USING XBRL FOR LOCAL GOVERNMENT BUDGET REPORTING IN SPAIN

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1 15th International XBRL Conference USING XBRL FOR LOCAL GOVERNMENT BUDGET REPORTING IN SPAIN Juan Zapardiel Carlos Palomino Ministry of Economy and Finance. Spain Munich, Germany. June 2007

2 THE SPANISH PUBLIC ADMINISTRATION FRAMEWORK 17 AUTONOMOUS COMMUNITIES 2 CITIES WITH SPECIAL AUTONOMY STATUS 50 PROVINCES MUNICIPALITIES 1

3 MUNICIPALITIES. DISTRIBUTION IN TERMS OF POPULATION Population Strata Nº of Municipalities % Population > inhabitants 2 0, ,83 De a inhabitants. 4 0, ,19 De a inhabitants. 52 0, ,45 De a inhabitants. 72 0, ,24 De a inhabitants , ,19 De a inhabitants , ,74 <= inhabitants , ,03 Total , ,67 Cities with Special Autonomy Status 2 0, ,33 Total % 2

4 FINANCIAL LOCAL INFORMATION THE (MEH) HAS COMPETENCES FOR REQUESTING LOCAL GOVERNMENTS TO REPORT FINANCIAL INFORMATION THE LOCAL BUDGET SETTLEMENT DATA ARE USED IN THE DECISION MAKING PROCESS ABOUT LOCAL FINANCING AND IN BUDGETARY STATISTICS DESIGN LOCAL GOVERNMENTS HAVE TO REPORT A COPY OF THEIR ANNUAL BUDGET SETTLEMENT (YEAR t) TO THE CENTRAL ADMINISTRATION, BEFORE MARCH 31 (YEAR t+1). 3

5 THE DIRECTORATE GENERAL OF FINANCIAL COORDINATION (DGFCLA) THE DGFCLA IS THE ADMINISTRATIVE CENTRE OF THE MEH RESPONSIBLE FOR THE FINANCIAL RELATIONSHIPS BETWEEN CENTRAL AND LOCAL GOVERNMENTS. SOME OF ITS FUNCTIONS ARE: THE APPLICATION AND MANAGEMENT OF THE LOCAL FINANCING SYSTEM TECHNICAL ASSISTANCE AND MANAGEMENT OF INQUIRIES REGARDING THE BUDGETARY AND FINANCIAL SYSTEM OF LOCAL ENTITIES THE PREPARATION OF STATISTICS PERTAINING TO THE FINANCIAL AND BUDGET ACTIVITY OF LOCAL ENTITIES 4

6 LOCAL BUDGET SETTLEMENT DATA REPORTS POTENTIAL UNITS THAT HAVE TO REPORT THEIR BUDGET SETTLEMENT TO THE MEH: LOCAL GOVERNMENTS ORGANISMS DEPENDENT FROM THE ADMINISTRATIVE STRUCTURE OF THE LOCAL GOVERNMENTS 51 PROVINCIAL GOVERNMENTS 160 ORGANISMS DEPENDENT FROM THE ADMINISTRATIVE STRUCTURE OF THE PROVINCIAL GOVERNMENTS 5

7 BUDGET REPORTING PROCEDURE TRADITIONALLY, THE LOCAL GOVERNMENTS HAVE REPORTED THEIR FINANCIAL INFORMATION TO THE MEH ON PAPER FORMAT THIS FACT CAUSED A GREAT DELAY IN FINAL DATA PUBLICATION AND, ON THE OTHER HAND, THE ERROR RISK IN DATA QUALITY WAS TOO HIGH SINCE 2006, THE VIRTUAL OFFICE OF FINANCIAL COORDINATION OFFERS SOME NEW WEB APPLICATIONS TO CAPTURE LOCAL FINANCIAL DATA 6

8 VIRTUAL OFFICE OF FINANCIAL COORDINATION WITH LOCAL AGENCIES 7

9 VIRTUAL OFFICE: IMPROVING PROCESSES THE VIRTUAL OFFICE WAS CONCEIVED AS AN OPEN COMMUNICATION CHANNEL BETWEEN THE MEH AND THE LOCAL ENTITIES, TO COVER ALL THE ASPECTS RELATED TO LOCAL FINANCING AND FINANCIAL DATA INTERCHANGE IN GENERAL FROM THE VIRTUAL OFFICE, AUTHORIZED LOCAL USERS CAN EASILY ACCESS THE DIFFERENT ONLINE APPLICATIONS, DESIGNED TO PERMIT AN IMMEDIATE SUBMISSION OF DATA AND, CONSEQUENTLY, A REDUCTION IN TIME TO PROCESS AND PUBLISH THE INFORMATION 8

