Businesses are doing it. Governments are doing it. The entire business reporting supply chain is doing it.

Companies, regulators and other information exchange partners are embracing collaborative information standards, like the Extensible Business Reporting Language (XBRL). These groups are also implementing related technology solutions that let managers, government ministers and markets more efficiently and quickly discover, analyze, consolidate and extract value business information from disparate systems.

Why is everyone doing it? "On-demand" access to business intelligence, increased efficiencies and better controls are the goals. Data integration means that a piece of business information, once entered into the corporate or organizational computer system anywhere, never has to be retyped – within the reporting organization; moved up to corporate levels; or moved out to regulators, investors, lenders or analysts.

Information entered or updated in one system can "ripple across" other systems with a minimum of human intervention. As a result of this increased activity, companies like IBM and Microsoft are seeing triple-digit gains in their data integration units and making strategic acquisitions to better compete in the market.

Many forces collaborate to move data integration forward as a necessity for cost effectiveness and operational efficiencies, as well as a competitive weapon in improved access to relevant, timely and accurate information for management and control purposes. Reactions to corporate corruption like Sarbanes-Oxley, privacy initiatives like HIPAA (Health Insurance Portability And Accountability Act of 1996) and the Gramm-Leach-Bliley Act of 1999, along with increasingly required e-filing initiatives, call for streamlined, controlled information flows and standards-based solutions.

Today's SOX Section 404 issues, followed by tomorrow's Section 409 threats (SOX 409 calls for "real-time disclosures"), increase the need for data integration to reach the eventual goal of real-time, "on demand" reporting.

Technology and collaborative developments also make data integration more feasible. Consider pervasive Internet connections, the integration of XML (Extensible Markup Language) capabilities into desktop and server applications, and the delivery of standards like XBRL that lower the barriers to obtaining the benefits of data integration.

With this new focus on controls and systems, businesses recognize the need to inspect their business information systems much like a home inspector looking for signs of problems in the foundation of a building. Most of the time, businesses find more than they first expected, and for every major, integrated system, a legion of supporting systems is not far behind, e.g., spreadsheets with "cut and paste" data transfers dominate business planning, reporting and analysis activities.

News stories like the spreadsheet failure at Fannie Mae, which had to restate its earnings by $1.2 billion dollars due to "honest mistakes made in a spreadsheet used in the implementation of a new accounting standard," highlight the fact that better solutions are necessary. Spreadsheet solutions and many so called ‘integrated systems’ currently fail at providing drill-down capabilities, solid audit trails and efficient reuse.

There are a wide variety of options for spreadsheet remediation. Database and middleware vendors provide managed spreadsheet environments to maximize the benefits of the spreadsheet interface and development environment, while reducing the consequences of using spreadsheets as a data mart. Other applications provide library functionality, access control, version control, audit trails, macros/menu control and hot key control, among other features, to better control spreadsheets.

Technology solutions like data warehouses and BI (business information) tools are normally expensive, and difficult to establish and maintain. Organizations that attempt to standardize their technology often find that they have managed to transform old legacy systems into new legacy systems. For this reason, many organizations and information supply chains are considering an information standards-based approach – standardizing on information standards. A technology approach may provide one view to one organization; an information standards-based approach provides one view for all.

This information standards-based approach is the goal of XBRL. Where Electronic Data Interchange and other emerging XML standards concentrate on transactions, XBRL represents the family of data/information integration standards for the accounting, financial and business reporting supply chain.

In 2004, XBRL reached a new level of acceptance in the United States, as evidenced by the Securities and Exchange Commission (SEC) Voluntary Financial Reporting Filing Program for the EDGAR System. Starting in Spring 2005, the SEC began its evaluation of XBRL by promoting the voluntary filing of XBRL-based representations of selected corporate filings.

The SEC’s commitment is only the latest in a wide variety of global adoption stories, which also include stock exchanges, tax regulators, securities regulators, banking regulators like the FDIC and entire governments. The Dutch government, for example, expects to save hundreds of millions of Euros per year due to XBRL.

There also is increasing interest in the use of XBRL for internal integration and reporting. XBRL GL is a standardized representation of the data found in accounting and business operational systems. It can represent the information found not only in the general ledger, but in receivables, payables, inventory and other sub-systems.

Companies who want to integrate their systems, and improve controls and audit trails, are looking to XBRL GL as an integral part of the solution. The auditor community, including tax agencies, is also interested in standardized solutions for pulling data from client/taxpayer systems.

Data integration is a vitally important topic for the CPAs in audit and tax to understand because it promises to bring new efficiencies to client, CPA, banker, regulator, tax agency and market. CPAs are encouraged to find out more about XBRL, look for spreadsheet sprawl in their clients' organizations and their own companies, and ask software vendors to implement standards-based solutions for the benefit of their organizations and all with whom they work.

About the Author
Eric E. Cohen, CPA, is one of the founders of XBRL and serves as XBRL Global technical leader for PricewaterhouseCoopers. He is chief architect of XBRL GL, a past chair of XBRL US and a past chair of the AICPA Technology Conference. He is especially interested in the audit, assurance, tax, security opportunities and challenges of XBRL.

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