SEC XBRL Mandate for Dummies Handbook [1 ed.] 9781118100776

Citation preview

Compliments of

Complying with the SEC Mandate requires XBRL software The SEC now requires reports in XBRL format — are you ready? This handy guide demystifies the SEC’s XBRL requirements and explores solutions. • Understand XBRL tagging — find out what XBRL is and learn the essentials of “tagging” data • Meet the SEC Mandate — understand what it is and why Phase 2 of the mandate is a big deal

on IBM Limited Editi

Open the book and find: • The basics of XBRL tagging • SEC XBRL reporting requirements • Solution choices: Outsourcing, Bolton, and Integrated • Features of an integrated XBRL solution

• Compare tools for using XBRL — discover the pros and cons of outsourcing, bolt-on tools, and integrated solutions ™ • Explore an integrated solution — Making Everything Easier! zero in on must-have features ®

Go to Dummies.com

for videos, step-by-step examples, how-to articles, or to shop!

IBM delivers a leading integrated XBRL solution that addresses the SEC’s XBRL Mandate while automating the production of your statutory and regulatory reports. Get more information at ibm.com/software/ analytics/clarity-systems/.

SEC XBRL Mandate Learn to: • Comply with the SEC XBRL Mandate • Select a long-term XBRL solution • Recognize the major implications of detail tagging

Not for resale ISBN: 978-1-118-10077-6

Ed Tittel

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

SEC XBRL Mandate FOR

DUMmIES

‰

IBM LIMITED EDITION

by Ed Tittel

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

SEC XBRL Mandate For Dummies®, IBM Limited Edition Published by Wiley Publishing, Inc. 111 River Street Hoboken, NJ 07030-5774 www.wiley.com Copyright © 2011 by Wiley Publishing, Inc., Indianapolis, Indiana Published by Wiley Publishing, Inc., Indianapolis, Indiana 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 Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/ permissions. Trademarks: Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Reference for the Rest of Us!, The Dummies Way, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States and other countries, and may not be used without written permission. IBM and the IBM logo are registered trademarks of International Business Machines Corporation. All other trademarks are the property of their respective owners. Wiley Publishing, Inc., is not associated with any product or vendor mentioned in this book. LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANIZATION OR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFORMATION THE ORGANIZATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE. FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ.

ISBN: 978-1-118-10077-6 Manufactured in the United States of America 10 9 8 7 6 5 4 3 2

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Contents at a Glance Chapter 1: What You Need to Know about XBRL ........1 About This Book .................................................................. 1 What Is XBRL?...................................................................... 2 How Does XBRL Work? ....................................................... 3 Why Use XBRL? ................................................................... 4

Chapter 2: Demystifying the SEC’s XBRL Mandate .....5 Meeting the SEC Mandate .................................................. 5 Examining the Increasing Liability of XBRL Filings....... 12

Chapter 3: Selecting an XBRL Solution .......................13 Your XBRL Options ........................................................... 13 Comparing the Options .................................................... 18

Chapter 4: Ten (Actually Twenty) Features in an Integrated XBRL Solution ..............................................19 One-Time Tagging ............................................................. 20 Source Data Integration .................................................... 20 Use Prior Reports as Templates...................................... 20 Ease of Use ......................................................................... 21 Workflow Management ..................................................... 21 Multiple Output Formats .................................................. 21 Automatic Consistency Across All Output Formats ..... 22 Block Tagging .................................................................... 22 Detail Tagging in Narrative .............................................. 22 Collaboration in XBRL Tagging ....................................... 23 Automated Taxonomy Extension .................................... 23 Collaborative Taxonomy Extension ................................ 23 Taxonomy Version Management .................................... 24 Taxonomy Custom View .................................................. 24 Support for the Latest XBRL Taxonomies...................... 24 Customizable XBRL Validation ........................................ 24 Generation of SEC-Ready Files ......................................... 25 Data Rounding ................................................................... 25 Internal Control ................................................................. 26 Audit Trails ........................................................................ 26

