The scorecard site lets you select a company and period for the results and then gives you access to a CSR scorecard and a graph. So I selected my Spanish Sustainability Stalwart – the Bank of Navarre – as an example, to see their 2009 results.

Their CSR-CS scorecard report can be downloaded in XBRL or as a PDF (see below).

csr-cs

I then took a quick at their energy consumption (in GigaJoules?) by selecting a specific indicator from the XBRL-CCI taxonomy to focus on and chart (see below).

CSR-CS: Indicator = Energy Consumption

Now if only the rest of the world could catch up with Spain…

What I mean is that if there was a central hub for crowdsuggesting extension tags then maybe they would find their way into the taxonomy a bit quicker and help prevent you creating your own extension tag when it’s very similar to someone else’s (that you have no knowledge of). Using this kind of hub you could also vote for an existing extension and bump it up the taxonomy  inclusion ladder (if you get my drift).

In fact what we should do is have an extension ‘lookup’ feature in XBRL report writers that says ‘Hey before you add this extension tag to your taxonomy let me check that someone else hasn’t extended in a similar way before’.

Or maybe we already do and I’ve been drinking too much cider again.

Even when data is retrieved in a spreadsheet from a conventional relational database you still can’t be sure that a specific piece of data stored in a specific table column actually means the same thing or even easily figure out what the data is supposed to mean. That’s why storing ‘tagged’ data, subject to a mutually agreed taxonomy – either within an organization or between co-operating businesses or as mandated by a regulator – helps to ensure not just one version of the truth but one definition of the truth. The database is storing not just numbers that are retrieved by the spreadsheet for presentation and manipulation but also what you have mutually agreed the numbers mean.

You can still label the numbers wrongly in the spreadsheet and you can still manipulate the numbers in the spreadsheet to give a false impression. But ultimately, when you drill down from the spreadsheet to the underlying data, the XBRL tags will tell you what that data actually should mean, making discrepancies harder to hide. So if you are a Sarbanes-Oxley 404 auditor looking for evidence of lack of controls over data integrity or fraud in financial reports and spreadsheets, One Definition of the Truth is going to help you a lot.

xbrl-truth

One of the steepest parts of the XBRL learning curve is getting your head around taxonomies. Taxonomies are the real drivers of XBRL. Sure you have to tag all the data but without a taxonomy to refer to, those tags add no value whatsoever. The problem with taxonomies is that when you first come up against them your initial reaction is Whoa! Big, gnarly documents with thousands of bits called elements and linkbases and dimensions and tuples – among others.

These are what I call ’strategic’ taxonomies. They are gnarly because they tackle complex global or country-wide initiatives like IFRS and US-GAAP. The taxonomy is managed by some sort of massive committee and rolling out changes is subject to widespread stakeholder engagement and change management controls. Strategic taxonomies are generally what regulators are focused on to manage sophisticated corporate reporting tasks like the quarterly 10-K in the USA or filing your corporation taxes in the UK.

But there is another type of taxonomy, I’ll it a ‘tactical taxonomy’, that is nothing whatever like this. It is more analogous to the Excel spreadsheets or Access databases that individuals or workgroups create every day in corporate life. A taxonomy that is relatively tiny in scope that helps to solve a specific organizational data management or reporting problem.

Consider this little data set: account, period, currency, amount. That’s a tactical taxonomy.

Or this: project, task, owner, status. That’s a tactical taxonomy.

Or this: employee, business unit, travel miles, carbon emissions. That’s a tactical taxonomy.

Of course I know that the actual taxonomy document is more substantial that the one line in this blog post but the point is that tactical taxonomies are much more limited in scope and impact. They might only be used within a business unit, within your organization as a whole or maybe across your business partner network. Tactical taxonomies are not intended to be used by the world or overseen by external regulators. The data managed by a tactical taxonomy is likely to be for internal consumption only.

We need to make defining, executing and sharing a taxonomy as easy as defining, populating and sharing a spreadsheet. Only the difference between data used by different people in an organization subject to a taxonomy and data used in the same way in a spreadsheet is that the taxonomy ensures one-definition-of-the-truth. This is something spreadsheets alone, and even databases, can’t do. Define once – apply many is the tactical taxonomy mantra.

