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It's Time for GL-Enabled XBRL It’s Time for GL-enabled Software | BY GIANLUCA GARBELLOTTO Those involved with the development of XBRL process that will bring value to their products and customers. have worked for years to encourage the business re- porting supply chain to move forward on XBRL GL Dear Accounting Software Vendor, Your customers are hearing about together. Previous columns have discussed the benefits the eXtensible Business Reporting and advantages of XBRL GL to the user community. Language (XBRL) and how it may af- fect them. It’s time to take the ini- tiative and communicate your com- I’ve explored the rationale behind XBRL adoption in the United States pany’s XBRL plans. Many software adopting XBRL GL from many dif- and abroad, I believe that a proactive companies are considering how to ferent perspectives: The benefits are approach would be far more benefi- add XML (Extensible Markup Lan- compelling, the potential is incredi- cial than a “wait and see” strategy. guage) capabilities to their products ble, and the need is crying out. Yet no Adding XBRL GL capabilities to ac- as either a standard import/export major accounting software packages counting and financial software now format or as part of the payload for have implemented XBRL GL yet. is the right choice at the right time. Web services. Instead of developing Accounting software vendors are The review period for the most recent proprietary schemas—with the limi- almost unanimous in explaining version of the XBRL GL taxonomy— tations that come from a proprietary why: Customers don’t ask for it. I am the “Proposed Recommendation” ap- approach—it makes sense to benefit not convinced by this statement. In proved by the XBRL International from a standardized approach. The particular, I’m not sure that changes Standards Board in November standard recognized as both global in a product or service happen be- 2006—ended in January 2007, and and holistic is XBRL GL, the stan- cause customers explicitly ask for XBRL GL is about to become “Rec- dardized Global Ledger. them. I think changes come about ommended” by the XBRL Interna- XBRL is more than standardizing more often because customers ex- tional Consortium. financial statements for the Securi- press needs and requirements and This month I want to turn the ties & Exchange Commission and vendors find solutions to fulfill focus from users to the software de- banks. It is also about internal effi- those. In other words, customers velopers who can make XBRL GL ciencies, systems integration, and aren’t looking for a hammer; they and its benefits a reality in the very making your products more useful to are looking to put a nail in a wall— near future. Below is an open letter the marketplace. That “more” comes the hammer simply happens to be to accounting software vendors, a from XBRL GL, the standardized the solution. call to action that I hope will result Global Ledger. Also, given the clear signals of in their active involvement in a This notion surprises many inde- F ebruary 2007 I STRATEGIC FINANCE 55 pendent software vendors (ISVs), es- business reporting supply chain— standing XBRL GL can be leveraged pecially those who are familiar with developing accounting software, job toward understanding the larger XBRL. Most people are aware of the costing, payroll, point of sale, ac- world of XBRL. Adding XBRL GL increasing importance of XBRL in countant’s write-up, auditing, tax, can be a low-cost solution for any preparing financial statements for budgeting, forecasting, or anything information system or software ap- filing with the SEC or placing on a else supporting internal reporting— plication that needs to meet the core corporate website or the require- XBRL GL should be on your radar. requirements of interoperability and ment that banks use XBRL to file Tax regulators are looking to scalability considered a must by gov- with the Federal Deposit Insurance XBRL GL as a recommended or re- ernment and corporate entities. Corporation (FDIC). XBRL is well quired format for exchanging de- Requirements like “one-time known for external reporting, but tailed accounting systems data with entry,” modularity, and reuse of data few are familiar with the standard- accountants and tax auditors, in- are facilitated through XBRL GL ized work from XBRL that moves creasing their ability to perform adoption. As XBRL GL becomes rec- from end reporting to the details in- their institutional mission/activity ommended or required for data in- side business systems—XBRL GL. while reducing the compliance bur- terchange, a number of countries are XBRL GL can increase the value dens and increasing efficiencies for thinking of providing special bene- of your software products in today’s everyone. Both the Organization for fits to companies whose business XML/XBRL/Web services/standards- the Advancement of Structured In- systems can provide audit data in a based environment. XBRL GL is an formation Standards (OASIS) Tax standardized format. extensive—and growing—modular XML Technical Committee and the The XBRL GL Working Group framework for representing business, Organization for Economic Cooper- conducts monthly outreach calls, operational, and accounting infor- ation and Development (OECD) provides internal and public mailing mation from the point it enters a Taxpayer Services Subgroup have lists, offers public exposure of its business system as transactions or stated their opinion in this respect, taxonomies (standard vocabularies) triggers through the audit trail to end and the OECD Tax e-Audit Task and sample documents, and reaches reporting. It provides a single, exten- Group has repeatedly mentioned out at meetings like the XBRL Inter- sible set of XML tags to represent: XBRL GL as a holistic, global ap- national general conferences (the N Parties involved in business trans- proach that should be considered in next one will be in Munich, Ger- actions (customers, vendors, em- the implementation of their Stan- many, June 3-7, 2007). Volunteer ployees, salespeople, contractors); dard Audit File-Tax (SAF-T). representatives of the XBRL GL N Resources consumed, used, ex- As the market adopts XBRL GL, group are willing to discuss XBRL changed (inventory, supplies, ser- many more products will work with GL with the software development vices, fixed assets), or measured yours—with a minimum of additional community, and commercial con- for later reporting (benchmarking integration required. XBRL GL doesn’t sulting services are available to help information, metrics, processes); require a company to change the way ISVs optimize the process of embed- N Document information such as it represents data internally, but it pro- ding XBRL into their products. document number, document vides a guide to help developers con- There have never been more fa- date, and document maturity date; sider what needs to be captured and vorable conditions to join the XBRL N Journal and entry information; exchanged. A “flick of a switch” on an GL effort. Now is the best time to N Job costing, depreciation, mort- external reporting tool will make every take part in making XBRL some- gage, and much more. system look similar to report builders, thing that will bring value to your XBRL GL is a global standard for consolidation tools, and others who products and customers. I representing the information found in need to master multiple systems. typical operations, business, and ac- Gianluca Garbellotto is an internation- counting software. It provides a com- Final Considerations ally known expert on both the business mon language for your products to As regulators, banks, and other orga- and the technical aspects of XBRL and talk to each other, and it makes it eas- nizations begin to request or require XBRL Global Ledger and a member of ier for other products to talk to yours. XBRL in its different forms for data the XBRL Standards Board. Gianluca If you are an ISV supporting the interchange, an investment in under- can be contacted at [email protected]. 56 STRATEGIC FINANCE I F ebruary 2007.
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