As the blog post points out, a 2007 Journal of Accountancy article highlights an early adopter of XBRL reporting – United Technologies Corporation (UTC) – who clearly explain their current and anticipated quarterly 10-Q reporting process. The first point to reiterate is that producing a 10-Q has never been a push button process. Data is aggregated from a number of sources and must be collaboratively validated before being compiled into a report filing that combines both financial and non-financial data and is re-formatted for online submission.

The data sources are ERP systems and a range of other organizational systems.  In large organizations, financial data is typically ’staged’ within a consolidation reporting system and non-financial data staged within something else (e.g. a Word document in UTC’s case). Then all this data is combined together, and formatted  and converted for submission to EDGAR.

Provisioning staging applications like consolidation systems generally depends on a pre-processing step called ETL – extract, transform and load. In the XBRL world, even if data was already tagged down in some ERP general ledgers using XBRL-GL, there’s still no way that all incoming data would be tagged. So tagging either becomes part of the ‘transform’ (i.e. pre-load) step of ETL or the acronym expanded to ‘ELTT’ to accommodate post-load tagging of untagged incoming data in the reporting application itself.

Now if you can cut a step out of this process by removing the need to stage data in both a consolidation reporting application and a Word document then this single-step submission staging should save time and effort and reduce the potential for error. But given that a new process requirement is introduced, XBRL tagging, some of that time will be clawed back by demands of the ‘enhanced’ process. Even so UTC estimated 145 hours of saved time or c.17%.

In this situation, the focal point for process savings becomes this single submission staging area – the reporting application that both gathers data from disparate feeder systems and prepares it for submission as a 10-Q. If this application is not fit-for-purpose then clearly any process savings will be eroded. That’s why it’s important that the reporting tool has been designed for the XBRL world. A world in which incoming data may already be XBRL-tagged, post-load tagging of non-XBRL data is efficiently managed and report output options are designed to make filing 10-Q submissions and complying with all aspects of the S.E.C. mandate as easy as possible. In other words what Rivet’s Crossfire was designed for. You can find out more here.

The benefits include the ability to create a report in seconds that can compare your company to all of the companies in your SIC groups or specific companies that you consider peers/competitors. Users create this report with three simple clicks.  They drag on the statement from the base elements.  They drag on the calendar.  They then drag on the SIC they want to see.  After performing some optional formatting, you can produce a report similar to the following but for your industry.

Another example is where you want to create a report only showing you 2 or 3 selected competitors.  This report is twice as hard as it takes 6 clicks.  Drag on the reporting elements, drag on the calendar. And then drag a company into column C, column D, and column E. After performing some optional formatting and adding excel charts and graphs, you can produce a report similar to the following but for companies you selected.

Rivet provides the ability to get at the data and bring this data into Excel.  Once the data is in Excel, we all have Excel gurus who can do magic with the data at this point.  We have had customers tell us that they never knew it could be so easy to gather so much data about their competitors in such a short time.

Our customers can also pick a single company and with a single click, see their specific filing including the income statement, balance sheet and the ability to see notes and disclosures.   Users can do this with a single click.  Select the report or disclosure for a company and then drag it onto the grid.

So the next time you hear somebody remark that they do not see the benefit of XBRL, you will know  they have been focusing on tagging and not the simplicity of analyzing data with the right product.  Rivet’s solution can turn a task into opportunity for companies to be globally competitive.

Actually, with Rivet’s Crossfire product, customers are creating these reports during the demo and then with our relative date features, the report updates itself whenever there is a new filing on the SEC website.

I have done a lot of demos in my day.  I have attended many seminars where they say you need to get the customer involved.  Well we have taken this lesson to a whole new level.  Lauri Harrison, our Director of Marketing, watched a demo and heard a customer remark that report design looks so easy.  She made a suggestion to me that we pass control to the customer and allow them to create reports during the demo. Within a few seconds, customers have created reports similar to the following.

I must say that I was a little skeptical at first.  I was thinking that customers would never accept control, but to my surprise, over half of the customers have taken me up on the offer.  It is very interesting, because after we show them the basics, we let them determine what data they want to see and then we just tell them where to click.  We have had clients create reports like the one above.  We have had clients see a competitor and tell us they want to see more about that company. We have had clients consolidate extended elements with base elements.  We even had one client, who just simply wanted to read through every disclosure about a competitor.

It has been a lot of fun.  I am usually scheduled for 10 to 15 demos a week and I have never like canned demos.  This way of demoing is as far from a canned demo as you can get.  You never know what or where a client will click.

The next time you are curious about how other companies are performing.  Schedule a Crossfire demo with Rivet and see how easy it is to find out about your competition.  It only takes a minute and you can be in the driver’s seat.