Once business ‘gets’ tactical taxonomies then they will come to be seen as no different to the document templates used to format your corporate communications. Every spreadsheet application will simply have access to a library of tactical taxonomies so users can pick one to define the data to an agreed organizational standard. Every spreadsheet will have File>New Taxonomy, File>Load Taxonomy and File>Import/Export Taxonomy right there in the menu. So you will know that when you, and anyone else in your organization, plugs numbers into this taxonomy-driven spreadsheet those numbers are subject to the same taxonomy-based definition and mean the same thing.

Tactical taxonomies will become so pervasive, you’ll probably need a taxonomy manager just to look after them all. Another job created by XBRL. Thanks Charlie.

So let’s develop a World Cup taxonomy. For example…

Key fact is ‘goal’ and elements are:

match e.g. England vs. USA

scorer e.g. Gerrard

team e.g. England

What else can we add? Time? Goalkeeper? Penalty/Non-Penalty? Stage of competition?

Taxonomies don’t have to be hard or have thousands of elements or be all about finance.

Claim 1 – Due to the fact that all public companies will not fully comply with XBRL until 2012, this mandate will not be relevant to investors until that time.

I agree with the panelists that the XBRL data will not be fully comprehensive until 2012.  While the full range of public data in XBRL will not be available for the general public until 2012, around 500 of the largest companies in the United States have already filed in XBRL – their XBRL data is already accessible on the SEC’s website or through Rivet’s CrossView to the general public (for free).

By December 2010, nearly 2000 of the largest US public companies will have filed a 10-K in XBRL with the largest 500 reporting detailed information into their notes which has never been able to be accessed programmatically. By 2012, the number of companies who will have filed in XBRL will be over 10,000. By utilizing the existing XBRL analysis tools available on the market today, investors have access to instantly compare some of the largest companies in the United States today.

Claim 2 – XBRL is too complicated for the individual investor as it is XML-based code.

Consumers of XBRL data are shielded from the code behind the numbers, much like consumers don’t need to read HTML (or XML) to view a web page.  HTML has a browser to render the code, similarly the SEC has implemented an open source XBRL viewer that renders just like your average web page.  (You want to see right now?  Check out Google’s XBRL data.  Where’s the complex code?)  In addition, many companies have developed their own software that allows robust analysis of multiple companies – all without the user ever needing to view XBRL code – just the financials they are accustomed to viewing.

The end result for investors is an easier to use and navigate source of financial information.  By linking references and definitions to every piece of financial data, in an easy to use, rendered format, users can access this “tagged” data as soon as it is filed, right from the horses’ mouth.  The ability to access and compare this information right in excel saves investors a great deal of time and energy on how to get at the data.  By limiting the role of 3^rd party data aggregators, investors can spend more time on data analysis and less time on how to get at the data itself.

Claim 3 – Company line items can’t be compared due to companies using different definitions of line items (such as operating expenses)

With best practices and software tools already in place to categorize the US GAAP XBRL taxonomy definitions by industry, statement, and definition, companies can easily choose from the line items and associated definitions that best represent their specific needs.  What this means for investors is that while companies may not use the exact same definition, there is usually only a few options that they choose from – making consolidation and analysis of the possible definitions simple.

Prior to XBRL, while companies may have used the same line item name, their internal definitions of say, net revenue, varied widely. Often times, consumers were not comparing apples-to-apples as XBRL now enables them to do. While companies may still maintain different definitions of Net Revenue, with XBRL investors now know companies are using different definitions and can choose to aggregate that data for analysis.  Investors can already take advantage of existing XBRL data to instantly access, compare, and analyze companies’ financials side-by-side, regardless of the definition – today.

As with all new standards, XBRL will continue to evolve with user feedback.  The XBRL data for the largest companies in the world and the tools to analyze the data are available to use today.

While technology alone will not fix the behaviors that contributed to our recent financial crisis, XBRL provides investors with a higher degree of data transparency along with the tools they need to make more educated investment decisions – holding public companies accountable for the financial information they provide to the public.

