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Internal Corporate Data Transparency and Accessibility with XBRL

Data transparency and accessibility are two of the key themes of the 24th XBRL International Conference in Abu Dhabi (March 20 to 22, 2012).

These are probably the two most important objectives that regulators around the world are pursuing with the adoption of XBRL, and also the most significant requirements for other consumers of XBRL data, such as analysts and investors. They are also key requirements within any corporate information system, big or small, and something on which organizations spend a lot of money:

  • In the time and resources wasted to support the inefficient and mostly manual processes in place to bridge the gap between the real internal data aggregation and reporting needs and what the corporate information system can actually deliver;
  • In the consequences of the errors that come with those processes;
  • In the continued quest for additional software tools and add-ons that are supposed to fix those problems – but wait a minute, wasn’t that something that the software we bought last year was supposed to fix?

Internal data transparency and accessibility ARE issues for businesses and organizations of any size, and XBRL can help addressing those issues just like it does for regulators and analysts in a cost-effective fashion. Unfortunately for some reason extending the vision on the benefits of XBRL and of data standardization in general within the enterprise does not come natural, not even for companies that are exposed to XBRL because they have to comply with a mandate.

The truth is that any organization, large or small, for-profit or not-for-profit, no matter if it is already subject to an XBRL mandate or not, can significantly benefit from using XBRL internally to support data aggregation and reporting processes. Here are three common consequences of lack of data transparency and accessibility within an organization:

  1. Proliferation of spreadsheets to address internal data aggregation requirements from disparate modules of the information system that cannot easily be automated;
  2. Duplication of processes, in particular related to data analysis and monitoring, in different applications where data similar in nature is stored or processed;
  3. Manual “last mile” of financial reporting;

And here are three ways in which XBRL can help address these issues:

  1. Base your spreadsheets on a custom XBRL taxonomy that supports the data aggregation requirements. Spreadsheets still act as user interfaces, so users interact with a familiar environment – but they are centrally managed and automatically populated through mappings from source systems to the XBRL taxonomy, reducing time and resources required to create them and increasing the efficiency of the processes that rely on the spreadsheets;
  2. Map the data stored in the relevant applications to XBRL Global Ledger (XBRL GL), an XBRL taxonomy designed to standardize granular data in accounting software and ERP applications. Then use XBRL Formula to express the necessary analytics and controls on the data converted to XBRL GL. The same analytics can now be applied to the source data no matter in what module or application the data is stored, avoiding duplications and inconsistencies;
  3. Leverage existing XBRL taxonomies to represent the end reports, or create your own if no suitable taxonomy exists. Then map the data that rolls up to those reports using XBRL GL. The manual activities currently required to generate the end reports can now be automated and applied consistently to any data source within the organization.

These are just generic and high-level ideas, but they come from practical experience in leveraging the benefits of XBRL within the enterprise. You can check our Three Easy Steps website for more information.

In just a few weeks I will be in Abu Dhabi, training and presenting on internal data transparency and accessibility enabled by XBRL and XBRL GL. If you plan to attend the Conference it will be easy to find me if you want to discuss these ideas in more depth. If not, you can always leave a comment to this post, or contact me directly.

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