10 VIRTUAL OFFICE: LOCAL BUDGET SETTLEMENT DATA CAPTURE WEB APPLICATION 9

11 NEW PROCEDURE FOR DATA CAPTURE NOW, THE LOCAL FINANCIAL MANAGER HAS THE FOLLOWING POSSIBILITIES WHEN SUBMITTING INFORMATION: DATA ENTRY (TYPING) THROUGH THE APPLICATION QUESTIONNAIRES DATA IMPORT FROM MS-EXCEL FILES, READY TO DOWNLOAD FROM THE ONLINE DATA CAPTURE APPLICATION USE OF THE NORMALIZED FORMAT BASED ON THE STANDARD XBRL, TO SIMPLIFY AND MAKE MORE FLEXIBLE THE FINANCIAL INFORMATION INTERCHANGE 10

12 A LEGAL DISPOSITION TO MODERNIZE DATA CAPTURE Order EHA/ /2007, of February 22 ESTABLISHES THE GENERAL CONDITIONS AND PROCEDURE FOR THE ELECTRONIC SUBMISSION OF THE LOCAL GOVERNMENTS BUDGET SETTLEMENT NOW, THE ELECTRONIC SIGNATURE OF DATA EXEMPTS THE LOCAL FINANCIAL MANAGER FROM THE OBLIGATION TO SEND A LEGAL COPY OF THE BUDGET SETTLEMENT ON PAPER FORMAT FOR THE FIRST TIME IN SPAIN, A LEGAL DISPOSITION REGULATES THE USE OF THE STANDARD XBRL ON ITS APPLICATION TO THE FINANCIAL DATA INTERCHANGE BETWEEN PUBLIC ADMINISTRATIONS 11

13 LOCAL FINANCIAL DATA. FORMAT CONFLICTS THERE IS NOT A UNIQUE TYPE OF INFORMATION SYSTEM THAT GENERATES THE LOCAL ACCOUNTING DATA RESPONDING TO THE SAME DATA STRUCTURE FOR MOST OF THE LOCAL GOVERNMENTS NEW IDEA: IMPLEMENTATION OF A COMMON MODEL OF DATA ELEMENTS AND RELATIONSHIPS, EASY TO USE BY ALL THE LOCAL ENTITIES, AND FLEXIBLE ENOUGH TO ADEQUATE THE LOCAL ACCOUNTING INFORMATION SYSTEMS TO GENERATE A FILE BASED ON AN ONLY STRUCTURE, ALONG WITH AN AUTOMATIC INFORMATION PROCESSING 12

14 TRADITIONAL PROCEDURE: MORE WEAK POINTS THIS KIND OF INFORMATION IS ALSO DEMANDED BY OTHER INSTITUTIONS LIKE EXTERNAL FINANCIAL CONTROL COURTS (REGIONAL AND NATIONAL), AUTONOMOUS COMMUNITIES (REGIONAL GOVERNMENTS), BANKS AND PRIVATE COMPANIES THIS FACT MEANS THAT LOCAL CORPORATIONS HAVE TO ACCOMPLISH SOME LEGAL DISPOSITIONS BY SENDING THE SAME OR VERY SIMILAR DATA TO SEVERAL INSTITUTIONS, USING DIFFERENT FORMATS AND CONSEQUENTLY, INCREASING THEIR MANAGEMENT COSTS DUE TO THE NEED OF GENERATING DIFFERENT FILES WITH DIFFERENT STRUCTURES 13

15 THESE DISADVANTAGES CAN BE ELIMINATED THE DGFCLA HAS CONSIDERED XBRL AS THE BEST SOLUTION FOR AN EFFICIENT FINANCIAL DATA INTERCHANGE, WHERE SO MANY ORGANISMS ARE INVOLVED XBRL MAKES ALL THE ACTORS TO TAKE SOME ADVANTAGE FROM ITS IMPLEMENTATION SO THAT THE PUBLIC ADMINISTRATIONS, THE AUDIT AND EXTERNAL CONTROL INSTITUTIONS, UNIVERSITIES, BANKS, ANALYSTS, AND ANY OTHER SOCIAL AGENT, WILL GET CLEAR BENEFITS WHEN XBRL BECOME AN ACCEPTED STANDARD TO BE USED IN THE LOCAL FINANCIAL ENVIRONMENT 14