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Publisher’s Acknowledgments We’re proud of this book, and the people who worked on it. For general information on our other products and services, please contact our Business Development Department in the U.S. at 317582-3205. For details on how to create a custom For Dummies book for your business or organization, contact [email protected]. For information about licensing the For Dummies brand for products or services, contact [email protected]. Some of the people who helped bring this book to market include the following:

Acquisitions, Editorial, and Media Development Senior Project Editor: Zoë Wykes Editorial Manager: Rev Mengle Business Development Representative: Kimberley Schumacker

Composition Services Senior Project Coordinator: Kristie Rees Layout and Graphics: Samantha K. Cherolis Proofreader: John Greenough

Custom Publishing Project Specialist: Michael Sullivan

Publishing and Editorial for Technology Dummies Richard Swadley, Vice President and Executive Group Publisher Andy Cummings, Vice President and Publisher Mary Bednarek, Executive Director, Acquisitions Mary C. Corder, Editorial Director

Publishing and Editorial for Consumer Dummies Diane Graves Steele, Vice President and Publisher, Consumer Dummies

Composition Services Debbie Stailey, Director of Composition Services

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Chapter 1

What You Need to Know about XBRL In This Chapter ▶ Exploring XBRL: tagging, and how things work ▶ Understanding XBRL’s key role in business and

financial reporting

Y

ou may have heard about Extensible Business Reporting Language (XBRL) but have no idea what it is — only that you need to start using it. If that’s the case, you’ve come to the right place.

About This Book This small book is designed to give you the basics about the U.S. Securities and Exchange Commission’s (SEC’s) XBRL mandate. This book also helps you understand available XBRL solutions and how to make the best choice for your company. In this chapter, we give you a brief introduction to XBRL and how “tagging” works. Chapter 2 covers the essentials of the SEC XBRL mandate, and Chapter 3 walks you through solutions for meeting the mandate. These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

2 We finish up with Chapter 4, which describes the top twenty features of an integrated XBRL solution. And, this wouldn’t be a For Dummies book without the little graphics in the margins calling your attention to specific bits of information. The icons we use here are: This image calls out important resources on the Web. This stringed finger points to important tidbits to keep in mind regarding the SEC’s XBRL mandate. This bull’s-eye targets text that helps you simplify or improve a process or otherwise offers valuable advice. This icon highlights things that can blow up on you. Heeding the warnings can save you time and money. And that’s it for the administrative stuff. Read on for a quick tour of XBRL.

What Is XBRL? XBRL is a freely available, global standard designed to improve accuracy and reliability for electronic transmission of business and financial data. This standard comes from an international non-profit consortium of approximately 550 major companies, organizations, and government agencies. However, XBRL represents even more than a standard. Depending on the situation, you can look at XBRL as:

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

3 ✓ A way to model what business information means in a form computer applications can use ✓ A method for providing “interactive data” that grants users quick access to information they want, in an easy-to-use format ✓ A better approach to exchanging business and financial information Interactive data is information that isn’t locked into a single format on a piece of paper, in a word-processing document, or in a spreadsheet. XBRL is the tool you use to make your financial data interactive.

How Does XBRL Work? XBRL lets you build what you can think of as a report. Although this report can be rendered much like other documents you’re familiar with — a word-processing document, a spreadsheet, or perhaps a PDF file — it is not a physical document. An XBRL document may be called an XBRL instance, and takes the form of an electronic file that contains business information. Within an XBRL document, business information, or values, are associated with tags. Tags define data, and each block of text or even each value takes a specific tag. For example, one tag may be “Net Income,” while another may be “Assets.” (Chapter 2 gives examples of tagging.) Tags essentially add structure to documents and “tell” computer applications what each piece of data means and how it relates to other data.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

4 Tags are collected in an XBRL taxonomy, also referred to as a dictionary. A taxonomy gives a precise definition for each term, including references and examples. A taxonomy isn’t included within a business report; it’s separate and referenced from within the report, and it’s integral to the use of the report. A taxonomy may live on the Web (for example, the SEC Web site), or on a company’s intranet — wherever the people and software that make use of the report can find it.

