An Interview with Altova
Founded in 1992, Altova is a key player in the software industry and the leader in XML development and data management tools. Our product suite, the Altova MissionKit, combines powerful enterprise software with usability features and easy-to-use interfaces that make it attractive to users with varying levels of technical ability.
Altova is the choice of over 3.5 million customers worldwide, and is an active member of the World Wide Web Consortium (W3C), the Object Management Group (OMG), and XBRL International.
In our most recent product release, we added support for working with XBRL across multiple tools in the Altova MissionKit tool suite to give organizations tackling XBRL compliance an affordable, easy-to-use solution for automating the way their financial data is captured, shared, reported, and analyzed.
1. XBRL is already accepted as the official standard for financial reporting. How do you (Altova) see the prospects for an XBRL mandate for financial reporting in the world and especially in the United States?
The SEC mandate in the United States has certainly given XBRL a lot of additional attention in recent months, but it is important to also note the growing number of XBRL projects worldwide – particularly programs in the Netherlands, Australia, Japan, and other countries. In order to continue to be successful, all of these initiatives share a common need for additional support from the organizations that are subject to financial reporting requirements. XBRL is beneficial on many levels – to regulatory agencies like the SEC and FDIC, to analysts, and very importantly, also to individual companies. Right now it seems that the rush to compliance may be overshadowing the crucial realization that XBRL can greatly increase internal reporting efficiency and reduce costs.
It is still very early, but we firmly expect that over time more and more organizations will begin to see XBRL not only as a mandate, but also as a revolutionary solution to eliminating the errors and inaccuracies that have resulted from traditional accounting and financial reporting methods.
2. What are the main benefits of XBRL in your opinion? Could XBRL statements help to prevent some future financial crisis?
XBRL offers benefits at all levels of the financial reporting workflow, increasing speed, reducing costs, virtually eliminating the risk of human error, and allowing for machine validation and automation. Not only does XBRL give computers the ability to process financial data at a semantic level, but it also gives investors and regulatory agencies the potential to view and analyze this data in real-time. In short, XBRL offers a mechanism for truly realizing the value of financial data, and XBRL software provides the means through which to do this.
Does XBRL have the capability to avert a future financial crisis? That is difficult to predict, indeed. On one hand XBRL will definitely offer more transparency and oversight with respect to financial information. On the other hand however, human ingenuity has always managed to come up with new ideas or financial constructs that difficult to grasp and control, so there is no telling what financial wizards might be cooking up next. In fact, if you look at the history of bubbles and busts in financial markets, the pattern is always one that is driven by greed and fear – two very human emotions that are fundamental to our nature. I doubt that XBRL will have any impact on controlling those emotions, so we should be prepared to deal with future market bubbles and busts, since they are an integral part of the system.
3. Altova has a long line of experience in development of various XML, database and UML tools. Since February 3rd, 2009, thanks to Altova, the XBRL world has been drastically changed. What are the XBRL tools from Altova and their specific applications for working with XBRL related documents?
There are three tools in the Altova MissionKit that support working with XBRL: XMLSpy, MapForce, and StyleVision.
XMLSpy supports XBRL validation, which allows users to validate their XBRL instance documents against the associated taxonomy to ensure accurate and compliant financial reporting.
XMLSpy also includes a graphical XBRL taxonomy editor for visualizing taxonomies, as well as creating taxonomies or extending standard taxonomies to meet the needs of your organization. The XBRL taxonomy editor uses the same editing paradigm as XMLSpy’s popular graphical XML Schema editor, providing a graphical view of XBRL taxonomies and intelligent editing features. By organizing different components on easy-to-filter tabs and providing informative icons, mouseover messages, detail windows, and context-sensitive entry helpers, the XMLSpy XBRL taxonomy editor makes it easy to both view and understand existing taxonomies, and create new ones.
MapForce is an any-to-any graphical data mapping and integration tool with support for transforming XML, databases, flat files, EDI, Excel 2007, Web services, and now XBRL, to/from other data formats and/or structures. This enables XBRL users to extract data directly from backend systems and convert it into fully compliant XBRL instance documents, or transform XBRL data received for repurposing in any number of ways. These conversions can be run on a one-time basis of automated through code generation in Java, C#, C++ or via the command line.
This makes public financial data submission a repeatable and highly manageable process, allowing organizations to produce valid XBRL reports as required based on the variable data stored in accounting system fields. MapForce can also be used to aggregate XBRL data for financial analysis.
XBRL taxonomies are inserted as the target or source of any mapping by referencing the taxonomy schema or an existing XBRL instance file. The XBRL component is represented in a hierarchical structure, clearly defining the root element, link roles, hypercubes, dimensions, context, concepts, and facts defined by the taxonomy.
StyleVision is a graphical stylesheet designer for rendering output in HTML, PDF, and Microsoft® Word based on XML, databases, and now XBRL taxonomies.