16 SPANISH SENATE MOTION DEMANDING THE GOVERNMENT TO IMPULSE THE USE OF THE XBRL FORMAT THE MOTION, APPROVED IN THE PLENARY SESSION OF JUNE 20, 2006 ASKED THE SPANISH GOVERNMENT TO GET INVOLVED ON LEADERSHIP, STANDARDIZATION AND HOMOGENIZATION OF THE XBRL ADOPTION THE SENATE CONSIDERED PARTICULARLY IMPORTANT THE ADOPTION OF AN OPEN STANDARD THAT CAN BE UTILIZED BY MORE THAN MUNICIPALITIES, 17 AUTONOMOUS COMMUNITIES, 51 PROVINCIAL GOVERNMENTS, DIFFERENT MINISTRIES, AN OTHER ORGANISMS WITH COMPETENCIES IN THE SPANISH FINANCIAL SYSTEM 15

17 MODEL BASED ON XBRL. EFFICIENCY GAINS THE USE OF XBRL IN LOCAL BUDGET REPORTING WILL PERMIT IMPROVING INFORMATION TRANSPARENCY, REDUCTION OF TIME FOR DATA PUBLICATION IN THE INTERNET, AND TRANSMISSION OF HIGH QUALITY INFORMATION TO THE SPANISH GENERAL STATE COMPTROLLER (IGAE) THIS EXPERIENCE WILL SERVE TO REINFORCE THE ELECTRONIC ADMINISTRATION EXPANSION IN A G2G ENVIRONMENT FOR FINANCIAL DATA INTERCHANGE BETWEEN TWO PUBLIC ADMINISTRATIONS SUB- SECTORS: THE CENTRAL AND THE LOCAL ADMINISTRATIONS 16

18 FIRST STEP: AGREEMENT SIGNED IN NOVEMBER 2006 (I) IN ORDER TO UNDERTAKE THIS IMPROVEMENT, FOCUSED ON THE ADMINISTRATIVE MODERNIZATION AND SIMPLIFICATION, THE DGFCLA SIGNED AN AGREEMENT, IN NOVEMBER 2006, WITH THE FOLLOWING INSTITUTIONS: Instituto Nacional de Tecnologías de la Comunicación NATIONAL INSTITUTE FOR COMMUNICATION TECHNOLOGIES (INTECO), A PUBLIC COMPANY ATTACHED TO THE OF INDUSTRY THROUGH THE TELECOMMUNICATIONS AND INFORMATION SOCIETY CAJA ESPAÑA, FINANCIAL ENTITY INTRODUCED IN MOST OF THE COUNTRY 17

COUNCIL. CACABELOS IS A SMALL TOWN (PROVINCE OF LEÓN) OF AROUND 5.

19 FIRST STEP: AGREEMENT SIGNED IN NOVEMBER 2006 (II) XBRL SPAIN, ASSOCIATION THAT PROMOTES THE ADOPTION OF THE XBRL STANDARD FOR THE PRESENTATION OF BUSINESS AND FINANCIAL INFORMATION IN SPAIN Ayuntamiento de Cacabelos CACABELOS CITY COUNCIL. CACABELOS IS A SMALL TOWN (PROVINCE OF LEÓN) OF AROUND INHABITANTS, WHOSE GOVERNMENT WANTS TO PARTICIPATE AS THE FIRST LOCAL ENTITY TO USE THE XBRL STANDARD FOR REPORTING BUDGETARY INFORMATION TO THE CENTRAL ADMINISTRATION 18

20 ACTIONS DERIVED FROM THE AGREEMENT DESIGN OF A FIRST RELEASE OF XBRL TAXONOMY (CALLED LENLOC ) FOR LOCAL FINANCIAL DATA INTERCHANGE, COUNTING ON THE DIRECTION OF THE DGFCLA, AND HAVING THE ADVISING OF THE XBRL SPAIN ASSOCIATION RUNNING A PILOT TEST, WITH A LOCAL COUNCIL, CONSISTING OF CREATING THE STRUCTURE OF AN INSTANCE DOCUMENT BASED ON THE XBRL TAXONOMY, WHICH FACILITATES THE REPORTING OF BUDGET SETTLEMENT DATA FROM THE LOCAL GOVERNMENTS TO THE DGFCLA DIVULGATION OF THE MODEL RESULTING FROM THE PILOT TEST 19

