Tutorial on Best Practices Presented at the: IX European Banking Supervisors XBRL Workshop & Tutorial In: Paris On: 29 th September 2008 By: Ignacio Boixo.

Tutorial on Best Practices

Presented at the:

IX European Banking SupervisorsXBRL Workshop & TutorialIn: ParisOn: 29th September 2008

By: Ignacio BoixoMember of CEBS XBRL Network

Why Best Practices?

Interoperability in CEBS environment

Basel II, IAS/IFRS …

EC 2006/48 & 49 …

Country 1

Sup 1

Report 2Report 1

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Country 3Country 2 Country 27

NCB 2 FSA 3 Sup 27

Report 27

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Report 3

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National Regulation

Transposition into national Legislation

European Law9X,XX% best practices + EU requirements

National Implementation

XBRL challenge!

Global best practices

Stack of definitions

Legislation Parliament and International Bodies

Bu

sin

es

s

Guidelines Banking Supervisors

Data description CEBS COREP&FINEP Networks

Taxonomies CEBS XBRL Network

Info

rma

tion

Tec

h.

Best Practices Best Practices Board

Format XBRL Standards Board

Communication and Security

W3C, ISO…

Standards, Proprietary and Interoperability

A Proprietary IT, used in a Proprietary mode, is not expected to be interoperable with others

Minitel (pre-Internet hierarchical web)

An Standard IT, when used in a Proprietary mode, is rarely interoperable with others

Standard .jpg images when containing business reports

A Proprietary IT, even used in a Standard mode, only interoperates with its more or less large perimeter.

Proprietary features of MS Internet Explorer

A Standard IT, when used in s Standard mode, MAY BE a Standard Implementation

HTML pages after passing the W3C validation, as www.corep.info

Corollary

The Standardization MUST BE applied to ALL the Layers of the Stack, as pre-requisite to preserve the Interoperability.

Cross-fertilization in Best Practices

XBRL International

Best Practices Board

Standards Board

Software Interoperability

Taxonomy Architecture

Reporting Processes

Project Management

XBRL Europe

EU Liason

Technical WG

Marcomm

Bylaws WG

CEBSExpert Group on Financial Information

Subgroup on Reporting

XBRL Network

FINREP Network

COREP Network

AuditabilityAudit is over a set of facts PRESENTED in a specific view, not over each individual fact

XBRL Instance Document contains facts; the presentations may change

5362

5163

5261

7382

7183

7281

1322

1123

1221

3342

3143

3241

53

62

51

63

5261

73

82

71

83

72

8113

22

11

2312

21

33

42

31

43

32

41

Auditor Stamp

PDF file

XBRL instance

Spanish Securities Solution

TraceabilityWho and when has reviewed each fact?

XBRL facts are to be used in different reports. How to track past audits?

5362

5163

5261

7382

7183

7281

1322

1123

1221

3342

3143

3241

53

62

51

63

5261

73

82

71

83

72

8113

22

11

2312

21

33

42

31

43

32

41 Auditor Stamp

Supervisor Stamp

81 Auditor Stamp

42 Auditor Stamp

Tax Stamp

13 Auditor Stamp

Tax Stamp

Supervisor Stamp

1322

1123

1221

3342

3143

3241

1322

1123

1221

Tax Stamp

Precision and rounding threshold: Problem

XBRL manages the precision mainly with the decimals attribute, indicating the position of the last rounded/truncated digit, ignoring the right-following digits.

XBRL interpretation of the actual sequence 4,444,444.4444444444

4,444,000.00 Decimals=-3. Thousands

4,444,444.00 Decimals=0. Integers

4,444,444.44 Decimals= 2. Euros and cents

4,444,444.4444 Decimals= 4. basic points (percentages)

4,444,444.4444444444 Decimals=INF. Absolute precision

4,444,000.00

4,444,000.00 4,444,000.00

4,444,444.00

4,444,444.00 4,444,444.00

4,444,444.44 4,444,444.44 4,444,444.44

4,444,444.44… 4,444,444.44… 4,444,444.44…

13,332,000.00 13,333,332.00 13,333,333.32 13,333,333.33…

Where should be the rounding threshold for validations?

Precision and rounding threshold: Consequences Each Supervisor may choose a proprietary precision and, therefore, a rounding threshold

Definitions at European Level MUST be developed for all the possible combinations. Formulae exacerbates this consequence.

Each cross border filer must obtain a different set of figures, according the precision required by each Supervisor, and therefore a different DataBase.

Valid XBRL Instance Documents for a Supervisor will be invalid for other using different precision

Interoperability seriously challenged if not an agreed Best Practice.

