Thank you for your leadership Patrick!

From a technical stand point we say the DEI, US GAAP, INVEST, and various other taxonomies are separate taxonomies but they are working towards the same end and follow the same specification and filer manual. When Patrick speaks to a single taxonomy he refers to the essence of a singular taxonomy.

My involvement on XBRL International’s Comparability Task Force has made me realize the true difficulty of comparing separate taxonomies such as the US GAAP Taxonomy to the IFRS Taxonomy. You can compare the two taxonomies because they are written in the same language however you have to build assertions sets (ie. explanations between the different methods of accounting) for the different concepts you are reporting. For example, reversal inventory write-down is required if certain criteria are met for IFRS but prohibited in US GAAP. There are also tax implications; when measuring differed tax asset and liabilities in IFRS they use a “substantial enacted” tax rate where as US GAAP uses and enacted tax rate.

Does this comparability extend to government reporting taxonomies? You betch ya, we could even compare performance between GASB and FASB. After a certain point, however, the assertions underlying the data make it less valuable, if valuable at all. It really depends on WHY you are comparing the data.

I think about the many ways people use Twitter to research emerging markets, points of interest, for alerts, to research competition and the list goes on. It all works because there are data points. I am not aware of many government reporting sites that create real data I can consume for free right now. Being a data nerd I guarantee that I would patronize political objectives tenfold if I could get my hands on the data, to really understand what is going on.

The essence of creating one taxonomy, or multiple taxonomies that were designed to work together, is the optimal way for the Open Government and Spending Transparency Reform to succeed. There are many reporting requirements and budgetary monitoring needs to consider before creating a taxonomy for the proposed bill “Digital Accountability and Transparency Act of 2011” short title “DATA Act” right now it is all over my head. But, I do know one thing there are a lot of smart people who understand XBRL, and XBRL is hands down the best language to accommodate this data standard we just need to know all the details.

For those filers planning for 2012 early, you can see advances in the taxonomy as they occur.If you expect an element to be updated you now know it has been updated. You can now see new elements that you can plan to use in the next conversion. Delivering this information early will only empower the industry to have tighter more intuitive taxonomy by the time it is delivered to the SEC for approval.

For example, a client wanted to use the new 2011 EarningsPerShareBasicAndDiluted element but it was modeled as an Instant element on an income statement disclosure. If you go in to the Production Taxonomy on the FASB website and search for the element you will notice that it has been updated to a duration type.

Last year the taxonomy that was released to the FASB revealed the draft taxonomy sometime in October allowing filers and software providers to prepare. We questioned if the FASB would change anything from the draft to the version they would deliver to SEC on January 17th. There were quite a few of these changes (ie changing some datatypes from XBRL US’s us_types to XBRL International’s num and nonnum). Our teams had to wait until it was delivered to ensure accurate support in our software. As a software provider we can now anticipate these changes much earlier. I have also heard rumors that FASB plans to deliver to the SEC a couple of weeks earlier, and the SEC could potentially release the official taxonomy even sooner so filers can file with the new taxonomy Q1 (We’ll just have to wait and see about that).

The FASB also released “ASU Taxonomy Changes” to show filers new Accounting Standards Updates alongside their XBRL counterparts. The first ASU Taxonomy Change is related to ASU -2011-04 Changes to Fair Value (Topic 820). The release also came out with a robust set of release notes and an illustrative XBRL document to show you how updated XBRL concepts are applied to the new Disclosure. You can also comment on the ASU updates through August 9th at which point it will be incorporated in to the Development Taxonomy. Learn more about the ASU Taxonomy Changes.

I know the industry is just getting through with 2011 conversions but the Compliance Managers at Rivet are ready to sink their teeth in to the 2012 taxonomy. Special thank you to the FASB and Taxonomy Advisory Group for all their hard work!

Links:
Production Taxonomy, Source: FASB – view »
ASU Taxonomy Changes, Source: FASB – view »

Thomas Verdin, fellow presenter on the data sharing track at the 23rd XBRL Intl. conference, updated us on the progress of the xEBR taxonomy designed to provide a mapping layer between existing EU business register data from a number of countries (e.g. the eccbso databases BACH and ESD), some of which already provide many years worth of financial performance data for analysis purposes. MONNET is another EU data harmonization project that is focused on the automatic translation of public information to minimize the language barrier when trying to compare data from different countries that is only available in a local and reference language (e.g. English).

• 3000 definition changes remained about the same as in the version delivered to the SEC
• 2500 Data type changes in the taxonomy delivered to the SEC
• 1600 standard label changes in the draft to 1700 in the taxonomy delivered to the SEC
• 540 deprecated elements in the draft to 830 in the taxonomy delivered to the SEC

All that change can be very hard to understand in a single dose. Don’t fret, our team of XBRL Compliance Managers (including myself) are continuing to analyze and prepare for the 2011 taxonomy transition. We are continuing to fine tune our transition utility to ensure a smooth transition for our clients when the SEC supports the taxonomy this spring. Staying abreast of all this change we are able to analyze and create reports to show Added, Deleted (Deprecated) and Changed reporting elements in the 2011 taxonomy. We can create company specific 2011 taxonomies and preserve 2009. For deprecated elements, we analyze and recommend replacement elements for our clients. For changed elements, we highlight what changed and let our clients approve the change. For new elements we have preformed the analysis to enable our clients to easily understand how to implement the new elements in place of extended elements.

