XBRL is a standard for tagging financial information that separates technical and business specifications. It allows for disaggregation of financial reports into constituent semantic elements. XBRL adoption is growing globally with many countries and jurisdictions actively working on local taxonomies. CFA Institute supports XBRL to improve the usability of financial information for investors. Semantic finance may disrupt financial reporting by enabling machines to better process and understand financial data on the semantic web.
6. XBRL in short
eXtensible Business Reporting Language
web standard derived of XML
disaggregates unwieldy information packages into
constituent semantic elements
separates technical and business specifications
open, royalty-free property of XBRL International
7. More XX‘s
Taxonomies
container of business logic
comparable to chart of accounts, but more
available for IFRS, US GAAP, many more
Extensions
8. Global reach
Central organisation XBRL International
Many local jurisdictions
local awareness
locally relevant taxonomies
quick adoption in many countries: USA, China,
India, Japan, NL, Germany, France
9. XBRL in Belgium
active jurisdiction since 2004 with 26 corporate
members (CFA Belgium?)
hosted by National Bank of Belgium
working groups on BE GAAP annual accounts,
permanent corporate data for CBE, communications
Contacts: xbrl.be@nbb.be
16. Some measurement
“units” ...
Equity method Cost with discount accretion, premium
Consolidation – recognition of individual assets amortisation and accrued interest plus or minus
and liabilities of the issuer of the equity some changes in fair value if some of the
instruments changes in fair value of the instruments are
Proportionate consolidation hedged under fair value hedge accounting
Fair value with gains and losses in earnings Cost plus accreted discount or amortised
Fair value with gains and losses in other premium with a separate line item for accrued
comprehensive income until realised interest
Fair value with gains and losses in other Lower of cost or market value
comprehensive income until realised except Carrying value less allowances for uncollectible
required impairment losses that are reported in amounts
earnings immediately For loans and receivables subject to troubled
Fair value with part of the gains and losses in debt restructuring, as specified in SFAS 15
earnings and part of the gains and losses in Accounting by Debtors and Creditors for
other comprehensive income (cash flow hedge Troubled Debt Restructuring
accounting) Carryover basis of the transferred assets
Cost less required impairment losses that are allocated on the basis of relative fair values of
reported in earnings the portions sold and retained
Cost with discount accretion, premium Not recognised unless an amount is receivable
amortisation, accrued interest and required
impairment losses in earnings
17. Fair value - why?
relevant for all economic decision making
no viable alternatives
most useful performance measurement
“approximately right” far superior to
“precisely wrong”
transparency about sources & assumptions
18. Known unknowns, etc
CPA’s CFA’s
domain domain
Cutoff
date
expected future expected future
development of development of
known business future business
19. Frequent objections
“not our job”
massive measurement errors
Profitable Downgrade Conundrum
abusing mixed attributes model
Fair values are -
hard to come by,
too expensive ...
23. Presentation
Method
Scope
First
The primary financial statements must provide the
information needed by equity investors, creditors,
and other suppliers of risk capital.
24. Presentation
Method
Scope
Second
The entity must be viewed from the perspective of
an investor in the company’s common equity.
25. Presentation
Method
Scope
Third
Fair value information is the most relevant
information for financial decision-making.
26. Presentation
Method
Scope
Fourth
Recognition and disclosure is based on the
information’s relevance to investment decision-
making, not on its measurement reliability alone.
27. Presentation
Method
Scope
Fifth
Complete recognition of all economic transactions
and events.
28. Presentation
Method
Scope
Sixth
Investors’ information requirements must
determine the materiality threshold.
29. Presentation
Method
Scope
Seventh
Financial reporting must be neutral.
30. Presentation
Method
Scope
Eighth
All changes in net assets must be recorded in the
“Statement of Changes in Net Assets Available to
Common Shareowners”.
31. Current
Net Change
Period Valuation
Estimates In Net
Accrual Adjustments
Assets
Transactions
Operating
Investing
Financing
Net Change
in Net Assets
before
Transactions
with Owners
Net Change
in Net Assets
32. Presentation
Method
Scope
Ninth
The cash flow statement provides information
essential to the analysis of a company and must be
prepared using the direct method only.
33. Presentation
Method
Scope
Tenth
Changes affecting each of the financial statements
must be reported and explained on a
disaggregated basis.
34. Reconciliation of Balance Sheet, Cash Flows,
Accruals, and Valuation Adjustments
Balance Balance
Cash Flow
Sheet: Valuation Sheet:
Statement,
December Accruals Adjustments December
Direct
31, 31,
Method
200X 200X + 1
36. Presentation
Method
Scope
Eleventh
Individual line items should be reported based
upon the nature of the items, rather than by the
function for which they are used.
37. Presentation
Method
Scope
Twelfth
Disclosures must give investors all of the
information they need to understand the items
recognised, their measurement properties and risk
exposures.
38.
39. Key principles of an XBRL
framework
CFA Institute supports XBRL from a user (of
financial statements) perspective
40. User awareness lacking
9%
high in EMEA at 66%!
CFA Institute works 32%
on raising awareness 59%
Investors Conference
with IASCF, EFFAS in
September
Up-to-date awareness
Aware
Not aware
41. First: Disclosure neutrality
Core taxonomy should be predefined by current
financial reporting standards, including GAAP and
other regulatory disclosure and reporting
requirements.
42. Second: Limited extensions
Taxonomy extensibility should maintain the level of
data comparability as defined by GAAP and other
regulatory requirements.
43. Third: Going global
Ultimately, companies should deliver required
financial reports to regulators using the established
XBRL framework
44. Fourth: Open Source
The general public should have equal access to the
XBRL tagged information
45. Fifth: Co-operation
Regulators should develop the necessary
infrastructure and protocol to ensure the timely
updating of the established XBRL framework as
outlined in the preceding four key principles
47. What is the Semantic Web?
The Semantic Web is ...
a vision for a future web of meaning
not separate, but an extension of the current web
a way for machines to better process & understand
data
a web on which machine reasoning can become
ubiquitous and powerful
describes a set of standards, ML & tools
48. Manual labour going strong
18%
37%
Manual extraction
high among specialist 34%
analysts
11%
Entirely manual
Mostly manual
Entirely 3rd party
Mostly 3rd party
49. Disruptive innovation?
worse performance near-term
different value proposition
cheaper, simpler, smaller, and more convenient
launched in new or insignificant markets
leading customers do not want it at first
50. Sustaining innovation?
better performance of established products
measured along historically established
mainstream dimensions
may be radical or discontinuous, but still
sustains established firms
52. Price discovery, ca. 1920
Valuation Expecta- Valuation Expecta-
concepts tions concepts tions
Bid Ask
Fundamental Fundamental
Information Information
53. Price discovery, ca. 2000
Valuation Expecta- Valuation Expecta-
Bid Ask
concepts tions concepts tions
Fundamental
information
54. Price discovery, ca. 2015
Bid Ask
Expectations Expectations
Valuation Fundamental
concepts information
55. The Mosaic Theory
Information
Public Non-Public
Status
Material
Non-material
56.
57. Cognitive Surplus
1'000'000
Mio hours spent
100'000
10'000
Mio hours
1'000
100
10
1
creating Wikipedia watching TV USA p.a. watching TV global p.a.