Two decimals and rounding threshold in thousands as an initial discussion basis?The last but not the least:

How to deal with the inequation 1.00 > 1/3 + 1/3 + 1/3 when decimals=2?

exact value

1000

1000/1 Mio

not predefined

Precision and rounding threshold: questionnaire

precision decimals not predefinedNumber of countries 1 8 2

precision

decimals

not predefined

exact value 1000 1000/1 Mio not predefinedNumber of countries 5 3 1 1

XBRL provides two methods of communicating the precision of a numeric fact: precision or decimals attributes. a)      Have you specified for your reporting institutions which method is to be used?

b)      Have you predefined an accuracy of the data to be reported, i.e. in two decimals or thousand or million or as exact monetary amounts?

Precision and rounding threshold: questionnaire

unique

variable

c)       Do you handle minor rounding variations with a unique threshold or with variable threshold/s?

d) Do you use additional solution/s to handle rounding differences?

2 countries explained that margins on calculation rules are specified (NL, PL).

1 country uses a unique percentage that applies to all calculations (FI).

unique variableNumber of countries 5 4

Other “tricky” points (from COREP/FINREP e-mail lists)

Definition of 'Zero' (answered by Walter Hamscher on 2008-07-07)

As zero

As a Blank

As Nil (XML)

Whitespace and carriage returns in Instance Documents. (discussion on 2008-06-06)

Other points not yet raised?

Dimensional Taxonomies

Both scenario and segment are dimensional containers, according XBRL 2.1 Specification. Their simultaneous use may complicate even more the dimensional intricacy. Why not use only scenario for dimensional stuff?

Topics related to hypercubes

Hypercubes structure, All and notAll combinations…

Topics related to dimensions/domains/domain-members

Canonical expression of Hypercubes, elements and correlated stuff

Topics related to presentation relationships on dimensional artefacts.

US-GAAP taxonomy as example

Intellectual Property Police: aspects

Security aspects

Authentication: XBRL Taxonomy has issued by the competent authority

Integrity: XBRL Taxonomy has been not modified.

Confidentiality: Not applicable for Taxonomies, only for Instance Docs.

Non repudiation: Competent authority issuing the taxonomy should correspondingly accept the Instance Documents.

Financial aspects

Protecting the significant amount of money, resources and talent has been invested in the development of any XBRL taxonomy

The use of XBRL taxonomy work will be royalty free.

XBRL consumers MUST be protected against any financial claim (even based on legal subterfuges) for the use of XBRL specifications and XBRL taxonomies.

Intellectual Property Police: Methods

Patents: Ideas may be patented in USA, but not in Europe

RSA cryptographic algorithm is patented in USA, but free in Europe

All the working group meetings in XBRL International start with a patent declaration as a preventative measure.

Copyright: International method to protect intellectual property

Open Source projects usually requires permission for modifications, but XBRL taxonomies are to be extended, NOT modified

Trademark: International method to protect and specify name or acronym

XBRL, COREP and FINREP are Trademarks, to protect their fair use.

Moral Rights: Legal duty on reputation. Authors MUST be credited.

Most software companies claiming against piracy, simply ignore this obligation

Stakeholder Management

Categories of Stakeholders

Vendors, Commercial End Users, Government Entities, Individual Practitioners, Universities and Academics, Individual Consumers

Taxonomy Ownership

Legitimacy and authority of the taxonomy's contents

Potential and legitimate sources of change

Cost of changing reporting standards

Project Team

Core Team, Extended Team of stakeholders, External stakeholders

Transparency

Motivating experts, Channelling inputs, Managing expectations, Timing, Accommodating institutional approaches

Quality Control, Risk Assessment and Risk Management

Additional data in XBRL Instances

Used when adding information for identification or others, as the name of the person authorizing the filing, entity postal address, and so on.

The GCD (Global Common Data) Taxonomies are in draft status since 2005-08-15.

http://www.xbrl.org/int/gcd/2005-08-15/gcd-overview-2005-08-15.htm

The DGI (General Data Identification) Taxonomies are in final status, with the acknowledgment of XBRL International, since 2006-01-09.

http://xbrl.org.es/gp/2006-01-09/Description_dgi_2006_01_09_EN.doc

DGI taxonomy is in use in Spain, with more than 15.000 XBRL instance documents received by the Securities Supervisor and published at www.cnmv.es (XBRL icon). A new version has been developed very recently.

Topic currently in discussion in the XBRL community

Additional data in XBRL Instances: Questionnaire

b)      Do you ask for additional data for identifying the reporting institution? Examples: contact details of the preparerer, company name, type of identification code etc.

No

Yes

c) How did you extend your national taxonomies to include this requirement?

•Additional taxonomy to be imported by each instance.•Additional hypercube that links to the segment element.•Specific tag in an XML structure (XML envelope) wrapped around the XBRL instance.