Why Use XBRL? The biggest reason — and the most obvious if you’re reading this book — is that the SEC now mandates the use of XBRL (see Chapter 2), so publicly traded companies reporting to the SEC have to use it. Beyond the SEC mandate, using XBRL and tagging data dramatically expedites the automated processing, collection, and analysis of business information. Databases, financial reporting systems, spreadsheets, and other types of software applications recognize and process tagged financial information. Thus, users can exchange information seamlessly, without having to combine information from different formats into some preferred application. Finally, stock exchanges around the world use XBRL, and it’s officially supported by the European Parliament as well as many other governments. XBRL is undeniably a global standard for business reporting, and it’s here to stay.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Chapter 2

Demystifying the SEC’s XBRL Mandate In This Chapter ▶ Examining the SEC mandate for XBRL use ▶ Understanding liabilities associated with SEC filings

A

ny major change to an established business process involves some degree of difficulty. Thus, the SEC recognizes that the transition to XBRL reporting might be a bumpy ride for some companies. To provide a softer landing, the SEC created a phased-in approach, which lets companies ease into tagging the first year, and eases liabilities for the first two years of XBRL reporting. This chapter focuses on key aspects of the SEC XBRL mandate and its associated liabilities.

Meeting the SEC Mandate After almost a year’s worth of public roundtables, comments, and hearings, one of the first acts of the Obama administration in 2009 was to sign into law a mandate for all public companies to file their SEC submissions in XBRL format, phased in over a three-year period.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

6 Companies must provide XBRL versions (in the form of exhibits) of their financial information along with their existing required documents. The mandate also requires companies to post XBRL reports on the corporate Web site. The SEC’s mandate appears in “Interactive Data to Improve Financial Reporting: Final Rule” at www.sec.gov/rules/final/ 2009/33-9002fr.pdf.

The mandate’s timeline Public companies that file with the SEC must comply with this mandate on the following phased-in schedule: ✓ Phase 1: For fiscal periods ending on or after June 15, 2009, large accelerated filers using U.S. generally accepted accounting principles (U.S. GAAP) with a worldwide public float of greater than $5 billion ✓ Phase 2: For fiscal periods ending on or after June 15, 2010, the remaining large accelerated filers using U.S. GAAP ✓ Phase 3: For fiscal periods ending on or after June 15, 2011, all remaining smaller domestic filers as well as foreign private issuers using International Financial Reporting Standards (IFRS) This timeline is summarized in Figure 2-1. Note that by last-half 2011, all public companies must provide SEC filings using the XBRL format — no exceptions!

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

All Remaining Filers (~7,200 companies)

All Other Large Accelerated Filers (~1,200 companies)

Large Accelerated Filers (~500 companies) >$5B public float

June 30, 2009

Liability “As Furnished”

Liability “As Furnished”

Liability “As Furnished”

Liability “As Furnished”

Detail & block tagging of notes/schedules Liability “As Furnished”

Liability “As Furnished”

Liability “As Filed”

June 30, 2012

Block tagging of notes/schedules

Detail tagging of financials

Detail & block tagging of notes/schedules

Liability “As Filed”

June 30, 2011

Block tagging of notes/schedules

Detail tagging of financials

Detail & block tagging of notes/schedules

June 30, 2010

Block tagging of notes/schedules

Detail tagging of financials

Liability “As Filed”

June 30, 2013

7

Figure 2-1: SEC XBRL Mandate — timeline.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