21 COLABORATION WITH EXTERNAL COMPANIES (I) AN EXTERNAL COMPANY, PERFECTLY COORDINATED WITH THE DGFCLA, HAS BEEN INTENSIVELY WORKING ON DEVELOPING TWO CONVERSION TOOLS: XBRL TO XML CONVERTER. IT IS A SPECIALIZED TOOL WHICH ALLOWS TRANSFORMING DATA FROM AN XBRL INSTANCE DOCUMENT TO AN XML FILE. AFTER CONVERSION, DATA FROM XML FORMAT ARE AUTOMATICALLY SAVED INTO THE CORPORATIVE DGFCLA DATABASES XML TO XBRL CONVERTER. THIS TOOL GETS TO MAKE THE INVERSE PROCESS: TRANSFORMING DATA FROM XML FORMAT (GENERATED BY THE APPLICATION IN CASE OF TYPING DATA INTO THE WEB QUESTIONNAIRES) TO AN XBRL INSTANCE DOCUMENT, READY FOR LATER PUBLICATION ON THE INTERNET 20

22 COLABORATION WITH EXTERNAL COMPANIES (II) XBRL TO XML CONVERTER: 21

23 PILOT TEST (I) DESIGN 22

24 PILOT TEST (II) AT THE FIRST STEP, CACABELOS RESPONSIBLES WILL GENERATE AN XBRL INSTANCE, USING A CONVERTER, CONTAINING THE BUDGETARY INFORMATION THIS DIGITALLY SIGNED XBRL INSTANCE DOCUMENT WILL BE SENT TO THE DGFCLA THROUGH LENLOC WEB APLICATION. LENLOC WEB APLICATION WILL VALIDATE THE INSTANCE AGAINST LENLOC TAXONOMY THE XBRL INSTANCE WILL BE STORED IN THE DGFCLA DATABASE USING AN XBRL-XML CONVERTER CACABELOS RESPONSIBLES WILL CHECK THE XBRL INSTANCE THROUGH THE VISUALIZATION MODULE OF LENLOC WEB APLICATION 23

25 PILOT TEST (III) SCHEDULE 24

26 LENLOC TAXONOMY DIMENSIONAL TAXONOMY IN THE DESIGN OF LENLOC TAXONOMY WE DECIDED TO USE THE DIMENSIONS 1.0 RECOMMENDATION THE REASONS FOR USING DIMENSIONS ARE: MODULARITY, REUSABILITY, UTILITY AND MAINTENANCE AT THIS MOMENT, THERE ARE ONLY TWO DIMENSIONAL TAXONOMIES: COREP AND LENLOC LENLOC HAS NOT PRESENTED ANY PROBLEM RELATED TO THE XBRL PROCESSOR USED IN THE PROJECT. THE DIMENSIONAL RECOMMENDATION IS A MODULAR EXTENSION FROM THE XBRL 2.1 SPECIFICACION 25

27 LENLOC TAXONOMY LENLOC STRUCTURE (I) Budget Settlement lenloc-liq liq xsd Ordinary Model lenloc-com com xsd Simplified Model lenloc-com com xsd Common Elements lenloc-com com xsd Functions lenloc-fun fun xsd Accounts lenloc-cta cta xsd Functions lenloc-fun fun xsd Accounts lenloc-cta cta xsd 26

28 LENLOC TAXONOMY LENLOC STRUCTURE (II) Namespace: Authority: Ministerio de Economía y Hacienda (meh) Country: España Report: Financiero (fr) Account: GAAP Legal References: Orden Ministerial: 8 de Septiembre de 1999 Orden EHA 466/2007 Version Date: Prefix: Budget Settlement Schema: lenloc-liq Namespace: Ordinary model Budget Settlement Schema: : lenloc-ord Namespace: Simplify model Budget Settlement Schema: : lenloc-sim Namespace: Common Elements in Simplify and Ordinary Budget Settlement Schema: : lenloc-com Namespace: Accounting Schema: lenloc-cta Namespace: Functions Schema: lenloc-fun Namespace: 27

29 LENLOC TAXONOMY LENLOC STRUCTURE (III) Files: lenloc-liq xsd lenloc-ord xsd lenloc-ord presentation.xml lenloc-ord definition.xml lenloc-ord label.xml lenloc-ord reference.xml lenloc-ord calculation.xml lenloc-sim xsd lenloc-sim presentation.xml lenloc-sim definition.xml lenloc-sim label.xml lenloc-sim reference.xml lenloc-sim calculation.xml lenloc-com xsd lenloc-com label.xml lenloc-com reference.xml lenloc-cta xsd lenloc-cta presentation.xml lenloc-cta definition.xml lenloc-cta label.xml lenloc-cta reference.xml lenloc-fun xsd lenloc-fun presentation.xml lenloc-fun definition.xml lenloc-fun label.xml lenloc-fun reference.xml 28

