Interview with XBRL International Inc. CEO Mr. Tony Fragnito
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.
