Five axioms and the future of tagging Miklos A. Vasarhelyi KPMG Professor of AIS Rutgers Business School Senior Technology Consultant AT&T Laboratories University of Kansas April 24, 2009
Dec 28, 2015
Five axioms and the future of tagging
Miklos A. VasarhelyiKPMG Professor of AIS
Rutgers Business School
Senior Technology ConsultantAT&T Laboratories
University of KansasApril 24, 2009
2XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Outline
• Introduction• 5 Axioms• Additional considerations• Conclusions
3XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Knowledge and Structure
Tabular num
erical Inform
ation
Free S
emantic
Form
at
Structured sem
antic form
at
Tagged detailed S
emantic
Information
Tagged C
oarse Sem
antic Inform
ation
•Understandability•Automation understandable•Expressing complex concepts•Comparability•Structured storage•Globality•Expressing Nuances•Paucity
Measuring Business
Expressing Complex Concepts
4XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Outline
• Introduction• 5 Axioms• The educational context• Additional considerations• Conclusions
5XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Axioms
• Tagging will force substantial standardization of reporting
• Tagging will create a language of its own• Tagging will lead to greater granularity of
data• Tagging will accelerate the route to
continuous reporting• Universal tagging will follow tagging by
sectors
6XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Axiom 1
• Tagging will force substantial standardization of reporting– Extension taxonomies will be viewed negatively as presenting
lack of transparency– IFRS dialects will present the apples and oranges of
measurement in the global context– Foreign currency conversion will make these substantially
more complex– Prior to the 2nd wave there will be rationalization of mandatory
reporting structures (expanded Dutch model)
7XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Axiom 2
• Tagging will create a language of its own– There will be a move towards taxonomy recognized utterances
limiting the types of information to be added to annual statements
• Focus of education will be on this dictionary• Data elements within the ERP will dominate this dictionary• Simple semantics will eventually prevail
– Predefined quantitative metrics will dominate over semantic utterances or ad-hoc measurements
• Computation of these metrics will be core to teaching but somewhat irrelevant as they will be provided by software and the formuli (calculations) in the structure of the taxonomies
8XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Axiom 3
• Tagging will lead to greater granularity of data– The mapping of corporate statement data and ERP structures
will substantially increase allowing time sequential disclosure without manual manipulation
– Traditional limitations to the quantity of data are rapidly disappearing in the free storage and cycle area
• The difficulties are more in the willingness of management to provide transparency under the guise of competitive impairment and on the existence of obsolete, incompetent, and misguided legislation
– E.g. aspects of reg FD and Sarbanes Oxley
9XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Axiom 4
• Tagging will accelerate the route to continuous reporting– Tagging will allow low cost continuous repetition or “addition”
to existing statements– Statements will be very different in format / a new type of
annual report with accounting principles focusing on atoms of data not reports
– Hyperlinks to “external” sources of data will be increasingly found in the corporate information portals
– Variable information update periods will be prevalent on the information portals
10XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Axiom 5
• Universal tagging will follow tagging by sectors– There are over 400 groups generating XML derivative
standards to create system interoperability– There has been little effort to create coherence in these
standard to void obliquity of data structures– There will be substantial societal costs to bring together these
standards in the 2nd wave• 1st wave: development of many sectorial interoperability standards• 2nd wave: development of mapping and coherence of these
standards• 3rd wave: development of clustering standards for
macrointeroperabily
11XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Outline
• Introduction• 5 Axioms• Additional considerations• Conclusions
12XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Financial Statement Presentation
• Purely electronic and a part of a wide corporate information portal– The question is who controls this portal: the firm or value
adders such as Bloomberg / Edgar Online– Consequently students will have to have analytical skills that
involve gathering and managing data from different sources– In particular accountants will be more like the financial
analysts of today as opposed to bookkeepers
• Standard setters will eventually focus on the content /comparability of data provisioning by companies as format will be irrelevant– Consequently students will have to have skills of data
integration and decision support
13XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Information Theory Reapplied
• Valuation bases can be reinstated (fair value)• Decision relevant bases must be created and kept
updated – exit values, market values, competitive position valuation, price level valuation, etc
• Tradeoff of information provisioning must be changed and re-evaluated frequently
• For the students– Improved expertise in archival search– Substantial training in valuation / appraisal – Understanding of information versus decision context– Obsolescence of substantive part of the current curriculum
14XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Better Data and Better Analytics
• Should accountants be the providers of data or analytics?
• Should accountants be involved in strategy setting?
• Should accountants be designing ERP systems?
• Should accountants be designing ERP information structures?
• Should accountants be designing the tens of thousands of ERP reports?
15XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Outline
• Introduction• 5 Axioms• Additional considerations• Conclusions
16XBRL Research Symposium – University of Kansas - Miklos A. Vasarhelyi
Five axioms- the future of tagging
Will tagging prevail?Inevitably!!!• XBRL is infrastructure therefore will eventually be
forgotten • Measurement structures will be affected by a
feedforward effect – Granularity– Pressure to comply– Standardization
• Who has dominance? Business prevailed in the last decade government will have an upper hand for a while
• Integration of reporting structures – a la Dutch Effort
• A conspiracy theory– Democratic forces favor heterogeneous reporting structures
and porous controls