TECHNOLOGY

XBRLBy Gianluca Garbellotto

XBRL Implementation Strategies: The Built-in Approach

In the May 2009 column, we took a a layer of standardization between the approach can be grouped into three closer look at the the easiest and most software applications in use within the categories: basic method to implementing XBRL, the corporate information system and the Assembly and review of end bolt-on approach. This month we’ll internal/external reporting layer, it gener- reports. Compared to the bolt-on move up to the next rung of the ladder ates the same results as a reporting approach, it provides collaborative and and focus on the built-in approach, application that supports mapping to contextual review (vs. the traditional linear where XBRL is embedded in the report- XBRL taxonomies. (For more information paper document review), automated ing process. Typically, the built-in on this implementation strategy and a aggregation of the reports (vs. manual, approach requires that the consolidating/ working example, check the Conver- spreadsheet-based aggregation), and a reporting application in use supports gence Assistant at www.convergence single reporting process (vs. the typical sit- mapping to XBRL taxonomies. Conse- assistant.com.) uation of separate processes for the Gen- quently, the conversion to XBRL becomes eral data and for everything else). a natural extension of the reporting Change management in compli- process rather than being another out- As we move away from the bolt-on ance requirements. If any changes are put from a manually converted Excel approach toward more complex, needed, there’s only one place they need spreadsheet that has no connection to embedded solutions, assessing cost to be made—the reporting process. With the underlying systems and data. becomes more a matter of quantifying new requirements already embedded in If the consolidating/reporting applica- the cost reductions derived from the the Securities & Exchange Commission tion doesn’t support XBRL, or if there’s process benefits of leveraging XBRL (SEC) mandate (see the discussion of the no such application in use, it’s still possi- internally. John Stantial’s article, “ROI on Year 2 requirements in the May 2009 ble to achieve the benefits of the built-in XBRL,” for example, discusses how Unit- column), these benefits can get to be approach, albeit in a different way. XBRL ed Technologies Corporation (UTC) used very significant in the short/medium Global Ledger (XBRL GL) can be used to the built-in approach to implementing term—and that’s before we even start to standardize trial balance accounts and XBRL and achieved a 25% overall discuss other potential concerns, such as amounts—as well as the way in which reduction of time and in the cor- the adoption of the International Finan- they are aggregated into one or more porate reporting process (Journal of cial Reporting Standards (IFRS). end reporting “views”—corresponding Accountancy, June 2007). Easier transition to a “deeply to XBRL taxonomies. This can be done embedded” approach. When the using inexpensive mapping software and Benefits built-in approach is implemented open source components. By interposing The main benefits of the built-in through standardization with XBRL GL

56 STRATEGIC FINANCE I A ugust 2009

at the trial balance level, it allows below overcomes this limitation. a seamless and gradual transition to the deeply embedded Intermediate Step approach. Besides serving as the The built-in approach opens up foundation for the creation of interesting opportunities to end reports, the trial balance is achieve the immediate goal of also the natural interface between compliance while beginning to internal/detailed data (transac- realize the benefits of leveraging tions, documents, entries, XBRL for internal use. It provides and subledgers, journals, etc.) and a way to approach more exten- aggregated reporting for internal sive use of XBRL and represents or external use. A built-in a gradual and more effective approach based on the standard- path to standardized corporate ization of the trial balance and its data management. links to end-reporting XBRL tax- The third, and final, column onomies paves the way for an looking at XBRL implementation easier transition to a broader use strategies will examine the deeply of XBRL within the corporate embedded approach and why it’s information system—and the sig- essential to understand the impli- nificant efficiencies that broader use from the same underlying data. It’s cations and benefits it provides when enables. important to note, however, that if the deciding how to prepare for filing built-in approach is made possible by a reports in XBRL. SF Limitations specific reporting application, this TVILLE With the built-in approach, there’s no reconciliation/drilldown is enabled by the Gianluca Garbellotto is an internationally separation between the process to create application itself (in its proprietary for- known expert on both the business and an end report and its conversion to mat) and only for the data available to technical aspects of XBRL and XBRL GL. XBRL. This means that it’s possible to drill that application, which frequently He is the current chair of the XBRL GL down from the summarized data in the doesn’t cover 100% of the relevant cor- Working Group and a past member of TION: AUGUST STEIN/AR report to the underlying detail and to porate data. The use of XBRL GL to stan- the XBRL Standards Board. Gianluca can

ILLUSTRA reconcile different end reports created dardize data at the trial balance level or be contacted at [email protected].

A ugust 2009 I STRATEGIC FINANCE 57