XBRL

Small Steps,

Giant Leaps | BY GIANLUCA GARBELLOTTO

No, this isn’t Chapter 1 of Walking on the Moon for validation and analysis of data dic- tated by the applications where the Dummies. It’s something far more easier: Put simply, the data resides and the consequent pro- extensive process changes and related efficiencies liferation of spreadsheets that bridge the gaps between those applications enabled by the use of XBRL in your company can be and the real reporting requirements. achieved today. The know-how and off-the-shelf tech- This is why even a pilot project rela- tively limited in scope can help build nology is already available, and every small step that familiarity with XBRL for internal use while still bringing substantial you take toward adoption will allow generating those end reports costly benefits that will be the basis for you and your company to become and inefficient. This obviously future developments. familiar with the technology at a requires more time and better plan- Here are some suggestions for very limited —all while address- ning, but it can be done more easily possible starting points for your first ing pervasive issues and achieving than you think and will enable you internal XBRL project. Included are meaningful results. and your company to take advantage estimates of the effort required for XBRL adoption can be approached of XBRL’s full potential. each as well as a description of the in different ways. One way is to The XBRL Global (GL) potential benefits with an eye to implement it at the highest reporting taxonomy framework, which is the maximizing the benefits/effort ratio. level by simply converting end re- primary tool for the implementation ports to XBRL after they are generat- of XBRL for internal purposes, has Standardizing the Trial Balance ed and prepared for publication. This very broad representational power. It In brief: This is the best value you “bolt-on” approach allows quick can be used to standardize anything can get for an initial implementation compliance with a regulatory man- from entries, transactions, and docu- project. date or participation in a voluntary ments up to subledgers, , trial Effort: Limited. The structure of a filing program, but it does nothing to balance, and the links between all typical trial balance boils down to leverage the benefits of XBRL in these and multiple types of end re- accounts, amounts, and dates. The terms of process enhancements and ports, both internal and external. At structure of an can be very savings. Another approach to the same time, XBRL GL addresses complex, representing various kinds adoption is to build XBRL into inter- issues that are crucial in any corpo- of segments and aggregations that nal information systems and process- rate reporting environment, such as are relevant in the specific entity’s es and use it to address some of the data integration between disparate context, but the number of data crucial issues that make the process of systems or the problems related to points that are required to represent

November 2008 I STRATEGIC FINANCE 59 a trial balance is limited, and its Ledgers and Subledgers to process and validate the data in structure isn’t complex. In brief: Extending the standardiza- a standardized, distributed, and What you can achieve: The trial tion layer to include ledgers and sub- application-independent way regard- balance plays a crucial role in internal ledgers expands the project scope less of where the data was generated reporting because it’s the connector significantly while still involving rel- or is stored. between the underlying detailed data atively aggregate data that’s easy to How you can get started: Same (ledgers, subledgers, transactions) standardize. as Standardizing the Trial Balance. and end reporting. There are multiple Effort: Limited to medium. Given the broader scope and the crucial process enhancements that Ledgers and subledgers relate to very greater impact that standardizing can be achieved with a standardized diversified information, but they’re transactions can have, it’s possible to trial balance, including: still at an aggregate level that’s rela- focus on a limited target such as a 1. of data from tively straightforward for represent- legacy application or a process that different entities/departments and ing with XBRL GL. involves rekeying data from one sys- from disparate systems; What you can achieve: Adding tem to another using spreadsheets 2. Automated generation of end ledgers and subledgers to the adop- or largely manual activities. This reports in XBRL or in any XML- tion project extends its scope to the will allow for testing the XBRL tech- Schema-compliant format; main areas of a typical / nology yet will still achieve measur- 3. Automated reconciliation ERP application—, able benefits. between end reports through the AP/AR, payroll, , fixed underlying trial balance detail. . Possible uses include: Implementing XBRL GL How you can get started: The 1. Data exchange with third par- XBRL GL is a generic representa- representation of a trial balance is ties, such as service providers, CPAs, tion of the files in a typical probably the most documented use outsourcing partners; or ERP system. of XBRL GL. The primary source for 2. Data archival—a standard back- It provides the set of data points XBRL GL best practices is GaLaPa- up format that can be applied to any and structure to standardize busi- GoS (Global Ledger Practices Guide application in the corporate informa- ness and accounting documents for Study, http://gl.iphix.net), where tion system and that can be retrieved and data and integrate them effec- you can find the trial balance best- even after a long time, regardless of tively into the business and auditing practice representation. Affordable the application in which the data used reporting process. At the same time, off-the-shelf tooling is available to to reside or changes in software and it provides a layer of standardiza- map from any accounting software versions, etc. tion in any information system that to XBRL GL. See the Mapping sec- How you can get started: Same as enables significant and quickly tion of http://iphix.net/resources/ Standardizing the Trial Balance. achievable cost savings. Even better, howto.htm for an overview of the XBRL GL can be implemented with topic. At the basic level, a trial bal- Documents and Transactions a step-by-step approach that targets ance can be exported in text or In brief: The standardization of doc- the most crucial issues within your spreadsheet format from virtually uments and entries enables great and corporate reporting environment any application, and that works well pervasive benefits. Since it involves a one at the time. The results are for the conversion to XBRL GL. The higher level of complexity, however, impressive, and can be—and are— Convergence Assistant found at it probably isn’t a good place to achieved today. ■ http://convergenceassistant.com is a start. free Web tool that automatically Effort: Significant. Gianluca Garbellotto is an interna- converts an uploaded Comma Sepa- What you can achieve: On top of tionally known expert on both the rated Values (CSV) file containing a the benefits listed for Ledgers and business and technical aspects of trial balance into XBRL GL. The tool Subledgers, there are: XBRL and XBRL GL. He is the cur- also provides guidance on how to 1. Support for data migration; rent chair of the XBRL GL Working use XBRL GL to generate end re- 2. Post-merger or acquisition Group and a member of the XBRL ports in XBRL and automate their integration; International Standards Board. Gian- reconciliation. 3. Application of business rules luca can be contacted at [email protected].

60 STRATEGIC FINANCE I November 2008