademarks and Unfair Competition, by Dana Shilling For more information on any of the above titles, please visit

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7 ESSENTIALS of XBRL Financial Reporting in the 21st Century Bryan Bergeron John Wiley & Sons, Inc.

8 Copyright 2003 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, , fax , or on the web at Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, , fax , permcoordinator@wiley.com. Limit of Liability/Disclaimer of Warranty:While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials.the advice and strategies contained herein may not be suitable for your situation.you should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services, or technical support, please contact our Customer Care Department within the United States at , outside the United States at or fax Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at Library of Congress Cataloging-in-Publication Data Bergeron, Bryan P. Essentials of XBRL : financial reporting in the 21st century / Bryan Bergeron. p. cm. (Essentials series) Includes index. ISBN (pbk. : alk. paper) 1. XBRL (Document markup language) 2. Business enterprises Finance Data processing. I. Title: Financial reporting in the 21st century. II. Title. III. Series. HF X25B dc Printed in the United States of America

9 To Miriam Goodman

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11 Contents Preface xi 1 Overview 1 2 Opportunities 29 3 Standards 53 4 Process 79 5 Technology Solutions Economics Are We There Yet? 179 Glossary 203 Further Reading 209 Index 211 ix

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13 Preface Essentials of XBRL: Financial Reporting in the 21st Century is a practical survey of the extensible business reporting language (XBRL) a technology standard for the transparent interchange of financial and business reporting data that promises to revolutionize the financial industry. In the fast-paced world of modern business, the accurate, secure exchange of financial data has become the rate-limiting step in executing, archiving, and communicating business transactions. With XBRL, a standard based on the extensible markup language (XML), a company can seamlessly exchange financial data with other companies in near real time. In addition to intercompany communications, XBRL can be easily adopted for a variety of internal uses, from readily searchable databases to executive decision support tools. The aim of this book is to provide an objective, vendor-independent assessment of XBRL, highlighting the positive and negative aspects of the standard. The book assumes an intelligent CEO-level reader, but one who may be unfamiliar with the challenges and significance of online financial and business reporting and needs to come up to speed in one quick reading. Although the underlying technology of XBRL is necessarily covered, the discussion is at a high level and assumes no experience with computers or network systems. After completing this book, readers will understand how their business can benefit from products that follow the XBRL standard. Moreover, readers will be able to converse comfortably with information technology professionals regarding financial system implementation xi

14 ESSENTIALS of XBRL issues, understand what to look for when considering financial systems that support XBRL, and appreciate the likely ROI and possible downside of embracing XBRL.To illustrate the practical aspects of XBRL in an easily digestible fashion, each chapter contains a vignette that deals with key technical, cultural, or economic issues of the technology. Reader Return on Investment After reading the following chapters, the reader will be able to: Understand how XBRL relates to similar activities in other industries and what can be learned from the successes and failures in these industries. Understand the technological underpinnings of XBRL and how they inherently limit the capabilities of XBRL. Understand the critical role XBRL can play in finance and business reporting in enabling best practices. Understand how XBRL can be an enabler of e-commerce. Understand how XBRL compares with competing standards. Understand the standards process and how the finance industry and the government are involved with the XBRL standard. Understand XBRL from historical, economic, and technical perspectives, including how it relates to the larger field of electronic data interchange (EDI). Have a working vocabulary of XBRL, and be able to communicate intelligently with IT professionals and vendors regarding XBRL-compatible products and services. Understand the trade-offs between the commercial options available for a XBRL implementation. Understand the significance of XBRL on the company s bottom line. Understand the relationship between XBRL and other business optimization strategies. xii

15 Preface Have a set of specific recommendations that can be used to move to XBRL-based financial and business reporting. Appreciate the status of XBRL: what is merely promised, what exists today, and the likely status of XBRL in the future. Organization of This Book This book is organized into modular topics related to XBRL. It is divided into the following chapters: Chapter 1: Overview. The first chapter provides an overview of the key concepts, terminology, and the historical context of XBRL in the finance industry. It illustrates the challenges of current business practices that XBRL is intended to address.this chapter also highlights some of the more promising alternatives to XBRL that have applicability in certain business settings. Chapter 2: Opportunities. This chapter examines the opportunities associated with XBRL-based reporting, from perspectives of both corporate senior management and the accounting professional. It discusses the role of XBRL in providing rapid access to timely financial data to the corporation while ensuring security and accuracy. Chapter 3: Standards. The chapter explores XBRL from the perspective of standard practices and standards organizations. Topics include traditional standard practices in the finance industry and how these relate to the new reality reporting since the advent of the Sarbanes-Oxley Act. It considers the role of vendors, the government, the general computing industry, and trade organizations in establishing standards for finance and business reporting. Chapter 4: Process. The chapter focuses on XBRL as an enabler of financial and business process.topics include knowledge management principles, the role of XBRL in the financial knowledge management xiii