Business reporting—be it a complex chart supported by a multimillion-dollar information retrieval system or a casual e-mail summarizing the issues of the day—is something with which nearly everyone has experience. Sometimes those experiences are not as good as we would like.
Confidence in information is a precious, and sometimes rare, commodity. Many reports tend to have a formal or informal confidence factor associated with them: “We don’t ever rely on the initial sales numbers from that subsidiary” “We nearly always need to go back to the operations group a week later—they have so many systems from which to pull data that their numbers always change.” Users often question the credibility of information at hand. Is it incomplete? Inaccurate? Inconsistent? Or just plain out of date?
External reports tend to be carefully developed and subject to rigorous review, including internal and external audit. Information that is actually used to run the enterprise is not always subject to the same level of checks and controls.
It stands to reason that the more reliable, consistent and clear the report, the better.
Users of financial information tend to take for granted that the definitions used in financial and management reports are the ones set out in the supporting materials, or available in an accounting or financial policy manual. Given the complexity of report consolidation in today’s enterprise, this assumption could turn into a sort of 'blind reliance.' It is not necessarily the case that two different parts of the enterprise measure the financial concept of “inventory” or the key performance indicator 'total non-defect volume' in the same way. XBRL can help improve this process by making definitions contextually appropriate and available 'at a click' to the producer and end user alike.
XBRL also can help by imposing certain disciplines on the people who develop reports, ensuring that they use the right definition—through the assertion that each tag makes. For example, if your company, Acme Ltd, has a specific definition for 'total non-defect volume,' then the use of the Acme tag for the KPI (acme:total_non-defect_volume) can be construed by the user as a statement by the producer of that report that the information is in compliance with the (easily accessible) definition. That assertion by the author to the user is a statement that corporations can incorporate into their 'account ownership' programs. XBRL is likely to play a big role in developing an internal culture of accountability for data quality.
This additional layer of confidence can be provided through the use of XBRL as an overlay, or as middleware, rather than as a replacement for existing systems.
Organizations that want to improve the credibility of their information should consider how XBRL might fit into their environment.
Steps for improving information confidence levels include:
- Seek to define the interrelationships between data points
- Understand and agree the definitions associated with data
- Leverage existing infrastructure
KPMG member firms' professionals can help.