8

The mandate’s tagging requirements The first year you file financial information with the SEC in XBRL, you must provide detail tagging for each item in your face financial statements. You must also provide block tagging for footnote disclosures and schedules. In the second year of XBRL filings, you must honor the first-year requirements but also include detail tagging of footnotes and schedules. Detail tagging means that every data point (monetary value, percentage, or number) must be tagged separately. Block tagging applies a single tag to a block of text. The term face financial statements refers to a balance sheet, income statement, and so forth. Footnote tagging requirements fall into four levels: I. Each complete footnote gets tagged as a single block of text. II. Each significant accounting policy within the significant accounting policies gets tagged as a single block of text. III. Each table within each footnote gets tagged as a separate block of text. IV. Within each footnote, each amount (monetary value, percentage, and number) gets its own tag. To give you time to become familiar with tagging footnotes, the SEC requires that you comply with Level I in your first year of XBRL filings, and provide detail tagging for each item that appears on your face financial

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

9 statements. However, you must comply with all four levels by your second year of XBRL filings. And that’s where the number of tags skyrockets. Note: Complying with all four levels of XBRL tagging is called Level IV or detail XBRL tagging. Take a look at the difference between block tagging (Level I) and detail tagging (Levels I, II, III, and IV), to see what you’re up against. Figure 2-2 shows an example of Year 1 XBRL tagging — notice that only one XBRL tag is required for the text block and table. However, when applying detail XBRL tagging, because each note, monetary value, percentage, and number gets its own XBRL tag, the number of tags jumps significantly. Figure 2-3 shows a snippet of a Year 2 XBRL filing with monetary values tagged separately. Some companies calculate they’ll use anywhere from 2,000 to 6,000-plus XBRL tags in a single filing period, starting with Year 2 XBRL submissions. Perform an XBRL practice run to work out the kinks before Year 2. Better yet, do two practice runs to deal with rolling values from one report to the next — you can’t get that kind of practice from only a single filing.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

$(19.3) (14.3) (19.0) $(52.6)

467.4

$ 39.4 26.6 20.4 86.4 381.0

$193.5

$(17.2) (10.9) (19.6) $(47.7) 472.5

$ 56.6 37.5 40.0 $134.1

$196.4

$ 42.3 24.5 18.0 84.8 387.7

Goodwill The estimated amortization expense for intangible assets subject to amortization for the remainder of fiscal year 2010 and each of the years ending May 31, 2011 through May 31, 2014 are as follows: $6.6 million; 2011: $12.8 million; 2012: $12.1 million; 2013: $10.3 million; 2014: $8.2 million.

Identifiable intangible assets, net

Patents $ 61.6 Trademarks 38.8 Other 37.0 $137.4 Total Unamortized intangible assets

Gross Net Net Gross Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Amortized intangible assets: (in millions)

The following table summarizes the Company’s intangible assets and goodwill balances as of November 30, 2009 and May 31, 2009.

Intangible Assets and Goodwill

Block Tag

10

Figure 2-2: An example of Year 1 XBRL block tagging.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Tags Tags

$(19.3) (14.3) (19.0) $(52.6)

$196.4

472.5

$ 42.3 24.5 18.0 84.8 387.7

$ 56.6 37.5 40.0 $134.1

Tags

$(17.2) (10.9) (19.6) $(47.7)

$193.5

467.4

$ 39.4 26.6 20.4 86.4 381.0

Tags

Tags

Tags

Tags

Tags

Goodwill The estimated amortization expense for intangible assets subject to amortization for the remainder of fiscal year 2010 and each of the years ending May 31, 2011 through May 31, 2014 are as follows: $6.6 million; 2011: $12.8 million; 2012: $12.1 million; 2013: $10.3 million; 2014: $8.2 million.

Identifiable intangible assets, net

Tags Patents $ 61.6 Trademarks 38.8 Tags Other 37.0 Tags $137.4 Total Unamortized intangible assets

Gross Net Net Gross Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Amortized intangible assets: (in millions)

The following table summarizes the Company’s intangible assets and goodwill balances as of November 30, 2009 and May 31, 2009.