No YesNumber of countries 7 5

Identification of the company/entity

Revelation 13:17 "so that no one could buy or sell unless he had the mark, Revelation 13:17 "so that no one could buy or sell unless he had the mark, which is the name of the beast or the number of his name“which is the name of the beast or the number of his name“

There is not a Universal Number identifying entities. Each country has its own proprietary system/s.

Some extended financial networks (i.e. SWIFT) have an identification for subscriptors, but only useful for banks in practical terms.

Europe has a list of Monetary and Financial Institutions, but it is even incomplete for supervisory purposes.

www.eurofiling.info/data/documents/CX-nnn/CX-087_ECB_MFI_List.doc

ISO 16372 is an standard in development for "International Business Entity Identifier". Last news shows that the task is proving to be extremely complex, and the focus would move for something like "International Financial Instrument Issuer Identifier".

Proprietary

IBAN

BIC

ECB-MFI

Identification of the company/entity: Questionnaire

Proprietary IBAN BIC ECB-MFINumber of countries 8 2 1 1

XBRL defines three items for use in identifying who sent the reporting data and for which period: Institution code, Scheme identifier and Reporting period.

a)      What codification is used to identify the reporting institution (IBAN/BIC/ECB-MFI/Proprietary…)?

Type of report

Different instances covering different periods with the same end date (yearly, quarterly, monthly, etc.)

Solo / Consolidated / Supervisor Specific

Test / Actual data

Others…

May help here a dimension widely/commonly used as Best Practice, with a set of predefined possibilities?

Type of report (questionnaire results)

Data based on COREP can be reported on a solo or consolidated basis. Do you use separate taxonomies, or other solution?

  SAME SEPARATE

Number of countries 6 5

By using the same taxonomy the discrimination of solo and consolidated is being done by adding a dimension in the segment or scenario element or by providing the information in the header of the file.

Non Repudiation of Non Required Data

Some Supervisors validates that the XBRL Instance Document contains all the required data, but ONLY the required data.

Supervisor A requires data sets P and Q

Supervisor B requires only data set P

A cross-border entity generates an valid XBRL Instance Document with data sets P and Q

The XBRL Instance Document is VALID for Supervisor A

The XBRL Instance Document may be INVALID for Supervisor B due to the repudiation of data set Q.

Corollary: Non Required data included in an XBRL Instance Document should be NOT a cause of repudiation

COREP/FINREP Versioning as Best Practice

CEBS Questionnaire

Some regulators have specified that a reporting institution can only sent a report for one template in one reporting period, but other regulators allow the composition of the data in one instance file for several reporting institutions, templates and periods. Which rules have you defined?

Rules: # countries

One institution for one template in one reporting period. 4

Several institutions with several templates for one reporting period. 1

One institution for several templates in one reporting period. 4

Several institutions with several templates for several reporting periods. 1

One institution with several templates for several reporting periods. 1

Delta update on XBRL Instance Documents

XBRL Instance

NOK

OK

XBRL Instance

XBRL Instance

XBRL Instance

XBRL Instance

XBRL Instance

XBRL Instance

NOK

OK

XBRL Instance

XBRL Instance

XBRL Instance

XBRL Instance

Delta update

Complete resend

CEBS Questionnaire

No

Yes

No YesNumber of countries 11 2

Do you expect the XBRL instance to be in a character encoding different from UTF-8? Additional accepted character encodings: ISO 8859-1 and ISO 8859-15 (FI, BE)

CEBS QuestionnaireDo you ask for (or have created) additional information that the one present in the CEBS (or

local regulator) package? If yes, how did you extended the taxonomy? Did you only referred to the CEBS taxonomy or did you look at other countries' taxonomies?

Proceeding: # countries

Taxonomy extensions by using only CEBS taxonomies 5

Additional taxonomy for "general information". 3

XML envelope around the XBRL instance. 2

No information added. 3

Did you delete some parts of the taxonomy? If yes, how did you proceed? What impacts did it had on the validation (calculation linkbase / formulas)?

Proceeding: # countries

Unused part were disabled, calculation linkbase is not used. 5

Unused part were disabled, calculation linkbase is adapted. 2

Unused part were disabled. 3

No extensions. 3

Questionnaires

CEBS XBRL adoption and usage questionnaire www.corep.info

XBRL Europe questionnaire

Best Practices Board questionnaire

Possible Conclusions

USA, Japan or India have a central source on Best Practices in Banking Supervision

Europe have 27 + 1 sources of authority (at least)

Only with harmonization at ALL LEVELS the Interoperability may be achieved.

Thoughts?

The XBRL Network of the

www.c-ebs.org

www.corep.info

www.finrep.info

Ignacio [email protected] +34 618526434