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Day: May 10, 2005

XBRL and Compliance

I have just finished working on a paper with an industry group that is concerned with compliance issues. The paper takes a broad look at enterprise-wide compliance issues, as distinguished from the trap (an easy one to fall into) of dealing with compliance in a fragmented way, driven by the demands of different (and changing) regulations.

What are the requirements for an enterprise-wide, operational approach to compliance? Well, to get the full answer you will need to read the paper when it comes out in the next few weeks. But there was one requirement –a requirement that I want to talk about here– that ties into the threads and postings about XBRL here on the Gilbane website.

One of the first, big steps toward getting a broader, more useful view of “compliance” consists of applying it to internal control procedures, rather than just in reference to external requirements. “Compliance,” in this view, means doing what is right for the organization.

Take relations with donors within a non-profit organization as an example. Compliance, in this instance, means that the staff follows the organization’s procedures for contacting donors, working with donors to structure gifts for maximum tax advantage, and staying in touch with and supporting donors after the gift has been given. Compliance, in this sense, means making use of what the organization has learned over time. Compliance is the means by which the organization ensures that learning is retained and put into practice.

Stepping back from the particulars and looking at the general case, compliance is one part of the mechanism by which an organization responds to its environment — to the sources of support, to threats, and, of course, to rules put in place by governments. Compliance–the exercise of internal control systems–is how the organization regulates itself so that it survives and thrives in its environment. To use a human analogy, your body’s responding to infection is kind of compliance response. At a higher level, using learned compliance, your responses in a business meeting–measuring your reactions, thinking before you speak–are also forms of control and compliance.

The point of taking this broader view  of compliance is, of course, to help organizations deal more deliberately and productively with the process of making decisions and taking risks.

But … when you put this good thinking and theory into practice, you run into a problem. The problem is that, for each component in this overall compliance system, the key to making the system work is always in the details–BUT–at the same time, you want to somehow get these systems to connect with each other.

And, they DO connect with each other. When you connect the details of
responding to infections with the details for responding to a business meeting, for example, you find that it is very difficult to put all the tact and learning about social interactions into play when you are running a raging fever.

This isn’t a far-fetched analogy. When you take a close look at the day-to-day operations at Enron, courtesy of a book such as Kurt Eichenwald’s Conspiracy of Fools, it is hard to escape the sense that the Enron tragedy grew from a combination of thousands of small infections coupled with a couple of big instances of shortsightedness and fraud. The interesting question raised by a book like Eichenwald’s is one of how the entire system managed to get out of control–and, if we can understand that–how can we prevent such interactions in the future.

So, the problem is one of finding a way to operate effectively both at the level of forest and at the level of trees. You’ve got to sweat the little things to make compliance work, but you also have to see how the little things work together in big ways.

One reason that this is so difficult is that many of the different, “tree-level” compliance efforts use different terms, because they reflect different concerns.  Calibration of lab instruments is an important aspect of compliance. Protecting privacy of patient records is another aspect of compliance. Tracking costs for clinical trials is yet another. Each uses a different language, reflecting different concerns. Yet all of these activities, taken together, contribute to assessing the health of a pharmaceutical research effort.

Successful governance–overseeing these compliance efforts and understanding what they are telling us–depends on finding a way to abstract the common elements and concerns. Communication of the common concerns depends on defining a “forest level” view that imposes uniform, organization-level language and perspective on all the tree-level activities.

My sense–and I am putting this out here for discussion and argument–is that XBRL is a good candidate for doing this. Taxonomies are a large part of what XBRL is all about, and XBRL has the flexibility, viewed as a formal language, to describe taxonomies at the level of “trees” and to link those “tree-level” concepts back up to a set of concepts that are appropriate to the needs of someone who wants to see and manage the “forest.”

Taking my pharmaceutical research example, XBRL taxonomies could describe the disparate concerns of instrument calibration, patient records, and financial costs, recording and tagging the facts associated with each of these areas of activity. The recording and identification of these facts would be an integral part of each detailed control process. At the same time, XBRL could be used to capture exception conditions and other aggregations, supporting high level, management control systems.

