Patrick Quinlan is the President of Rivet Software, a Denver, Colorado-based company that is pioneering the future of global financial communications. Patrick comes to Rivet as a business executive with a proven track record of startup development, funding strategies, and capital investment success. He brings experience in the small and emerging business space and is skilled in executing strategic planning, performing market analysis, and guiding new product development. As the CEO of several successful startups and as a consultant, Patrick has helped many companies build and manage effective sales teams, meet revenue goals, and achieve peak performance. He graduated from the University of Kansas and holds an MBA from Regis University.

1. Why is XBRL so superior in technology to its other alternatives?

XBRL is designed for superior flexibility, yet in a standardized format. Since XBRL is based on the well-developed and accepted technology XML, it’s much more accepted by technical and business users.

Open specifications such as XBRL facilitate the ability of many different software packages to produce and exchange documents that work in a number of situations. The interoperability permits organizations to transmit information pretty easily.

2. How do you evaluate progress of XBRL adoption in the USA so far? Is everything ready for the second phase of the SEC’s mandate?

It was a slow start, but since the SEC mandate took place last summer, the “movement” of XBRL has gained great momentum. Mutual Fund Risk/Return tagging will soon follow the corporate financials, and corporate actions reporting in XBRL have generated a lot of discussion and enthusiasm. The SEC, software vendors and accounting firms have all spent a significant amount of energy and effort to actively promote XBRL and to educate organizations about the benefits of XBRL. We have seen a slow shift in corporations’ perceptions of XBRL in the last few months because they are finally seeing the benefits and a competitive advantage when they adopt XBRL for both internal and external reporting.

We don’t believe every company is ready for the 2nd phase of the SEC’s mandate to provide detailed tagged XBRL documents. Detailed tagging is a much more involved process for companies, and will require well-designed software and seasoned professionals to facilitate the tagging, validation and viewing/reviewing process.

First-wave companies have already selected their tagging vendor.  Now is the time to ask the tough questions and make sure their selected vendor has a solution in place and is not afraid to demonstrate the software, talk about the process (tagging, reviewing, rendering) and has the expertise to provide the services that corporations will need to successfully complete the detailed tagging.

The second- and third-wave companies should learn from the first 500 companies and pick a vendor wisely as soon as possible. It’s not too early to start planning, even if you are a third-wave company.

3. It seems that the biggest problem for the quick adoption of XBRL is the ignorance of it (there are some who like to say this due to its long learning curve) – do you think that all “stakeholders” (CPAs, CFOs, Financial and Accounting managers…) are aware of the existence of XBRL and that they have to “meet” with XBRL, sooner or later?

We believe stakeholders are finally caught up and have shown some interest in learning more about XBRL – not just the mandate, but also the benefits XBRL can bring. The “XBRL community” needs to do a better job of explaining XBRL in plain, understandable language. XBRL can be complicated, and it’s the job of regulatory agencies, software vendors, and even the academics to simplify the technology so that companies can focus on the benefits rather than the complexity that the technology brings.

4. When we talk about XBRL, we usually talk about external reporting. Do you know some examples of successful implementation of XBRL for internal reporting? Is internal reporting currently postponed in relation to mandating external reporting?

Yes I do.  Rivet Software started in 2003 with the vision that standards-based reporting (external and internal) is the future. At that time, XBRL was still in its infancy, and we have seen the promises that XBRL can bring. We believe in the technology, but more importantly, we understand that, in order to leverage the technology effectively, we need to create software applications that are end-user focused and not overly complicated.

We tell our customers that financial transformation is a journey. Today, most companies start with the “compliance” aspect because that’s what they have to do. However, the journey will continue on to better “control” and effective “communication” of their financial information – if the appropriate technology and intelligent implementation was selected.

We have a customer that has implemented XBRL GL-based internal reporting and is ready to file with the SEC using an integrated solution provided by Rivet.

5. Do your clients internally use XBRL for data consolidation and reporting or are any of them planning to adopt XBRL to maximize the efficiency of their internal processes as well?

