Purpose:
Discuss the 2014 US GAAP Financial Reporting Taxonomy in
detail.
Questions:
What does it mean to my company? How does this work with our
accounting software? Does my company have any unusual disclosures that would
require special treatment?
Information:
The Financial Accounting Standards Board (FASB) is responsible
for ongoing development and maintenance of the US GAAP Financial Taxonomy (UGT).
(Financial Accounting Standars Board (FASB), 2013) The taxonomy has
grown exponentially over the years to more than 18,000 elements providing a
greater level of detail over other taxonomies in use today. (Bartley, Chen, & Taylor, 2010) The latest UGT is
available at this website:
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| US GAAP Taxonomy 2013 |
Each year a new taxonomy (UGT) is developed with recommended
updates from the year prior and has been the case since 2009. “Each new
taxonomy introduces many changes and options that could impact a company’s
custom extension taxonomy.” (Active Disclosure, 2013) Every year the SEC approves
the most current taxonomy after extensive review and announces the acceptance,
generally in the early spring. The SEC adopted the use of the 2012 US GAAP
Taxonomy (UGT) on March 26th last year and prohibited the use of the
2009 taxonomy. (Active Disclosure, 2013) The SEC will start
supporting the 2013 UGT on May 20th and will discontinue its support
of 2011 UGT at that time. (Active Discussion, 2013) This may be the SEC’s
way of forcing companies to update their taxonomies and move away from the many
customer taxonomy extensions to a more unified and comprehensive taxonomy. The
latest version of the UGT contains the following changes and updates:
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| Development US GAAP Financial Reporting Taxonomy |
 |
Development US GAAP Financial Reporting Taxonomy
|
Each year the SEC strives to make improvements to the
taxonomy to help improve the quality of the taxonomy and reduce inconsistencies. FASBA
has made over 4,000 changes to the taxonomy, (Active Disclosure, 2013) this alone will make
implementation or conversion to XBRL a daunting task requiring additional and
comprehensive review of the financial statements tagged.
In 2008 the Securities and Exchange Commission adopted a
phase-in reporting mandate for all public companies to use XBRL format for
their supplemental filings. (Bartley, Chen, & Taylor, 2010) On January 30, 2009
the SEC adopted the rules requiring firms to financial statements in XBRL
format and make them available on their website if they maintained one. (Ly, 2012) From March 2005 to
April 2008 over 75 companies filed their financial documents in XBRL format as
part of the Voluntary Filing Program (VFP) established by the SEC in
preparation for a full implementation of the mandate (XBRL.US) . During this time, of
the companies that filed in XBRL about half the companies implemented the
required changes and tagging through outsourcing to companies that provided
this service. While the other half purchased software and assembled teams from multiple
departments to take up the daunting task devising a plan and implementing it
internally. (XBRL.US)
At this time the mandate is for publicly traded companies
only so non-profit companies are not included in this first round of
implementation. Right now I am a fiscal officer with Indiana University (IU)
and have survived a recent transition from the custom financial software developed
by IU, Financial Information Systems (FIS) to an open-sourced Kuali Financial
Systems developed by Kuali Foundation. This is the foundation’s first open
source financial software for higher education. (The Kuali Financial System: Community-Developed Software for Education,
2010)
Aside from providing a more comprehensive financial system that addresses the
needs of a higher education financial structure, it is able to support XML file
tagging for import and export.
 |
(The Kuali Financial System: Community-Developed Software for Education, 2010) |
I have a feeling that one of the added attractions to
adopting this new software is the ability to use XML formatting with the university’s
financial data potentially lending an adaption to XBRL for financial reporting
standards in the future.
Indiana University is required to file financial disclosure reports
with the SEC, however I do not believe they are required to file in XBRL format
at this time. A list of their reports can be found through the Treasurer’s
Office website at: http://treasurer.indiana.edu/investordisclosure/pubdisclosure_filings.html
The Annual Disclosure
Document relates primarily to the bond issues and includes disclosures
pertaining to the university’s audited financial statements.
 |
| (The Trustees of Indiana University, December 2012) |
There are several areas that would require special treatment
and XBRL extensions through customization simply because of the nature of the
organization. The UGT was developed primarily around Commercial and Industrial,
insurance, and banking financial activities which would not include reference
or tagging for student fees, authorized degree programs, state appropriated or
contract and grant revenue or restricted, unrestricted and general funds. The
UGT would however provide tagging for the bonds and certificates section of the
disclosure statement.