I would be interested in reader feedback on this idea. I am pretty sure that we do need a way to move from trees to forest and back again, and it seems to me that XBRL is set up to do that job. What do others think?

McLaren Updates Enterprise Engineer for EMC Documentum Platform

McLaren Software announced the immediate availability of its Enterprise Engineer 2.5.1 Service Pack 1 (SP1) upgrade for the EMC Documentum platform. Enterprise Engineer 2.5.1 SP1 is the first of McLaren’s software updates for Documentum, providing improved functionality, streamlining content management processes and enabling enhanced platform support across the entire Enterprise Engineer suite. This includes: Faster import of AutoCAD and MicroStation drawings; Streamlined review and lifecycle processes incorporating feedback from customers; Multi-line text boxes and dialogs enabling more information to be recorded and stored, aiding the creation of audit trails; Extended CAD support including full reference handling; New platform support for Windows Server 2003 and Documentum 5.3 and 5.2.5 SP2 and SP3; and Support for AutoCAD 2006 and MicroStation 8.5. Enterprise Engineer is a suite of configurable business applications that manage engineering content and the business processes that use this content. The software supports the engineering process by providing a single point of controlled access to manage the production and use of project content, such as drawings, correspondence, procedures and specifications, throughout an asset’s lifecycle. Extending the capabilities of the EMC Documentum platform, Enterprise Engineer accommodates the complexity of engineering content and associated business processes.

CM Professionals Announces Management Committee & Executive Director

Content Management Professionals (CM Pros), the international content management community of practice, today announced the appointment of its Management Committee and new Executive Director, reinforcing the organization’s increasing relevance to the content management discipline. Chartered with tactical responsibility for achieving the organization’s goals, CM Pros Management Committee is: Patricia Kelley, content architect at Allstate Insurance – Director of Marketing; Erik Hartman, president of Netherlands-based Hartman Communicatie BV – Director of Member Relations; Glen Secor, senior consultant and legal analyst with The Gilbane Report – Legal Advisor; and Hilary Marsh, president of strategic online consultancy Content Company Inc. – Director of Communications. In a move signaling CM Pros continuing expansion, CM Pros also announced that Laura Walker – who as executive director of OASIS led that consortium to the forefront of e-business standards – has been appointed CM Pros Executive Director. The executive director position was previously held by industry luminary and CM Pros cofounder Bob Doyle, who becomes the organization’s Technology Advisor, continuing to support and enable its member and public communication infrastructures. As the organization’s primary link to members and the public, the executive director translates the CM Pros mission and strategic plan into action.

Interwoven Announces Salesforce Productivity Intranet & Channel Extranet

Interwoven announced two new content-centric solutions, the Interwoven Salesforce Productivity Intranet, and Channel Extranet, designed to help marketing organizations within the financial services, manufacturing and high technology industries to achieve sales and channel optimization. The new Interwoven Salesforce Productivity Intranet solution enables marketing organizations to provide sales personnel with the latest, most compelling information and sales tools even in the context of rapidly changing markets and campaigns, while the Interwoven Channel Extranet solution enables sales and marketing executives to make the channel a more seamless and effective extension of the internal sales organization. Based on the latest version of Interwoven’s LiveSite Content Publishing technology, the solutions include packaged templates, components, best practices and pre-built websites that make it simpler for business users to create and deploy intranet and extranet sites for specific salesforce and channel initiatives.

Fios & Interwoven to Deliver Discovery Management Solution

Fios Inc., a provider of IT-enabled electronic discovery services, and Interwoven announced a strategic partnership that will result in a discovery management solution for the enterprise. Under the agreement, Fios will OEM and integrate Interwoven’s Collaborative Document Management (CDM) technology as the foundation of its evidence management services. Additionally, FIOS will serve as a preferred partner to meet the electronic discovery needs of Interwoven’s installed client base. Together, the two companies will help enterprises proactively address the fire drills, litigation risk and cost predictability issues caused by the growing volume of electronic documents that must be managed and easily accessed for government investigations, regulatory compliance, antitrust inquiries and litigation. ,

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