Item 2: The Commission will consider a recommendation to publish an interpretive release to provide guidance to public companies regarding the Commission’s current disclosure requirements concerning matters relating to climate change.

Back in November 2009, a petition organized by Ceres on behalf of 20 large investors and other interested groups was presented to the S.E.C. The petition called for better disclosure of risks and opportunities relating to climate change in S.E.C. filings. According to EnvironmentalLeader.com, significant numbers of companies in 2008 failed to report any risks or opportunities relating to climate change outside of the utilities and energy sectors. Talk about an elephant in the room.

Kurt Cagle considered the implications of this for the XBRL community back in February 2009 as did a reader of this blog Daniel Roberts in December 2009. The Global Reporting Initiative (GRI) has been working on an XBRL taxonomy for sustainability reporting for some years and a couple of Australian academics, Gilbert & Schmidt, published a paper in 2009 on XBRL Enabled Social and Environmental Sustainability Reporting.

The pressing need for improved climate change disclosure and reporting is a wonderful opportunity to use a ‘greenfield’ global requirement, one that is not subject to dickering over the harmonization of existing entrenched standards as is the case with ‘accounting’ XBRL, to drive the definition of a new taxonomy that is in every nation’s interest. And the US S.E.C could help to lead the way.

Update: 01 Feb. 2010

SEC Issues Interpretive Guidance on Disclosure Related to Business or Legal Developments Regarding Climate Change.

Update: 02 Feb. 2010

Follow some of the hoo-hah generated by this guidance here.

Update: 03 Feb. 2010

SEC Commission Guidance Regarding Disclosure Related to Climate Change

The financial services industry can rightly be proud of the many innovations it has introduced in terms of the way money can be packaged and sold at a profit – junk bonds and mortgage-backed securities spring immediately to mind. We believed these ‘masters of the universe’ understood what they were doing and had carefully modeled the possible risk and impact scenarios they were creating. And we were all (well mostly all) complicit in going along with it while our 401K and our house price appreciated in value.

But I think Santiago is right. Whether truly deliberate or not, many financial instruments are purposely opaque, and can only be explained by experts – often badly. Which brings me to my point. I’m hoping that President Obama follows up his bonus-culture change with another cultural change proposal for ‘transparency on purpose’.

Basically this works as follows. Whenever someone comes up with a new financial instrument, it can only be marketed if explained by a ‘transparency taxonomy’ that has the sole purpose of preventing ‘opaqueness on purpose’. The transparency taxonomy must also be accompanied by a ‘what if everyone did this’ model that clearly visualizes the effect of this instrument being used in a ‘dominant way’ in a global context.

In fact this model might be a good thing for all product releases: The model for the birth control pill might show a world without children; the model for shoot-em-up video games, morgues full of corpses; the model for the Teenage Ninja Turtles toy, landfills full of plastic. With a quick look at these models we might at least think a little more about what we are buying. But back to transparency on purpose.

Cobblers, I hear you say. With this kind of transparency, who would bother inventing clever, new financial instruments? So reward transparency by granting some kind of ‘copyright’  that creates a commercial advantage for a year or two before everyone piles in. Then we’d all have a time window to be a bit clearer about what it is we are getting into while the impact itself would be more contained.

As Daniel Roberts suggests, considerable political courage is required for initiatives like transparency on purpose. Because it’s not really about data or XBRL it’s about changing a culture. An industry culture I mean – not a Yoghurt culture.

The trouble with some workplaces today is that there is no time for reflection and even when there is, many of us are less than structured in the way we reflect. That’s why models like the taxonomy of reflection are useful. They remind us that serious reflection is hard but also provide a framework for that reflection to make it a tad easier.

Let’s say you’ve just delivered a new financial reporting format to your organization. Try clearing your mind and getting reflective for a moment so you can apply the six levels of the Pappas model to your effort.