We are starting to see clients integrating XBRL into their internal consolidation/reporting process. Most companies are playing catch-up on the mandate, and we believe that once the filing mandate becomes a standard business process, companies will be open to discover additional ways to adopt XBRL and to make their business processes more effective.

Software vendors need to be forward-thinking and create solutions that can take the customers to the next stage. It might not be a revenue generator today, but it will go a long way to better serve the user community if software companies work hard to create solutions that are needed tomorrow.

6. Present us with Rivet Software’s product and briefly tell us how it makes our life easier in tagging and analyzing financial statements.

We have three main products that are all based on our Crossfire Financial Reporting Platform – Compliance, Controller and CFO.  All three are designed to meet the XBRL reporting requirements of SEC corporate filers as well as providing better financial reporting for all users.  The difference between the packages, in a nutshell, is that our Compliance Package is designed to manage your filing preparation by using a simple cut-and-paste approach; our Controller Package streamlines the process by automatically integrating your data and includes improved internal controls and financial statement production and consolidation; and our CFO Package has the ability to integrate multiple data sources (from your GL/ERP/CPM) while providing more effective ways to communicate your information both internally and externally.

Rivet’s Crossfire Financial Reporting Platform includes features such as built-in tagging assistance, task-based workflow to facilitate working in teams, and basically reduced complexity to protect the end-user from XBRL – your taxonomy is completely hidden so your preparers will only see financial statement line items.   All three packages include the complete support of our Professional Services team, comprised of experienced CPAs, accounting, XBRL and finance professionals, to assist the user throughout the tagging and filing process.

7. It seems to me that your company is currently focused on USA and Canadian markets. Do you plan to expand business internationally? Have you seen an interest in that?

We do focus a lot more on the U.S. today because it’s an important market, and because we have worked very closely with the SEC in the past few years.

We created an XBRL-solution for Thomson/Reuters in 2008, and it’s currently being used to process XBRL filings from China, Japan and Korea. One of our other major clients is the Microfinance Information Exchange, Inc. (MIX).  They are a leading business information provider dedicated to strengthening the global microfinance sector. The MIX is using our solutions to tag and process thousands of XBRL documents based on the IFRS taxonomy.

Rivet will look at opportunities from other countries carefully. We believe that we have created a world-class XBRL-based reporting and analysis tool that can provide great benefits to many markets.  XBRL is a solution without borders, and Rivet is well positioned to pursue international opportunities.

8. What are the minimum requirements to fulfill XBRL-enabled software? What are a few tips on what features customers should look for in XBRL software?

Our view might be different from other software companies when it comes to XBRL. We believe in a well-crafted, comprehensive solution instead of specialized software components just to address certain areas that XBRL would touch.

Take SEC corporate filers as an example. We have created the Crossfire Reporting Platform to address the entire lifecycle of XBRL. Tagging is just a start, an integrated viewing and reviewing component that is critical for the filers to fully understand the “tags” selected for their companies, and we also show the filers how their selected tags are comparable – or not – to other SEC filers as well as other filers in their industry. We also show how the filing would be rendered to the public once it’s filed with the SEC.

Our benchmark module enables the filers to compare their filings with their competitors inside the Crossfire Reporting Platform.  It’s one thing to fulfill the SEC mandate and it’s another to be able to become more competitive while fulfilling the mandate requirements.

Companies should do their homework and ask tough questions when selecting their XBRL vendors. Select a vendor that can be your partner on this journey to financial transformation; select a vendor that can turn a compliance task into an opportunity.

9. Was the software industry adequately prepared for the introduction of XBRL? What is your comment on the lack of open source solutions?

In order to implement XBRL software, companies have devoted a lot of money and resources. It’s understandable that companies would be reluctant to put their expensive IPs into open source.  Rivet has a different view and has provided open source solutions for tagging and rendering. Anyone can go to the SEC website and download the source code for the SEC rendering engine and incorporate it into their own products.  Our hope was to promote a sense of community, so collectively we can all work together to make XBRL more accessible to end-users.

10. After a period of tagging XBRL reports, we are expecting the period of report analysis, comparison… What will be the key trends of XBRL software development in the future?