Intangible Assets and Goodwill

Block Tag

Tags Tags

Tags Tags Tags Tags

11

Figure 2-3: An example of Year 2 XBRL with Level IV tagging.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

12

Examining the Increasing Liability of XBRL Filings The SEC allows filers to submit XBRL documents as exhibits. From a liability perspective, for the first two years of XBRL filing, the SEC considers these exhibits to be furnished (limited liability) rather than filed (full liability) where key liability provisions are concerned. However, in the third year of filing, but no later than October 31, 2014, any XBRL submission is subject to the same liability as the related official filing, per SEC Rule 406T. By “furnishing” materials to the SEC, your company is liable for errors only if such information is intentionally false or misleading. Companies face less legal exposure for furnished, as opposed to filed, information. Despite the opportunity to submit filings as “furnished,” providing incorrect information to the street reflects poorly on your company. Therefore, even with reduced liability in the first two years, your company should go for 100-percent accuracy in all of its XBRL filings. It’s critically important that you understand the implications of the increase in XBRL tag counts in Year 2, as well as the increasing liability associated with XBRL filings.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Chapter 3

Selecting an XBRL Solution In This Chapter ▶ Reviewing XBRL solutions ▶ Comparing key elements for each solution

Y

ou don’t have to be an XBRL expert to meet the SEC’s new filing requirements — just choose a solution that does the heavy lifting for you. This chapter covers different approaches to implementing XBRL so you can match your environment with a solution that meets your needs.

Your XBRL Options The three primary options to address the SEC XBRL mandate include the following types of solutions: ✓ Outsourcing the task of generating XBRL to an XBRL service provider ✓ Bolting the ability to generate XBRL onto an existing process ✓ Deploying an integrated XBRL solution These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

14 The following sections cover the pros and cons of each one of these options.

Outsourcing XBRL If you decide to outsource XBRL generation, you’ll continue to prepare your SEC filings much as you do today. However, once you complete your reports (in Microsoft Excel and/or Microsoft Word format, for example), you then send them to an outsourcing agent to handle XBRL tagging. An outsourcing agent manually creates the required company extension taxonomy, and then submits its XBRL tagging decisions to your accounting staff for review. Based on feedback from your accounting staff, the outsourcing agent applies XBRL tags to your reports and returns those documents to your accounting staff. At this point, your staff needs an XBRL viewer to review the tagged documents. Any changes must be communicated to the outsourcing agent, who applies those changes and then sends the documents back to your company. Once your staff receives these modified documents and approves them, the outsourcing agent submits those documents to the SEC. Although the outsourcing option sounds easy enough, it does have some disadvantages: ✓ Financial reporting decisions are made outside the company: Creating an XBRL filing is really about making a series of financial reporting decisions. Many companies aren’t comfortable letting people outside the organization make financial reporting decisions as part of the process of choosing XBRL tags. This is ultimately a responsibility that management owns, and your internal team is best positioned to make these decisions. These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

15 Be warned. Your CFO and investors will hold your team accountable for XBRL mistakes, no matter who made the errors. ✓ High costs: Outsourcing XBRL tagging is costly and is likely to increase significantly from the first to the second year of XBRL filing, owing to Year 2’s detailed XBRL tagging requirements. ✓ Increased risk of late filing: Outsourced tagging is likely to increase reporting cycle times, which raises the risk of late filings. That’s because the XBRL tagging process occurs after your external reporting cycle is complete, adding more time to the process. Note: Initial filers have reported that some of the largest outsourcing vendors require four days to make a simple change to an XBRL file. ✓ Last-minute changes are challenging: Last-minute changes to SEC filings — to fix errors or apply modifications to a document — are common at many public companies. The process to manage last-minute changes gets more challenging with an outsourcing XBRL agent. The SEC mandate requires that the content of the traditional Electronic Data Gathering, Analysis, and Retrieval (EDGAR) output and the XBRL output be identical. Therefore, last-minute changes to the SEC filings must ripple through both sets of output. Applying last-minute changes across two output formats is even more challenging when you must coordinate with an outsourcing agent, especially if that outsourcing agent’s turnaround time stretches your reporting timeline.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