Footnote exhumation means surfacing the footnotes associated with an SEC XBRL filing. You can already view the text of XBRL tagged footnotes in CrossView – for example the screenshot below shows a note from a recent quarterly filing by Apple noting the costs of Steve Job’s private jet use.

But in Crossfire you can set text-based rules to do the digging for you and automatically surface notes that are of specific interest to you. So if you were tracking corporate yacht use, then using the term ‘yacht’ as a search term for a rule could have dug up the fascinating footnote that Michelle found:

InfoGroup saying the cost of the yacht for former CEO Vinod Gupta was really $873,078 instead of the zero that it had previously reported.

I think we’d all like to know where to buy yachts for $0!

Obviously surfacing footnotes is not only about trains and boats and planes, there’s lots of treasure buried in them thar footnotes. Some of which – like deferred revenues or litigation – might be directly relevant to your business, your supply chain or your competitors. The good news is that now this information can be a lot more transparent thanks to XBRL, CrossView and Crossfire.

This is a sentiment that I hear over and over again from folks working in the modern corporate world. That’s why I can understand how the recent XBRL mandate can be positioned as part of a long list of regulations that turn accountants into law enforcers. But this assumption severely undermines the ability of XBRL to transform the financial reporting and analysis inside an organization; XBRL isn’t only about financial transparency for outsiders or Street analysts, it’s about the financial transparency within an organization.

The XBRL mandate is here, though, and the first step is to ensure compliance with the SEC. But we at Rivet also know the extraordinary benefits that XBRL can have for an organization. That’s why our Solution for SEC Corporate Filers minimizes the compliance burden and maximizes the benefit for an organization, all while keeping the customer in control.

One concern that comes up frequently from our clients is how to really be sure that the XBRL files produced will be blessed and accepted by the SEC. The validation tool in our product happens to be a beneficiary of Rivet’s 5 years and 100,000+ hours of experience with XBRL. Rivet’s developers, QA team and Professional Services team have been meticulous in their research and integration of the EGDAR manual and XBRL specifications. I have even seen one particular QA Manager with the EDGAR manual on in her kitchen! The validation tool in the Compliance Package runs the documents through three levels of validation: XBRL 2.1 specifications, EDGAR requirements and taxonomy calculation. And because the Crossfire products are web delivered, any updates from the SEC or XBRL US are quickly integrated into the validation tool and no software updates or installs are required by the user. This is just one of the ways that the Crossfire Financial Reporting Platform aims to make accountants’ lives a little easier.

I have also heard again and again from clients that while undergoing the XBRL vendor evaluation process, they couldn’t help but wonder if and how XBRL could be beneficial for them. Rivet has a way to make XBRL work for you. The Compliance Package includes an easy to use Excel add in which allows the user to pull all XBRL filings to the SEC into a spreadsheet to slice and dice to the heart’s content. Within seconds (not hours), our customers create KPIs, benchmark reports or any other kind of analysis one can think of. They can compare an internal quarter filing to competitors’ before it even goes live. They can create bar charts in Excel using publicly filed data without ever having to comb through their own or a competitor’s financials. In fact, Crossfire emails them an alert any time a particularly interesting data field is updated. Seriously!

Rather than becoming a compliance burden, the XBRL mandate has allowed Rivet’s clients to drastically improve and revolutionize their internal reporting processes, leaving them more time for analysis. With all of the slicing and dicing made possible by Crossfire, I might get that MBA in accounting after all.

A good internal audit department audits based on risk. A risky area, say derivatives trading, deserves a lot more attention from internal audit as opposed to a non-risky area, like marketing. However, internal audit needs information in order to assess risk. If they can’t assess risk, they end up auditing areas that don’t really matter and miss out on the areas that do.

In a large organization, internal audit will be choosing from a diverse set of risks such as:

• risk of financial statement misrepresentation
• lawsuits deriving from illegal hiring practices
• bribery charges stemming from a foreign operation
• purchasing managers colluding with suppliers
• inventory shrinkage
• rogue traders
• a lack of a disaster recovery plan for critical IT systems

The list could go on and on since each part of the organization has its own set of risks.

So the question is how to determine where to allocate audit resources in order to mitigate these risks. Getting a global vision of the activities that require internal audit’s attention is a transparency problem. This is one of the very things XBRL is excellent at resolving. By creating a taxonomy of relevant data points, then collecting that data and tagging it with the proper elements, one can create a data warehouse of risk related information that can then be used by internal audit to make effective decisions.

