Developing XBRL taxonomies

in the Spanish Public Sector

How IGAE (public sector accounting coordinators)
see the advantages of XBRL with public sector
financial information at local governments.
Bonsn-Ponte, Enrique -- Escobar-Rodrguez, Toms -- Flores-Muoz, Francisco
AECA, XBRL Spain, University of Huelva, Spain

Index

Importance of the public sector accounting information.

Final users and its decisions.
Special characteristics of the Spanish public sector.
Rules and regulators.
XBRL in this context.
Local government in Spain.
IGAE

Local government XBRL taxonomies, now.

Importance of public sector

accounting information.

The importance of the public sector

in the Spanish economy.
Spanish public sector represents around a 40% of the national
production. According to that weight, is necessary to consider what is
the level of transparency and quality of the information provided by
public organisms.
Goals of the public sector, such as redistribution of resources,
equality, high quality services in education and health, investment in
R+D and public infrastructures, are additional reasons for that
necessity of transparency and quality.

Public information necessity.

Citizens are not very much involved in the daily management of public
sector activities, so, as it occurs in the private sector, a reporting
system is needed to inform final users about the activity of the public
sector.
In different countries, the redefinition of the role played by public
sector in the economy is perceived as a incentive to apply different
reforms on regulations and systems.
New mechanisms of management and new objectives (as a more
balanced result between income and expense, and efficiency) are the
new topics to work with.

Functions of public accounting

Traditionally in Spain, public sector accounting had a legal function
and the main users were the control organism within the public sector.
Today, public accounting information is considered as one of the most
important inputs in the decision making process of all modern
economies, considering the importance of the public sector weight in
the economy.
So, the traditional set of budget information, referred only to one fiscal
year, is not enough to the modern users.

Objectives of the public sector

accounting information
Modern public sector accounting is now more than budget controls
referred to one year. To support the decision making process, users need
information about the economic and financial position of the public
organism, about the result and the efficiency that these entities obtain.
The main objective is to provide information for the users decisions, at it
occurs with the business areas. So, if the objective is next, the financial
statements to be provided could be similar in both public and private
sector (balance sheets, income statements, budgets, cash flows, )

Objectives of the public sector

accounting information
And finally, as users, we can think in the tax contributors, clients,
suppliers, regulators, really, all the citizens. Of course, not only
control organisms.
Theoretically, users can decide about a broad set of issues using that
information.

One sector, two accounting rules.

Public sector is not only public administration. It includes different
foundations, autonomous agencies and companies owned by the
State, providing different services. Some groups of entities are
involved in the economy in that way that they have to provide
accounting information following the private sector rules.
So, sometimes, consolidation is not clear within a public framework if
we have public and private accounting information.
For us, in this presentation, we consider only the entities that have to
provide accounting information according to the public sector rules.

We need information, but really

we need good information.

Concepts of quality
Important aspects of quality in public sector accounting information
could be (not necessarily ordered by importance):

Timeliness
Frequency
Free of frauds
Respect for GAAPs.
Fair view of situation and operations

Concepts of quality
The technical support can improve the quality of the information,
making possible to ensure the timeliness and frequency of the
information, and validating aspects about legal rules introduced in the
artificial systems.
So, if the society incorporates more quality requirements in the public
sector accounting, it will have two consecuences:

Users will have a best tool to support the decision making process

Technical complexity will be aided by new languages and tools.

Characteristics of good
public accounting information
According to modern international principles, the public accounting
information must be:

Relevant: it must influence decision making processes and cover

necessities of users.

Reliable: giving a accurate and exact information.

Complete: including all aspects according to a certain level of

materiality.

Characteristics of good
public accounting information

Identifiable: clearly defining the entity it refers to, and the concepts
included in the financial reports.

Clear: ensuring users using that information in the correct way,

without ambiguity.

Comparable: supporting decisions in which election between public

entities is a key factor.

Characteristics of good
public accounting information

Substance over form: containing relevant concepts more than a

certain visual format.

Relative importance: considering only aspects according to materiality

criteria.

Of Fair view: giving an exact image of the situation of the entity, which
is the final objective of the information if it follows all these principles.

Fair, relevant, reliable,

frequent, on time
A lot of things!
Technical tools could help.
XBRL? We will sayyes

Final users and its decisions.

Users of public sector

accounting information
Analyzing interrelationship between the public sector and different
types of users, is possible to identify the following user decisions:

Users of the services given by the State: they are interested in

determine the capacity of the public sector of produce high quality
services.

Politic organisms: they need financial information to support the

political decisions.