The XBRL
taxonomy is quiet immense and not entirely intuitive, but I was able to locate the
section pertaining to investments and securities.
 |
| 2013 US GAAP Taxonomy |
Assumptions:
The disclosure document that accompanies the financial
statements is lengthy and I really and not able to imagine the complicated task
of tagging all the pertinent information necessary to truly allow for an
accurate analysis by searching in XBRL format to compare organizations across
the industry. However, I can see where the XBRL format would be useful in
internal analysis between all eight of the IU campuses. If the university could
implement an automated tagging system through KFS the process of tagging the
financial statements would be much less daunting than the disclosure documents.
Conclusion:
The US GAAP Financial Taxonomy is a complicated
comprehensive set of elements that do not encompass the vast majority of the
companies and organizations currently filing with the SEC. I can see the frustration
and slow buy-in that companies have exhibited. There would be an enormous
amount of effort expended to comply with the SEC regulations with little ROI
for the university at this point. The benefit would come from early implementation
and preparation through utilizing the KFS open-source software to help automate
tagging and potentially adopting XBRL as a research project to give added
incentive for implementation and adoption by the entire organization.
References:
Active Disclosure. (2013, March 27). Adoption of
the 2013 US GAAP Taxonomy: Are You Ready? Retrieved from
ActiveDisclosure:
http://activedisclosure.com/adoption-of-the-2013-us-gaap-taxonomy-are-you-ready/
Active Discussion. (2013, April 23). SEC Extends
Deadline for 2013 UGT. Retrieved from ActiveDiscussion.com:
http://activedisclosure.com/sec-extends-deadline-for-2013-ugt/
Bartley, J., Chen, A. Y., & Taylor, E. Z.
(2010). A Comparison of XBRL Filings to Corporate 10-Ks - Evidence from
the Voluntary Filing Program. Price WaterhouseCoopers.
Financial Accounting Standards Board (FASB). (2013).
Development US GAAP Financial Reporting Taxonomy. Retrieved from
Financial Accounting Standards Board (FASB) Taxonomy (XBRL):
http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176160285739
Financial Accounting Standars Board (FASB). (2013). FASB
US GAAP Financial Reporting Taxonomy Release Notes Version 2013. FASB.
Indiana University. (2013, May). Investor
Disclosure. Retrieved from Indiana University Office fo the Treasurer:
http://treasurer.indiana.edu/investordisclosure/financials.html
Indiana University. (2013, May). Office of the
Treasurer. Retrieved from Indiana University:
http://treasurer.indiana.edu/
Indiana University Financial Management Services. (2012).
Indiana University 2011-2012 Financial Report. Bloomington: Indiana
University .
Ly, K. (2012). Extensible Business Reporting
Language for Financial Reporting (XBRL FR) and Financial Analysts' Activity:
Early Evidence. Academy of Accounting & Financial Studies Journal
(V16, 2), 25-43.
Lyons, D. (2009, November). Kuali Financial System:
for higher education, by higher education. KFS Basics - KFS Overview.
Kuali Foundation.
Parrish, S., & Horn, K. (2009, November 17-18).
Kuali Financial Systems: Kuali Days Conference. Budget Construction
Presentation. Kuali Foundation.
(2010). The Kuali Financial System:
Community-Developed Software for Education. Kuali Foundation.
The Trustees of Indiana University. (December 2012).
Annual Disclosure Statement. Bloomington: Indiana University.
Wall Street Journal. (2012, November 13). Companies
Grow Weary of XBRL. Retrieved from CFOJournal (Blog):
blogs.wsj.com/cfo/2012/11/13/companies-grow-weary-of-xbrl/
XBRL.US. (n.d.). XBRL and Public Company Business
Information: Case Studies.
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