One such project has been initiated by OCEG (http://www.oceg.org/Details/GRC-XML). OCEG is a non profit organization dedicated to providing standards and metrics for governance, risk management, and compliance (GRC). The organization announced in September 2008 that they would be developing a taxonomy dedicated to GRC. While I’m unsure of the status of the taxonomy at this time, the other tools to make this a reality are available now.

I imagine the workflow of an XBRL savvy internal audit department would be something like this:

1. Create XBRL enabled interview templates for the initial data gathering stage. These would be questions designed for managers representing each core function of the organization.
2. Conduct phone interviews and fill in the templates with the appropriate responses.
3. Create instance documents from the templates (an instance document consists of the business facts being reported, and a collection of the taxonomies which define metadata about these facts, such as what the facts mean and how they relate to one another).
4. Load the instance documents into a data warehouse.
5. Analyze the results.
6. Select the area considered to be the most deserving of internal audits’ attention.
7. Perform the audit using the normal procedures, but any data produced from the audit would be captured using XBRL.

Of course, there are many details to be hammered out but this gives a general road map of how it could be done and yes, it can be done today. To give you an example of the tools that are available for using XBRL for whatever purpose you think is appropriate, I was interested in gathering economic data to get a feel for the economy. I wanted to see if the United States was pulling out of the current recession so I gathered leading indicator data from several sources (the Bureau of Labor Statistics, the Census Bureau, the Federal Reserve, etc). Of course, this data is not in XBRL format (maybe someday!) so I created elements for this data by extending the US-GAAP 2009 taxonomy using Rivet’s Crossfire Preparer. I then, in Crossfire Preparer, created a template (a template basically looks like an Excel spreadsheet but contains all the metadata needed to describe each fact) and imported the data from Excel. At that point, I created an instance document. The instance document was loaded into Rivet’s Crossfire Analyst (our data warehouse) and from there I could easily analyze the data however I wanted and even combine it with data from SEC filers. It was probably eight hours of work, including the data gathering piece which includes data going back to 1995.

I know these things can be done without XBRL, but the beauty of XBRL is the standard taxonomy that enables data to be defined and shared across departments, organizations, and system platforms. In the internal audit scenario, once a well-defined taxonomy, which includes all the necessary concepts and relationships, is developed, the data and the meta-data can be shipped all across the organization and each consumer of the information needs only an XBRL viewer to digest the information (however, tools like Crossfire Analyst make it much easier to analyze the data). XBRL is taking hold in a business-to-government setting. It’s time it took hold in an intra-business setting too.

The new tagline reflects two key messages: That Compliance is just the start of a journey towards financial transformation of your business and that Rivet’s Crossfire Reporting Platform will support you on every stage of the journey.

Here at Rivet we like to think that every CFO or Controller can be a financial transformer – someone with both the strategic grasp and tactical grip to change the way an organization manages business performance. We see executing this financial transformation as a journey where the destination is active participation in a global financial ecosystem that benefits all participants.

In the USA, the journey begins with compliance. The SEC mandate for filing financial information in XBRL format can be viewed either as an unwelcome burden or an opportunity. It’s undoubtedly a burden, adding extra effort and cost to the filing process, but it’s also undoubtedly an opportunity to standardize financial reporting, improve transparency and benefit from an expanding universe of like-for-like performance data to compare against.

The ‘big idea’ behind the SEC’s mandating the use of taxonomy-based reporting was not that the journey would stop there – with compliance – but that having done the hard work, business filers will create a new financial ecosystem that they and other stakeholders can benefit from. An ecosystem based on standardized information formats and a new information communication channel.

By control we mean taking control of this new financial information format and communication channel by using it as the means to better analyze your financial performance both internally and against national, and eventually international, industry peer groups. For the first time you will have taxonomy-based financial reports that mean the same thing and can be reliably compared and contrasted with some confidence – not a just a bunch of spreadsheets. So it’s not only easier to compare and contrast against your own previous or projected period reporting but also against the reports filed by your competitors and peers. Control also means having the ability to streamline the financial reporting process utilizing XBRL-GL format and finally be able to unify various data sources under the same reporting framework. Finally, the control belongs to end users, not the IT group.

By communicate we mean making your business more transparent to all your stakeholders – whether they are regulators or investors, partners or customers. The opacity of the financial services sector and the banking industry in particular has precipitated the greatest financial crisis the world has seen in living memory. Transparency is no longer a game or a nice to have it’s something the global economy needs in order to survive, to enable businesses to start and grow, to keep people like you and me in work.

This comply, control, communicate journey won’t take place overnight. As the slide below shows, it involves lots of collaboration and thoughtful effort. And the destination may never be fully realized. But having set foot on it, you might as well put your best foot forward.

Journey Towards Financial Transformation