Reporting and analysis is the logical next step for XBRL software development.  With the availability of financial, mutual fund and other types of business data, customers will start looking for powerful, standards-based reporting/analysis solutions soon.  Other key areas for development might be auditing applications and budgeting/forecasting applications.

Tony Fragnito has acquired over 20 years experience managing finance and operations within for-profit and tax-exempt organizations. He has worked with volunteer leadership for over 15 years in both the educational and biomedical research fields. Throughout his career he has managed financial, governance, business service and technology issues both from an operational and strategic perspective. Tony joined XBRL International, Inc. as the organizations first CEO in 2007.

Mr. Fragnito graduated from George Mason University in Fairfax, VA and earned his CPA in 1988.

1. It is known that the most important mission of XBRL International (XII) is to drive adoption of XBRL. How do you evaluate previous adoptions of XBRL around the world?

We are seeing XBRL adoption in a broadening arena of business and financial reporting, which has always been part of the mission of XII, to have XBRL recognized as the business reporting standard worldwide. Most of the earliest adoption of XBRL focused on reflecting the reporting elements required for regulated financial reporting, which is consistent with the early requirements gathering process and implementations of the XBRL technology. The facts that the US SEC, JFSA and IASCF, along with numerous other country specific accounting requirements, are reflected today in XBRL shows a strong commitment to the benefits of standardized reporting using the XBRL specification.

What we see today are broader uses of XBRL in the areas of banking regulation and reporting, risk assessment, governance, sustainability and extra financial information. What is particularly exciting is that adopters of the specification are starting to realize the benefits of incorporating XBRL earlier in their reporting cycles. The beneficial aspects of standardized reporting elements, so valuable to the regulatory community, also have great value internally. We at XII are most encouraged by the trend to utilize XBRL within the internal reporting processes of organizations. This is part of an evolution in the understanding and acceptance of the technology and approaches the true potential of XBRL to enhance reporting processes, not just improve data validation.

2. What is your greatest achievement (or the most significant event) in the previous two years, since you are leading XII?

XII has achieved great success through the dedication of a large number of committed volunteers over many years. The individuals and companies involved with XBRL are truly visionary. They have committed untold hours and dollars to realize a vision of a more efficient system for sharing business information globally.

To work with these dedicated individuals, to expand the global network of XII and to evolve the governance and staff to support these individuals has been an honour.

3. Currently, there is a 24 full jurisdictions, mostly from developed countries. How do you expect to run the process of establishing new jurisdictions when the focus is going to be transferred to less developed countries? Whether the whole process may slow down or based on experience of predecessor countries the whole process may run faster?

XII has direct membership options for companies in developing countries – and we are seeing increased interest in this membership category. XII also has the ability to define “jurisdictions” as a country or region, providing options for developing regions.

There are a variety of membership models using by international standards bodies, and we have looked at them all. Because XBRL is an international standard which often is applied to country specific reporting requirements (i.e. country specific reporting standards) our model works very well to advocate and support adoption.

4. What are the key moments in the process of adoption of XBRL in some country?

The key is finding that decision maker or influential individual who is willing to challenge the status quo and who is aware of the international trends in business reporting and regulation. XBRL adoption is a fundamental shift in the transparency, and efficiency, of business reporting. To be effectively implemented it requires collaboration, communication, openness and partnership between the reporting, regulatory and vendor community.

5. Currently, there is XBRL mandate in progress for first 500 companies in the United States. How do you evaluate progress of this project so far?

The XBRL adoption project by the US –SEC is really a model for the elements I mentioned above – collaboration, communication, openness and partnership. The US SEC, along with XBRL US and a broad range of other contributors, has implemented a significant adoption of XBRL in a very transparent and successful project. I predict this particular implementation of XBRL will be looked at as a model for best practices worldwide.

6. Is there some project, currently in progress, that you can highlight as very interesting?

I personally find the projects related to the reduction of regulatory burden particularly interesting. Within the Netherlands and Australia these projects are being referred to as “Standard Business Reporting”. The XBRL specification is a major component of the technological aspect of these projects.

The basic idea is to reduce the regulatory burden to the reporting entities through a collaborative effort between regulators and businesses. To identify the core information needed and to work, again collaboratively, with the vendor, regulatory and reporting entities to define and collect only those data elements required – using a standardized format – XBRL.