16

Bolt-On XBRL tools Perhaps you don’t want to outsource, but you want to minimize disruption. In that case, a bolt-on solution may work for your company. Using this approach, you bolt on a new process (which adds an extra step) at the end of the external reporting process. To use a bolt-on tool, produce your external reports as usual (in Word and/or Excel format, for example), then run the bolt-on XBRL tool to apply XBRL tags to the document. This bolted-on process produces your XBRL-formatted output. A bolt-on approach keeps accounting decisions associated with XBRL tagging in-house (good!), and requires your staff to develop expertise to efficiently and properly assign XBRL tags. A bolt-on solution also ensures that accountability for the XBRL process remains within your finance department without involving an external third party (as with outsourcing). Disadvantages of bolt-on XBRL tools include ✓ Extension of reporting timelines: Because bolt-on tools require additional effort at the end of the process, external reporting timelines stretch out and increase the risk of late filing. This risk escalates with a company’s second year of XBRL submissions, when detailed tagging is required. ✓ Lack of tools to promote efficiency and reduce risk: Bolt-on XBRL tools don’t leverage potential efficiencies and risk reductions, which you can achieve through tight integration with a company’s reporting system.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

17 ✓ No assurance of consistency: Bolt-on XBRL tools don’t include features to help enforce consistency between traditional EDGAR output and new XBRL output. Ensuring consistency ratchets up time and effort during the second year of XBRL submission. ✓ No error checking: Bolt-on tools don’t address potential errors in the existing external report process — they simply tag what is passed to them.

Integrated XBRL Solutions With an integrated XBRL solution, the XBRL taxonomy management and tagging process is embedded within the external reporting process. You can apply, modify, and validate XBRL tags throughout the reporting process, so there’s no need to apply XBRL tags just prior to filing with the SEC. Integrating XBRL into the external reporting process makes tagging, validation, and creation of XBRL documents more efficient and less error-prone, and results in shorter cycle times and higher confidence in your final submissions. You can find a lot of supporters for integrated XBRL solutions. In a case study from Gartner titled “UTC Improves Efficiency with Financial Statement Production Solution,” the firm recommends that: “Taking back in-house the current XBRL outsourced approach will be cost-effective for many firms. This will also help organizations develop a strategy for future increased disclosure requirements.”

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

18

Comparing the Options Figure 3-1 identifies key features of solutions that address the SEC’s XBRL mandate. While choosing a solution for your company, consider the factors outlined in the figure. Outsourced Bolt-On XBRL XBRL

Integrated XBRL

XBRL Tagging Support for the Latest Taxonomies XBRL Validation Report Handoffs Kept Solely In-house XBRL Accounting Expertise Kept In-house One Time Tagging Source Data Integration Use Prior Tagged Report as Template Workflow Management Multiple Output Formats Auto Consistency Across All Output Formats Collaboration in XBRL Tagging Detail Tagging in Narrative Automated Taxonomy Extensions Collaboration in Taxonomy Extension Taxonomy Version Management Taxonomy Custom View Generate SEC-ready Files Rounding Internal Controls Audit Trail

Figure 3-1: Comparing options to address the SEC XBRL mandate.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Chapter 4

Ten (Actually Twenty) Features in an Integrated XBRL Solution In This Chapter ▶ Outlining key features to look for in an integrated

XBRL solution

A

n integrated XBRL approach may be your best option for meeting the SEC’s XBRL mandate, compared to outsourcing and bolt-on tools. But with many companies offering seemingly similar solutions, how do you choose? This chapter describes features that are unique to an integrated XBRL solution, and that serve as key differentiators to help you choose between different integrated XBRL solutions. Use the information you learn here to help you make a confident and informed choice — one you can live with over the long term.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

20

One-Time Tagging One-time tagging means that XBRL data and text tags are defined only once and then automatically reused in future reporting periods. As a result, the time and effort needed to create XBRL output decreases and the risk of errors during the tagging process shrinks significantly.

