Reading review problem. According to its Web site ( www.fdic.gov ), “The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress that maintains the stability and public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions, and managing receiverships.”
On a quarterly basis, banks submit a Report of Condition and Income, otherwise known as a “Call Report,” to the FDIC. The Web site provides the following information about the Call Report:
FDIC collects, corrects, updates and stores Reports of Condition and Income data submitted to us by all insured national and state nonmember commercial banks and state-chartered savings banks on a quarterly basis. Reports of Condition and Income data are a widely used source of timely and accurate financial data regarding a bank’s condition and the results of its operations. The Reports of Condition and Income data are the only publicly available source of information regarding the status of U.S. banking system; therefore, the FDIC’s actions in this regard are of paramount importance, and every precautionary measure is taken to preserve data integrity and accuracy.
In 2004, the FDIC began requiring member banks to use the eXtensible Business Reporting Language in filing Call Reports. XBRL has been particularly useful in Call Report formulas, which check for logical consistency in the reports.
1. Suppose you were talking to a finance major at your school who had never heard of XBRL, but had recently gone to work for the FDIC. Briefly explain what XBRL is and how it is useful to the FDIC and other organizations.
2. Explain the following terms as they relate to XBRL: taxonomy, namespace, instance document. Which taxonomy would banks likely use for their call reports?
3. What internal controls should banks institute to address the risks associated with XBRL? What internal controls should the FDIC institute for that same purpose?
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