Links:

1st Post – 2011 US GAAP Financial Reporting Taxonomy:  Behind the Curtain

Draft Version of 2011 taxonomy

‘Movers, shakers and report makers’ will gather at the New York Stock Exchange for a breakfast event and panel discussion to answer the question “Why is America letting the world lead in sustainability reporting?”

A question that will no doubt puzzle organizations such as Patagonia, Timberland, B Corporations and many others in the USA who are innovating in the area of sustainability reporting without the use of prescriptive frameworks.

If you have no idea what I’m talking about, check out this introductory white paper I wrote back in mid-2010: Sustainability Reporting: Definition, Directions and Challenges.

Making the effort to use reporting frameworks (and I consider GAAP and IFRS to be within the frame of this statement) is only really justifiable to provide the standardization that’s needed for information comparability. But many frameworks are document-based and therefore incomparable without human intervention to find and decompose the data from the documents. So frameworks can end up driving a box-ticking or box-filling activity to create a result that is simply ‘shelved’ – whether physically in a filing cabinet or online as a PDF on a website – until next year.

To its credit, the GRI has an XBRL initiative to create machine-readable, data-centric sustainability reports rather than 20th century human-readable, document centric sustainability reports. But this initiative seems to have stalled, which is a shame because most US companies are not stupid. They perhaps don’t see the point in producing yet another online PDF that is difficult to compare quickly with those of their peers in order to realistically assess sustainability performance and progress – even if it is in a standard ‘GRI’ format.

It may be that sustainability reporting actually only makes sense at the peer group level where an industry or sector within an industry agrees a set of sustainability indicators, taxonomizes them, and proactively publishes and communicates their standardized sustainability data so that automated analysis can be performed to create true apples-to-apples comparisons.

So here’s my suggestion to the GRI for the focus of Focal Point USA.

1. Pick a contentious, front of mind issue e.g. sustainability reporting in the energy sector.

2. Leverage your existing energy (oil & gas) sector indicator set to create a sector-specific XBRL taxonomy limited, say, to a top 20 indicator set.

3. Get some forward-thinking energy companies to work with you to report their sustainability indicator data in XBRL to an online GRI Energy Reporting Hub so that the data can also be verifiable by an external body (e.g. some assurance company).

4. Let the crowd cloud – including people like us – have access to that XBRL data e.g. as an RSS feed, to create the analytic apps that can deliver interesting information from the standardized data set.

5. Repeat this formula GRI sector by GRI sector until you have conquered the world.

That’s the way to get the attention of those US businesses that genuinely want to report in a transparent and standardized way so that they, and all their stakeholders, can benefit from using 21st century tools and techniques to improve their sustainability performance. Not just publish a PDF.

Such is the fate of those of us who labored to learn the 2009 US GAAP Financial Reporting Taxonomy. In total, more than 4800 XBRL financial reports have been submitted to the SEC using this set of rules and definitions.  In 2011, the game twists with the introduction of a new taxonomy that includes more than 4000 changes of all shapes and sizes:

• Deprecation due to “essence-alias”
• Changes from “domainItemType” to “stringItemType” and from “stringItemType” to “textBlockItemType”
• “Dimensionalizing the effect of new accounting pronouncements”

These terms come directly from the FAF 2011 taxonomy draft release notes, though they read more like a foreign language or computer code. They can be confusing and intimidating, no matter how thorough the FAF documents the changes. The guidance and documentation are not easily consumable either. You can review the proposed changes HERE, where you will find six Excel files with at least four worksheets, each overflowing with a horde of element names. Overall there are 2200 definition changes, 1600 standard label changes, 500 deprecated elements, and 1900 new elements.

Analyzing and preparing for these taxonomy changes is not for the faint of heart. In fact, it’s probably not a great use of your time unless you happen to be employed by an XBRL vendor. At Rivet Software, there is an entire team of XBRL Compliance Managers (including myself) who have been analyzing and preparing for the 2011 taxonomy for months. Our goal? To make the transition as seamless and pain-free as possible for our clients.

Our technology team has also been pivotal in preparing our software for the transition. We will be able to direct our clients to the specific changes that affect their company’s taxonomy, and present choices in a very intuitive and user-friendly way.  This is very much in line with our tech mantra of “making complex processes seem simple.”

Next week I will be presenting a webinar available to the public:  “2011 US GAAP Taxonomy Appetizer” where I will go into further detail about how companies can prepare to transition their taxonomies for the upcoming changes.  This event is free, and you can register for it HERE.

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…