Source Data Integration Your integrated XBRL solution should provide easy-touse methods to pull data from a wide variety of data sources, including enterprise resource planning (ERP) systems, financial consolidation applications, relational databases, online analytical processing (OLAP) databases, and Excel. These features help ensure “one version of the truth,” because data automatically flows from a company’s source systems into its SEC filings — for both EDGAR and XBRL output.

Use Prior Reports as Templates New reports typically contain the same sections that previous ones do — reusing the same data sources and XBRL tags, and re-creating the former report’s look and feel. An integrated XBRL solution draws on this concept to jump-start report creation. The latest data automatically gets loaded into a report template that’s preformatted and pre-tagged. Thus, you can focus on editing a document rather than collecting, consolidating, or formatting data.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

21 Templates are real time-savers once you get into your second year of XBRL filings, considering the increased number of XBRL tags you’ll use going forward.

Ease of Use Most people already know Word and Excel — so should your integrated XBRL solution. Look for software that incorporates Word’s formatting capabilities and Excel’s calculation abilities with a simple, straightforward XBRL tagging function overlay.

Workflow Management A workflow process within an integrated XBRL solution tracks the status for each section in a document, due dates, and responsibility assignments. Using workflow, it’s easy for an administrator to check the status of each section in a document, and to see which sections are overdue and who is responsible. Workflow gives management clear oversight into external reporting.

Multiple Output Formats Your integrated XBRL solution should support a wide variety of output options, including Microsoft Word and PowerPoint, PDF, Adobe InDesign, XBRL, and EDGAR-ready output for filing to the SEC.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

22

Automatic Consistency Across All Output Formats A key feature in a good integrated XBRL solution is its synchronization of all output formats: XBRL, Word, PDF, and EDGAR-ready. This also addresses the SEC’s XBRL requirement that all output formats be synchronized. You define a document once and then publish that single document to numerous output formats — the integrated XBRL software automatically ensures that the document’s information is consistent across all formats.

Block Tagging Multiple blocks of Word text or Excel data that make up a common disclosure may be assigned the same XBRL “text block” tag. Using an integrated XBRL solution, you can easily apply “text block” tags by highlighting a note fragment and assigning an appropriate XBRL tag. XBRL document generation weaves these fragments together to complete an XBRL disclosure while preserving all required formatting.

Detail Tagging in Narrative Look for a solution that lets you tag fixed and variable values within a narrative, without repeating such values in multiple locations. Think “Tag values once, use the tags many times.”

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

23

Collaboration in XBRL Tagging Multiple users should be able to apply XBRL tags to different sections of a document at the same time — without tripping over each other. Support for collaboration in an integrated XBRL solution boosts the efficiency of the XBRL tagging process significantly.

Automated Taxonomy Extension A built-in taxonomy editor helps users build and manage extension taxonomies easily and quickly, with minimal training and little XBRL jargon. Such an editor uses an existing report layout to generate each required XBRL taxonomy extension automatically and keeps extension taxonomy labels current without additional work on your part. Automated creation and management of taxonomy extensions helps make an integrated XBRL solution more usable and more valuable.

Collaborative Taxonomy Extension Your solution should allow multiple users to access and edit multiple sections of the taxonomy concurrently. This type of collaboration lets you manage your taxonomy the way you want — with one person or multiple people managing the taxonomy extension as part of their core workflow, then collaborating with others as needs and circumstances dictate.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

24

Taxonomy Version Management Only an integrated XBRL solution can roll a taxonomy forward from period to period. When you roll a taxonomy over from the previous to the current period’s new taxonomy, an integrated solution automatically updates tagged elements to reference the most up-todate version. This frees up time that must otherwise be spent maintaining or updating a taxonomy. In fact, this is another big value-add for an integrated XBRL solution.

