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XBRL's Global Ledger Framework: Exploring the standardised missing link to ERP integration

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Abstract

With the January 2009 mandate by the US Securities and Exchange Commission of Interactive Data, as well as other governmental mandates and opportunities for compliance burden reductions globally, the Extensible Business Reporting Language (XBRL) is becoming a more common and necessary part of corporate governance and compliance. Due to this external pressure, as well as the primary focus of XBRL advocates themselves to encourage governmental adoption of XBRL for compliance reporting, another important deliverable from XBRL International, Inc. – XBRL's Global Ledger Framework (XBRL GL) – and its obvious and immediate benefits to organisations has been given much less visibility than the external focused efforts; however, XBRL GL has the potential to bring more measurable benefit to companies, in addition to helping support the benefits regulators and the markets receive from more transparent external reporting. XBRL GL serves as a metadata hub (to facilitate system interoperability), as a common face to data from different systems (facilitating common toolsets and controls) and as a tool to enable a seamless audit trail, spanning gaps between systems. XBRL GL seamlessly integrates incoming transactions and external facing reports, acting as a bridge, a single, holistic, generic view of data. While companies can continue to choose proprietary approaches, and while the XBRL Specification itself is sometimes used as the basis for those approaches, it is a proper combination of XBRL GL with XBRL for external reporting that may offer the greatest benefit to companies. While XBRL GL has some obvious potential benefits, the risk to companies and to the market as a whole is that lack of adoption of XBRL GL will lead to a proliferation of proprietary standards at different points in the Business Reporting Supply Chain and for different consumers, such as the world's tax regulators, leading to more confusion and burden instead of providing holistic solutions that provide benefits for all. Those responsible for corporate governance have a responsibility to make sure that interoperability solutions are being chosen with an eye on long-term value, and not just the easiest solution in the short term.

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Correspondence to Eric E Cohen.

Appendix

Appendix

Technical backgrounder on XBRL GL

XBRL's GL Framework can represent the data that are represented in a typical ERP system, from detailed representations of incoming trade documents to trial balances and final summary representations.

Examples of XBRL GL in use are available at the Global Ledger Practices Guide for Study, or GaLaPaGoS, at http://gl.iphix.net.

A reusable structure

Every XBRL GL instance is based on XBRL GL's reusable structure:

1. It is an XBRL instance document, which

2. Contains one to an unlimited number of groupings of data, delimited by the tag <gl-cor:accountingEntries></gl-core:accountingEntries>,

3. Each of which represents a similar batch of information, which is communicated through the tag <gl-cor:entriesType>.

There is a fixed list (known as ‘enumerations’) of common types of batches of information, such as a trial balance, an account list (which is a much broader category of items than people may first think), an asset listing (of things that tie to a trial balance, for example) and journal entries.

Those batches can work together; a listing of some kind of transactions in one accountingEntries batch can be associated with the inventory item master file, represented by another accountingEntries batch, and with the customer master file, as represented by yet another accountingEntries batch, all within a single XBRL instance document. This permits the producer of the file to choose to normalise the data more (separating it into separate topic specific batches) or denormalise the data into one monolithic batch.

4. Each accountingEntries structure can also contain the information about the organisation whose data are being reported upon, including various codes by which it is known to different authorities, addresses, primary contacts, types of reporting and reporting calendars. XBRL GL is unique in its ability to be used for reconciliation, as we already saw with one structure shown back in Figure 2; it can also track by design the difference between permanent and timing differences, important for tax reconciliations.

5. The batches of data are then included in <gl-cor:entryHeader> tags, which store information related to batches of similar information, such as the source journal and who made and authorised the batch of entries, and then holds any necessary detail lines of information, in <gl-cor:entryDetail> structures.

6. It is at this detailed level that important building blocks are associated. Information about underlying source documents (what type of document, document number, document date, due date if applicable and even where that document can be obtained right now), the parties (customers, vendors, employees and others) that are associated with the detail, the resources (inventory, supplies, services, fixed assets, key performance indicators and others) that are consumed, exchanged, used or tracked, jobs, taxes and accounts are tracked at this level.

