Sloppy auditing and an absence of rigorous business processes create a corporate environment in which corruption and scandal can flourish: that was the message of the feature ‘Global visibility’, which appeared in the August 2002 issue of Information Age.
Now, software giant Microsoft, auditing company PriceWaterhouseCoopers and stock exchange Nasdaq have joined together to promote more widespread use of XBRL [extensible business reporting language), a self-describing mark-up language for financial data. XBRL, say its proponents, makes it easier to format corporate accounts, run automated checks on them, and compare them against other financial data.
In August 2002, the three partners kicked off an XBRL pilot that pairs PWC-designed software running on Nasdaq systems that provide data to Web surfers using Microsoft Office desktop applications. For the project, the financial data of 21 Nasdaq-listed companies will be available on Nasdaq’s web site to users running a Web browser and the Excel spreadsheet application. “As a company with perhaps the largest and most involved shareholder base in the world, we at Microsoft see the issue both from our perspective and from the perspective of shareholders,” said Microsoft chief financial officer John Connors.
However, industry analysts have pointed to the fact that, until recently, Microsoft was itself the subject of an unofficial US Securities and Exchange Commission (SEC) investigation into its own questionable accounting pracicies.
The SEC found Microsoft failed to accurately report its financial results, causing overstatements of income in some quarters and understatements of income in others. The total balance of these accounts ranged from approximately $200m to $900m, between July 1994 to June 1998.
Furthermore, say these analysts, XBRL is only likely to reduce the potential for human error in reporting. In other words, it is unlikely to deter deliberate miscounting of results before they are entered into XBRL.
Microsoft’s real game-plan in the XBRL project, they say, is to position its Office software as the best client for consuming web services, and the best way to author web services content.