1. Remembering – What did I do?

Some of you may well stumble at this first hurdle as producing new report formats under typical corporate pressure may mean that it’s all just a blur. So keep it simple. Just refreshing your memory about the purpose of or drivers for the report may be enough. Don’t get bogged down in trying to recall every step of your report definition line-by-line – unless of course you need a quick powernap (what we in the U.K. call a ‘kip’ or in military parlance, a ‘gonk’) at your desk.

2. Understanding – What was important about it?

I advise a Twitter approach – try to describe what was important about this particular financial report in 140 characters or less. Focus on the delivery outcome  e.g. ‘I made it easier to understand segment reporting in our grapefruit business’ or some such. Do exercise restraint. The phrases ’saved the world’, ‘put an end to poverty’ or ‘who gives a’ should not be part of your 140 characters.

3. Analyzing – Did I see any patterns in what I did?

This is where you cast your mind over other reports you or your team have produced in the past and compare them to your new report to tease out common elements, connections and overlaps. It’s important to do this without the help of artificial stimulants (e.g. Red Bull, salty liquorice, helium etc) as you are not searching for psychedelic patterns.

4. Applying – Where could I use this report format again?

(Pappas actually puts this before analyzing but personally I find it hard to apply anything before I’ve analyzed it.)

Is there another business unit, LOB, department, manager etc. that could use a report like this? Could this report format become a re-usable template to save work next time? Whatever you do, please avoid insisting that your format should be applied everywhere by everyone just because you think it’s awesome.

5. Evaluating – How well did I do?

You can really only figure this out once your report is out there and being used in anger. Somehow you should get some idea of benefit realization from your report. If only to have this documented in that long list of raise-reasons you want to bring to your next performance review.

6. Creating  - What should I do next?

With all this reflective content front of mind, you should be in a great position to spark ideas for new reports that you can propose to your boss/CFO the next time you are invited for lunch in the executive dining room. But be selective. Bombarding them with wacky new report formats every day will only lead to the kind of Pickwickian imbalance in your own personal income statement that is certain to occur when you are fired.

Just to reiterate. Step 6 is the real bonus from  your application of the taxonomy of reflection. So make sure you don’t skip it and just head hi-fiving for the snacks after step 5. But all joking aside, many of us could benefit from the application of the taxonomy of reflection in our workplace, whether as individuals or teams, on a weekly or monthly basis.  That’s why I recommend the taxonomy of reflection to all users of our Crossfire Reporting Platform who want to get the best from Crossfire’s comprehensive functionality.

The 2010 Mutual Fund Risk/Return Summary Taxonomy has been developed as an update to the 2008 Mutual Fund Risk/Return Summary Taxonomy. The updates provided in this release have been developed primarily to optimize the taxonomy for use in the Commission’s previewer and viewer which are currently being updated to support this taxonomy. In addition, other minor technical edits and corrections have been made. However, the element names and content of the taxonomy remain unchanged.

Public Comments Due on December 31, 2009
The SEC staff is seeking public feedback on the draft taxonomy and all other deliverables listed. Companies are encouraged to provide all comments via email to ask-oid@sec.gov by 5:00 pm EST on December 31, 2009.

According to the SEC, upon completion of the public comment period and consideration of the feedback, the taxonomy will be finalized and ultimately made available for use with the Commission’s systems. Indication that the updated taxonomy is available for use will be made via the standard taxonomies page at http://www.sec.gov/info/edgar/edgartaxonomies.shtml.

Rendering Risk/Return Summary Data on SEC Website
The Rendering Guide and the set of sample filings provide detailed explanations and examples of how to prepare the XBRL taxonomy and instance document to achieve desired rendering results.

Since the rendering rules are quite different from the corporate financials, companies should definitely review the rendering guide and the samples carefully to get a good understanding of the best way to prepare the filings.

Here are a few rendered examples:

Figure 1 – Shareholder Fees

Figure 2 – Bar Chart Data

Figure 3 – Average Return Data

If your company is starting to evaluate software/service providers for your mutual fund XBRL solution, make sure the vendor you select fully understands not just the taxonomy, but also the rendering requirements. XBRL is about data transparency, but for the data consumers, an accurate and well-organized report display is almost equally important.