30 LENLOC TAXONOMY LENLOC STRUCTURE (IV): 29

31 LENLOC TAXONOMY LENLOC STRUCTURE(V): DTS LENLOC IMPORTS THE DGI TAXONOMY IN ORDER TO IDENTIFY LOCAL ENTITIES AND THEIR DEPENDENT ORGANISMS TWO PRINCIPAL SCHEMAS: ORDINARY AND SIMPLIFIED (LENLOC-ORD AND LENLOC-SIM) DEPENDING ON THE MUNICIPALITY POPULATION TWO HYPERCUBES OR N-CUBES OF CONCEPTS REGARDING EXPENSES, INCOMES AND FUNCTIONS: ACCOUNTS (LENLO-CTA) AND FUNCTIONS (LENLOC-FUN) A SCHEMA WHICH COLLECTS THE REST OF THE COMMON CONCEPTS ( LENLOC-COM) 30

32 LENLOC TAXONOMY EXAMPLE OF AN XBRL INSTANCE: INCOMES AND EXPENSES 31

33 NEW CAPTURE WEB APLICATION USING XBRL LENLOC WEB APLICATION (I): 32

34 NEW CAPTURE WEB APLICATION USING XBRL LENLOC WEB APPLICATION (II): FEATURES THE FIRST BUTTON ALLOWS TO DOWNLOAD LENLOC TAXONOMY THE SECOND BUTTON ALLOWS TO UPLOAD AND DIGITALLY SIGN A VALIDATED XBRL INSTANCE DOCUMENT THE THIRD BUTTON ALLOWS TO UPLOAD THE INSTANCE DOCUMENT WHEN THE ELECTRONIC SIGNATURE OPTION IS NOT GOING TO BE USED 33

35 DERIVATIVE BENEFITS OF USING XBRL BY THE LOCAL ENTITIES THESE ARE SOME OF THE MAIN ADVANTAGES FROM THE USE OF THE LENLOC TAXONOMY IT ALLOWS GETTING INFORMATION FROM THE LOCAL BUDGET SETTLEMENT IN A QUICK WAY, VIA INTERNET, GUARANTEEING DATA CONSISTENCY AND SECURITY XBRL IMPROVES THE PROCESS TRANSPARENCY, AS WELL AS THE ANALYSIS AND CONTROL OF BUDGETARY DATA FROM LOCAL CORPORATIONS THIS PROJECT CAN BE TAKEN AS A MODEL TO BE EXTENDED TO OTHER FIELDS OF THE PUBLIC SECTOR IT ALLOWS USERS TO CONSULT DETAILED AND VALIDATED INFORMATION FROM ITS ORIGINAL SOURCE ADMINISTRATIVE COSTS REDUCTION 34

36 FUTURE EVOLUTION: CONVERGENCE BETWEEN LENLOC AND PUBLIC SECTOR TAXONOMIES (I) THE PUBLIC SECTOR TAXONOMY SUBGROUP, CONDUCTED BY THE IGAE, WAS CREATED IN THE XBRL SPAIN ASSOCIATION WITH THE GOAL OF DESIGNING A TAXONOMY FOR REPORTING THE LOCAL GOVERNMENTS GENERAL ACCOUNT TO THE EXTERNAL FINANCIAL CONTROL COURTS (REGIONAL AND NATIONAL NOW, THE DGFCLA AND IGAE HAVE PROPOSED THE CONVERGENCE OF LENLOC AND PUBLIC SECTOR TAXONOMIES INTO A NEW ONE 35

37 FUTURE EVOLUTION: CONVERGENCE BETWEEN LENLOC AND PUBLIC SECTOR TAXONOMIES (II) THE DGCFCLA-IGAE PROPOSAL TRIES TO REACH A SOLUTION THAT SATISFIES THE EXPECTATIONS OF ALL THE ORGANISMS AND INSTITUTIONS THAT REQUIRE LOCAL FINANCIAL INFORMATION IT CONSISTS OF THE CONSTRUCTION OF AN ONLY TAXONOMY FOR THE LOCAL GOVERNMENTS GENERAL ACCOUNT REPORTING, THAT INCLUDES A STRUCTURE OF THE BUDGET SETTLEMENT THAT RESPONDS TO THE NEEDS OF DGCFCLA AND IGAE 36

38 Thank you for your attention Juan Zapardiel Carlos Palomino meh.eses

1. Introduction. Juan Zapardiel / Carlos Palomino. Ministry of Economy and Finance SPAIN. The Spanish Public Administration Framework

1. Introduction. Juan Zapardiel / Carlos Palomino. Ministry of Economy and Finance SPAIN. The Spanish Public Administration Framework USING XBRL FOR LOCAL GOVERNMENT BUDGET REPORTING IN SPAIN Juan Zapardiel Carlos Palomino Ministry of Economy and Finance SPAIN 1. Introduction The Spanish Public Administration Framework Since 1978, when