Users of public sector

accounting information

Control organisms: they must monitor the information provided by the

public sector activities, to ensure the quality of that information.

Creditors of the State: they need information about the capacity of the
State to pay the debts and interests, about the solvency of the public
sector.

Financial agents: they need information to qualify the financial assets

related with public sector activities (bonds, notes).

Users of public sector

accounting information
Analysts: they must consider public sector performance to judge and
preview the markets reactions.
Employees: they need information about the entity they work for, to
organize the actions that ensure the labor rights.
Other national and international entities within the public sector
framework: to manage the coordination between them.
Citizen and mass media: to monitor the politic and administrative
performance and take democratic and economic decisions.

Special characteristics
of the Spanish public sector

Spanish public sector structure

Since 1975, the democratic development in Spain has promoted
decentralization in the public administration, recognizing different
autonomous regions and improving the politic and administrative
competences of different levels of the State.
The modern structure is approximately divided in national, social
security and tax, autonomous region, province, and local government
levels.

Spanish public sector structure

National Level &
Tax Administration Level

Autonomous Regions Level

Local Level

Special characteristics,
an approximated view.

The public activities have not the goal to produce a monetary profit.
The final objective is to produce a set of high quality services for
citizens.

The public sector has income not directly connected with the services
it produces, because the expenses are established by means of a
democratic process (political programs)

To measure the efficiency of the public sector, is necessary to use a

set of indicators, not only the profit or result, because, as it is said
before, this profit is not really significant.

Special characteristics,
an approximated view.

Spain have different providers of public sector accounting information,

one Public GAAP (1994) and the IGAE rules (Intervencin General de
la Administracin del Estado or General Auditors of the State), and 17
Tribunales de Cuentas (or Accounting Courts, one for each
autonomous region).

Public entities generate the public sector accounting information,

according to IGAE rules and supporting services, and later, the
Accounting Courts receive and analyze that information.

Rules and regulators.

The main rule

The main rule in public sector accounting in Spain is the Plan General
de Contabilidad Pblica (or Public Plan of GAAP) of 1994.
The main objective of that rule is to homogenize and standardize the
accounting between the different Public Administrations, and, at the
same time, it tries to homogenize its contents and presentation, as far
as possible.
Other important objective is to provide an accounting model more
similar to the private sector model.

Other rules
We have other minor rules dedicated to different aspects of the public
sector accounting.
Specially, we can mention the IGAE rules, called Instructions.
Instructions make possible to provide public information from local
governments, in a detailed way, and provide the model of financial
statements, and so, we have a reference to create de XBRL
Taxonomies.

XBRL in this context.

Accounting in the public sector

and digital information
XBRL can play an important role with the public sector, supporting
both financial and not financial information.
The standard implies a certain level of agreement between different
users, regulators and technical agents, and it owns different technical
advantages.
Users
Users

Regulators
Regulators

Public
Public
Sector
Sector

Technical
Technical
supporters
supporters

Advantages of using XBRL

in the public sector

Regulators can offer a validated XBRLTaxonomy as an Annex of the

legal rules. It is a very high quality way to offer regulations (regulation
which will be technically tested).

If the public sector contains a broad range of entity sizes and

characteristics, XBRL can play a vital role, giving the technical support to
the communication flows between these entities and aiding small entities
to easily provide high quality digital information about their activities.

The need for an agreement between users, technical people and

regulators to create the Taxonomy makes regulations more democratic
and it makes the changes less dramatic.

Advantages of using XBRL

in the public sector

XBRL will increase the nowadays low digital transparency and degree of
detail of the Spanish public sector accounting information.

XBRL will allow the use of different ratios and indicators to improve the
public management and application of different policies with a better
information.

If the users need a more detailed and validated information, XBRL can
show how this goal is technically possible.

Stages in XBRL implementation

for the public sector.
The Spanish public sector could prepare a set of stages to implement the
XBRL standard, according to the public sector structure.
1.
2.
3.
4.

Local Government (IGAE XBRL Taxonomy) in

National Level
Tax Administration Level
Autonomous Regional Level

process.

National Level
& Tax Administration
It is possible to generate a XBRL Taxonomy which will support the
main document which emanates from the national level: The General
Budget of the State.
It is also possible to generate different Taxonomies to support the
disclosure of the financial and non financial information of the State at
the national level, including the tax income, and connecting it with the
tax administration.

Autonomous Regions Level

The need for compatibility is clear when we think about the 17
different autonomous regions existing within Spain.
XBRL can help to maintain compatibility and connection between
different administrations, as it occurs along Europe between different
countries.
Depending on agreements in the next future, is possible to implement
autonomous regions taxonomies coming from national level
taxonomies by extension, depending on the national level
experiences.