To create a straightforward XBRL report, users simply drag and drop a taxonomy financial statement onto the design pane as an XBRL table and then use StyleVision’s graphical interface to format stylesheets for simultaneous display to different publication mediums. The XBRL Table Wizard makes it easy to customize the table structure and specify the concepts to include in the report.
In the case of the US-GAAP taxonomy, which provides, in addition to the hierarchical organization in its presentation linkbase, some best practices information on how to structure XBRL instances, users can simply select US-GAAP mode to have StyleVision automatically output the data according to this information.
A sample XBRL instance file can be assigned to the taxonomy so that the progression of the design can be viewed on-the-fly by clicking the preview buttons at the bottom of the screen.
The XSLT and XSL:FO-powered publishing templates autogenerated by StyleVision can be incorporated into highly automated financial reporting workflows to create a repeatable process. Because the overall structure of an organization’s XBRL reports are likely to remain the same, XBRL financial statements can be automatically rendered at any time based on the original stylesheet design and the updated financial data.
4. Which sort of companies and professionals (xbrl filers, investors, portfolio managers, analysts) will benefit most from using Altova XBRL tools?
While our traditional target market of developers will definitely benefit from XBRL support in Altova MissionKit tools, the graphical, drag-and-drop interfaces and other usability features provided in XMLSpy, MapForce, and Stylevision make it accessible to a wide range of users, from accountants to analysts and beyond. To help increase accessibility across various audiences, we’ve also created a free XBRL Online Training course to help technical users come up to speed on the accounting side of XBRL, and to make key XBRL concepts more transferable for those with an accounting background – all while working with Altova MissionKit tools.
5. What is the first (or maybe the most important) step a company should do in the process of implementation of XBRL?
In order to realize the benefits that XBRL can provide internally, it is vital that companies invest some time in restructuring current accounting and reporting infrastructure. Traditional accounting and reporting practices have been led by accountants, and this only makes sense. But now there is a technical dimension to financial reporting with software tools and technology standards, and it is very important that IT or development be involved in the decision-making process, at least at the early stages of adoption. XBRL implementation does not have to be complicated; it does not necessarily require new systems, expensive software tools, or even new hires. What it does require is a certain amount of financial and technical expertise that is easily attained through cooperation between accounting and IT or development departments.
6. What do you see as the risks in the process of introducing XBRL in the United States and is there a possibility that the whole process could fail at some point?
It is unfortunate that the XBRL mandate by the SEC is currently being used as a bit of a political power play. If the XBRL introduction were to fail or is rolled back, then it would be as a result of a political gamble. And this would put the US at a serious disadvantage in the global marketplace, as XBRL adoption in other countries will continue.
In essence, the introduction of XBRL only aids transparency, so there is little fundamental risk associated with it. The fact that companies have to deal with a transition to XBRL amidst the worst financial crisis of the past 50 years is a bit of “bad timing” for sure, but those companies that are stable and positioned well to not only survive this crisis, but also thrive in the following recovery, will be able to take advantage of some very unique benefits that XBRL brings to the table.
7. Liz Andrews posted an article “XBRL…so much more than compliance” at Altova blog recently. Do you think that most of companies don’t realize the real power of XBRL? How long do you think it’ll take for investors and analysts to realize the benefits of XBRL?
The United States XBRL mandate has come at a time when the public is looking for an economic watchdog, and XBRL fits the bill. Because of this, there has been a lot of talk about the benefits of XBRL financial reporting to the general public (transparency, etc.) and even more effort to convince accountants and reporting companies that the XBRL mandate will not disrupt the status quo.
The truth is that XBRL provides a multitude of benefits to organizations, but that some very simple adjustments may need to be made. It is simply just not enough to tag financial reports once they have been generated in the traditional manner… this only serves to obfuscate the process by adding another layer of potential human error on top of a process that was already fundamentally flawed.
Altova has a long history of supporting only the most established and successful technology standards, and XBRL has certainly found a place among them. It is not uncommon for companies to be a little slow to realize the benefits of standards – we have seen the same with XML – but it is still early. Once the early adopters begin to publicize the benefits that they have experienced with XBRL implementation, others will follow.
8. At the end, let’s not talk about Altova as XBRL solution provider but as a company which itself applies XBRL. Is Altova ready to fulfill financial reporting requirements? Do you plan to adopt XBRL to maximize the efficiency of your internal processes?
Altova is a private company and is therefore not subject to external financial reporting requirements. However, we do have a project underway to look into how we can take financial data from SAP BusinessOne and work with it internally using XBRL. This has the potential to help us to automate our internal financial analysis and inter-company reporting. Again, it is important to recognize that the benefits offered by XBRL resonate far beyond the need for compliance and data transparency to regulatory agencies.