7. What are the key innovations and benefits which XBRL will contribute to the accounting in the future?

The accounting profession is generally struggling with the idea of deconstructing standardized forms and the implications for assurance with the idea of standardized data – which can be consumed as individual data elements. I am confident the assurance issues will be resolved.

Accounting information, at its heart, is information for comparison and analysis. Most consumers of business information use a variety of sources, both financial and “extra financial” in their analysis and judgements. XBRL will bring these data sources under the same standard and allow more efficient and higher quality analysis. XBRL will also help to facilitate convergence by making comparison of reporting under different accounting standards more efficient – hopefully driving further convergence – again benefiting global commerce.

8. XBRL is known as a standard for financial reporting. Are there projects from other specific areas that are based on the adoption of XBRL?

Many. XBRL is being used for mutual funds research reports, sustainability reporting, statistics, banking, tracking of money laundering, insurance, business registries, MD&A disclosures and many other areas in business reporting. XBRL certainly has a stronghold in the area of financial reporting – but it clearly can handle a broad range of reporting requirements.

9. One of inevitable question when we talk about XBRL is software support. What do you think about the quality of software solutions that are currently on the market?

This is one of those questions that can always be answered, “it could be better”. A large number of international and regional software vendors are committed to providing XBRL capabilities and are active participants in the XII organization. As with any technology trend historical business models can be challenged and consumer demand drives investment and innovation. To this point XBRL adoption has been lead by the regulatory community. Many of the solutions to date have focused on this market and the reporting entities with solutions geared toward development of taxonomies, collection and reporting of data in XBRL format. As more data become available we will see higher demand for analytical tools and XBRL enabled ERP and even transaction level systems.

The maximum benefit of standardizing data will be realized when that standardization comes at the transaction level. We see growing demand and tools to accomplish these objectives.

10. Does XII and in which way (could) support software start-up projects in with respect to XBRL?

Our focus is to understand and evaluate the business requirements for the specification, evolve the specification to meet accepted requirements and provide the support resources to facilitate adoption of XBRL.

The software community is driven by consumer demand, which has been steadily growing as adoption expands globally. Our position remains that the market will drive the demands and requirements for software tools and solutions. Through the XII consortium we bring together members from the entire supply chain, and each party benefits from those interactions.

11. There are some opinions that the disadvantage of XBRL is that it is primarily computer readable language. Do you think that Inline XBRL may be the answer for this?

Some might say it is a disadvantage, I would say it is the advantage. The fact is computers are very good at sorting through huge amounts of information, based upon human instruction, and returning the data we are interested in. Just think of the amount of information available today on the internet. Without some means to “search” this huge store of information it would really be worthless. I view XBRL in a similar fashion. Business information, prior to XBRL, was not easily searchable and therefore not very valuable.

Inline XBRL, along with other technologies which will surely be developed, will provide the functionality to display and link data from within XBRL instances directly to documents and websites. This is, yet, another example of improved functionality as a result of market requirements, which will continue to evolve both the standard and software tools.

12. At the end, does it seems to you that everybody are still more focused on the filling of XBRL instance documents, but not so much on using their benefits in report analysis?

Yes – but this is really a function of the adoption curve and the volume of data available today in XBRL. I expect this will change rapidly.

We also anticipate, and are experiencing, greater interest in moving XBRL back further in the organization – to the transaction layer. Up until recently XBRL was viewed as a “report then convert” idea. Individual companies are starting to realize the benefits and value to their internal information systems and reporting through the use of XBRL. I predict this will create another wave of adoption in the near future.

It has just been announced, at the culmination of the SEC roundtable on December 17th 2008, that the proposal for XBRL filing has been accepted (carried by 4 votes to 1) as well as for mutual fund reporting.

We are awaiting a press release, but it seems some minor changes to the May 2008 proposal will include the mandate timeframe being extended to companies reporting at the end of June, 2009.

The commissioners were unanimous on the benefits of the technologies, although question were raised about the timing of the adoption (during a crisis) and protection of investors should the information furnished lack proper controls.