The local government in Spain.

Local entities
At the local level, we can find the same degree of diversity.
Municipalities, Metropolitan Areas, Companies, exist at this level.
This group of entities have a more direct contact with citizens. They
are, for example, responsible for urbanism, water provision, security
in the cities, and a broad set of activities, depending on the population
size and other factors.
Sometimes, due to the lack of a optimal size, public local entities has
not the organizational capacity to generate public accounting
information in a efficient and high quality way.

IGAE

IGAE goals within Spanish public sector

The Intervencin General de la Administracin del Estado,
assigned to the General Secretariat of State for Tax and
Budgets, has functions of internal control, by means of the
exercise of the financial control, the direction and
management of the public accounting, the formation of the
economic accounts of the public sector and the planning,
design and execution of the digital policy of the General
Secretariat. Since 1997 IGAE runs a publicly available portal
web providing an ample range of information and services,
that is extended day to day in order to approach the
budgetary Administration to the citizens and the rest of
Organisms of the public Administrations.

IGAE and digital world

So, IGAE, as a high level supporter of digital and administrative services

for public organisms and citizens, is very involved in digital developments
within the public sector, leading the XBRL developments.

One example of the implication of IGAE with digital world is the

implementation of BASICAL, a system that support the elaboration and
transmission of accounting information in small local entities.

IGAE BASICAL developments consist not only of the creation of that

system, but its implementation and usage, and the technical and business
supporting for the small local entities through the process of implantation
and updating.

Local government XBRL taxonomies, now.

XBRL-IGAE developments
until today

IGAE development of XBRL taxonomy for the local government

started at the beginning of 2006.

Today, the Working Group is improving a first draft of the taxonomy,

and have considered a set of strategic decisions about the global
design of the modules of the future taxonomy.

As usual in XBRL developments, all the materials are publicly

accessible (with a pre-admission process) in the XBRL-ES-SECTOR
PBLICO Yahoo Groups for comments.

IGAE-XBRL Working Group

A Working Group have been created within XBRL Spain to
support the IGAE implementation of a taxonomy for the
local public accounting models.
In this context, different entities are deeply participating in
the tasks, as accounting courts, audit firms, analysts,
computer vendors, regulators and the university.

IGAE rules and XBRL modules

Local accounting is structured in three models, depending on size criteria. Each rule generates a XBRL
modular taxonomy:
Model IGAE rule XBRL modular taxonomy

Normal Model

Instruction 4041/2004 igae-n

Simplified Model Instruction 4042/2004 igae-s

Basic Model

Instruction 4040/2004 igae-b

The models are different in the number of financial statements they contains, but the Normal Model
could be considered as an extension of the Simplified one. Basic is special, and BASICAL system
helps small local entities with it. So, at the level of the basic model, is being implemented a system
of bidirectional mapping XBRL BASICAL.

A few details about the design

IGAE accounting models are based on this kind of tables, for which the group
have decided to use tuples. Using tuples, users will reply each line of data
they must to provide. Accounting courts are preparing a set of detailed linear
calculations to validate de information reported with the new taxonomy.
Tuple head

Line being replied

Calculation relationships

A few details about the design

The simplicity of the model has been considered by the XBRL Spain
technical coordinators and so, the recommendation is not using
dimensions here.

The tuple structure is a good option for this kind of reporting model, so
it ensure the same number of lines in each column.

Now, the priority is the definition of the calculation rules needed. This
definition of rules is based on the regulation, and will allow to improve
the quality of quantitative information provided by local entities.

Final considerations

XBRL will support a high level of validation in the information provided

by the local entities, aiding the implementation of high quality digital
processes in not very developed contexts (as small local entities).

XBRL will show its capacity of adaptation with pre-existing systems,

as BASICAL, and the technical advantages will allow a best public
resources management.

The local experience will be the starting point for the implementation
of more advanced and technically complex XBRL projects within the
public sector.

Thanks for your attention.

References

AECA (Spanish Accounting and Business Administration Association).

Public
Sector
Accounting
Conceptual
Framework
http://
personales.ya.com/aeca/comisiones/comisionsectorpub.htm
IGAE http://www.igae.pap.meh.es/
XBRL Spain http://www.xbrl.org.es
IGAE XBRL Taxonomy Yahoo Group XBRL-ES-SECTOR PBLICO
IFAC (International Federation of Accountants). Handbook of
International Public Sector Accounting Pronouncements