We saw back in Figure 5 that XBRL GL has a sophisticated account (and subaccount) structure; the reusable structure for parties is shown in Figure 7, with its many substructures collapsed for brevity's sake. The resources structure can track resources and associated information whether numeric (for example, 5000 cycles), qualitative (‘satisfactory performance’) or time constrained (operated from 0500 hours EST to 2000 hours EST).

Figure 7
figure 7

Customers, vendors, employees and others.

Reusing the building blocks

To see XBRL GL at work – how XBRL GL represents the data in ERP systems from ‘first transaction through to end report’, leveraging the extensible framework and the reusable building blocks, I have illustrated four different groupings of sample ERP data:

  1. 1

    A ‘setup’ file;

  2. 2

    A master filer;

  3. 3

    A mapping file; and

  4. 4

    A trial balance

Setup files

Setup files are foundational files in business systems. These files tend to ‘stand alone’ – not rely on other files, but define codes that other files – in particular master and transaction files – will reuse.

Through different combinations of the building blocks and related enumerations to guide the way, XBRL GL can be used to represent setup files, such as this extract from a reporting period file, with the content represented here, followed by its representation with XBRL GL.

Reporting calendars are established for a number of purposes. They help users validate that transactional entries are entered into appropriate reporting periods, as well as to help summarise reports into different time buckets for different reporting purposes.

A reporting period data entry screen might look like the following:

illustration

figure g

The same information can be represented in XBRL GL. The relevant information is specifically expressed using the standardised reporting period structure.

illustration

figure f

Master files

A master file is similar to a setup file, although they often rely on setup files for standardised codes. Examples of common master files include customers, vendors, employees, inventory items, jobs and fixed assets.

In this example of a snippet from a master file, there is information from a fixed asset file, representing a specific fixed asset, its default general ledger account and that it is here primarily for tracking its depreciation for IRS purposes:

illustration

figure e

The XBRL GL representation of this data leverages the measurable structure, which tracks inventory, supplies, services, intangible assets, key performance metrics and – as illustrated here – fixed assets.

illustration

figure d

Mapping file

A mapping file associates something with something else – simple enough. Common in many ERP systems, a mapping file might associate a customer with the products they routinely purchase, a vendor with the goods management has determine can be purchased from them, or the accounts used for US GAAP with their counterparts used for IFRS reporting.

XBRL GL is unique in its ability to associate an account or a transaction with multiple end reporting concepts, as captured in XBRL taxonomies or other XML schema reports, such as those defined by the US Internal Revenue Service.

For example, a company may wish to store for later use a mapping file that indicates that their primary cash account (account 1000, entitled ‘Cash and deposits’) should be summarised to the Canadian GAAP concept ‘CashCashEquivalents’ as defined in the Canadian GAAP taxonomy40 but – if creating an IFRS report instead – would summarise to the IFRS concept ‘CashAndCashEquivalents’ found in the IFRS taxonomy.41

This mapping can be represented using XBRL GL, as expressed in this snippet of XBRL associating an account with multiple end reporting concepts:

illustration

figure c

In the above example, if you omit the account structure, you find an equivalency of sorts being represented in the relationship between the Canadian GAAP and IFRS taxonomies.

Trial balance

The last example I will provide here – but not the end of the road necessarily for XBRL GL – is a traditional trial balance. XBRL GL can be used to easily represent simple trial balances – with the ending balance only – or more elaborate trial balances with beginning balances, period changes and ending balances.

A trial balance, expressed in Canadian dollars, that looks like this:

illustration

figure b

illustration

figure a

Journal entries and simple trial balances are very similar – a starting trial balance is often created through a single journal entry.

A wide variety of additional representations taken from a typical accounting system, with representations ranging from detailed transactions through various summaries, such as ‘Job Costing summary, actual versus budget’, can be found at GaLaPaGoS.42

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Cohen, E. XBRL's Global Ledger Framework: Exploring the standardised missing link to ERP integration. Int J Discl Gov 6, 188–206 (2009). https://doi.org/10.1057/jdg.2009.5

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