Taxonomy Custom View With over sixteen thousand XBRL elements listed in the U.S. GAAP taxonomy, it can be challenging to find the most appropriate element when tagging documents. Look for an integrated XBRL solution that provides search and filtering options to make this task easy.

Support for the Latest XBRL Taxonomies Your integrated XBRL solution should support the latest XBRL taxonomies with seamless year-to-year conversions, ensuring up-to-date XBRL submissions.

Customizable XBRL Validation Once XBRL tags are applied, it’s important that an XBRL document comply with the latest SEC XBRL submission requirements. Look for an integrated XBRL

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

25 solution with a built-in XBRL validation engine to ensure that XBRL documents comply with those requirements. A validation engine should be customizable and able to validate an entire report based on rules you define for your organization. This lets you extend the SEC’s validation rules with company-specific validation rules, so that you can enforce company policies, procedures, and practices. This is especially useful for enforcing internal controls your organization may develop and use.

Generation of SEC-Ready Files Your chosen solution must be able to generate XBRL documents that are ready to submit to the SEC. When using a financial publisher or other filing agent, these XBRL documents are delivered along with the primary form, such as 10-K, 10-Q, 8-K, and so on. XBRL output from an integrated XBRL solution is ready to send to the SEC, with no additional edits needed.

Data Rounding Ensure your integrated XBRL solution provides an automated method for rounding financial data to thousands, millions, or billions while ensuring that all numbers tie out (are in sync across documents) and foot down (total at the end of columns). This feature lightens your load and eliminates XBRL calculation inconsistencies that can result from rounding errors — further improving the efficiency and accuracy of the external reporting process.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

26

Internal Control A top-of-the-line integrated XBRL solution provides a framework for applying internal controls that ensure the proper steps are followed within each section in the document, including the XBRL tagging process.

Audit Trails To maintain document version control, you must be able to track all changes to a document, including what changed, who changed it, and when a change occurred. An integrated solution should provide an audit trail that tracks changes to any XBRL submission, including a detailed report of all tags used, values tagged, and other relevant attributes, as well as all changes to the base document. For more information on integrated XBRL and IBM Cognos Financial Statement Reporting (FSR) — one of the leading integrated XBRL solutions on the market — go to ibm.com/ software/analytics/clarity-systems/.

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Notes

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Notes

These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.

Compliments of

Complying with the SEC Mandate requires XBRL software The SEC now requires reports in XBRL format — are you ready? This handy guide demystifies the SEC’s XBRL requirements and explores solutions. • Understand XBRL tagging — find out what XBRL is and learn the essentials of “tagging” data • Meet the SEC Mandate — understand what it is and why Phase 2 of the mandate is a big deal

on IBM Limited Editi

Open the book and find: • The basics of XBRL tagging • SEC XBRL reporting requirements • Solution choices: Outsourcing, Bolton, and Integrated • Features of an integrated XBRL solution

• Compare tools for using XBRL — discover the pros and cons of outsourcing, bolt-on tools, and integrated solutions ™ • Explore an integrated solution — Making Everything Easier! zero in on must-have features ®

Go to Dummies.com

for videos, step-by-step examples, how-to articles, or to shop!

IBM delivers a leading integrated XBRL solution that addresses the SEC’s XBRL Mandate while automating the production of your statutory and regulatory reports. Get more information at ibm.com/software/ analytics/clarity-systems/.

SEC XBRL Mandate Learn to: • Comply with the SEC XBRL Mandate • Select a long-term XBRL solution • Recognize the major implications of detail tagging

Not for resale ISBN: 978-1-118-10077-6

Ed Tittel