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Setting a new global standard in accounting practices

By Steve Hansen


Charlie Hoffman graduated from PLU with a business degree in 1982 and returned a decade later to earn his MBA. During that time, he ventured forward on a relatively conventional career path.

He worked for an international accounting and consulting firm in Anchorage. He returned to Tacoma to work for a local public accounting firm. After a few stints as CFO at several medium-size businesses, he found himself back into public accounting as an information systems consultant.

Then everything changed.

Hoffman’s career path took a major shift in 1998 when he developed – literally in the basement of his house in Tacoma – a new method for the exchange of information between accounting and business software.

“Up until seven years ago, I had a fairly typical accounting career,” said Hoffman ’82, ’92. “Now, I am still doing financial reporting type work, but the work has more to do with figuring out how to create a standard way computers can ‘talk’ with financial statements and other business reports.”

Hoffman, who has no formal training in IT, saw the need for a global standard for exchanging financial information, so he started work on an Extensible Business Reporting Language (XBRL). It’s now backed by over 400 organizations, including all the Big Four public accounting firms.

XBRL is based on XML, a language for creating other languages. Both are all about computer applications exchanging information, rather than simply presenting a Web page in a browser, like HTML.

Even though he hates the analogy, Hoffman uses the standard bar code as a way to describe what XBRL can do for financial reporting. “It is like putting a little bar code on every piece of information in a financial statement.”

As a result, companies can share information and instantaneously understand the value and the currency of the data, what entity the data is for, the period to which the data relates, the scenario of the data such as “actual” or “budgeted” and how the data relates to other pieces of financial data.

Hoffman is currently director of innovative solutions at UBmatrix, in Kirkland, Wash. The company helped develop the XBRL standard and helps organizations make use of XBRL in the workplace.

He describes the current situation like this: More than 85 percent of all financial statements are produced in word-processing programs like Microsoft Word. Such documents are great for presenting information, but they are not so good at exchanging the information so it can be consumed by another application without re-keying the information.

If you are looking for the numerical value of “cash and cash equivalents,” for example, the only way to get the information is to thumb through the document until you find it. And if you want to check the calculations in the report, Hoffman muses, plan to get out your 10-key and green eye shades and go to work. This manual process is expensive, error prone and time consuming.

UBmatrix helped the Federal Deposit Insurance Corporation (FDIC) enable XBRL in their system of collecting financial information for banks. They project they will save $26 million over 10 years, make data available in two days rather than 60 days and reduce the number of errors by 18,000 per filing period. The Dutch government also uses the standard, and projects it will save $350 million using XBRL.

According to Hoffman, stock exchanges in New Zealand, Japan, China, Germany and South Korea have already implemented XBRL. Here in the United States, the Security and Exchange Commission has begun a pilot project, encouraging public companies to submit financial data using XBRL.

“It is not that it is going to be a global standard,” said Hoffman. “It is the global standard.”

That it has taken a while for the standard to take hold doesn’t surprise Hoffman. In fact, that’s the way it should be. “Financial reporting should be hard to change – you have to have stability,” said Hoffman.

“Over the past several years I have gained a lot of appreciation for the conservative nature of CPAs. An accounting profession filled with people like me would not be a good thing,” he said.

“But every now and then, it is good for someone to challenge the status quo. I see it as my job to change things. It is fun for me, but I drive my bosses a little crazy from time to time.”

And to do that, it has taken a lot of vision, persistence – and a few surprising twists and turns along Hoffman’s career path.

“It amazes me that one person can have such a profound impact, literally around the world,” he said.

“It is pretty cool that all this started in the basement in, of all places, Tacoma, by a PLU graduate, who one day was standing around the front desk at Stuen Hall with some friends, contemplating changing our majors because we were all struggling with intermediate accounting. I can still remember that as vividly as if it were yesterday.

“I am glad I stuck it out. Who would have thought that accounting could be so much fun?”

Charlie Hoffman will be speaking at PLU in the public events room in the Morken Center for Learning and Technology, Monday, April 3, from 6-7 p.m. The event, part of PLU’s MBA Executive Leadership Series, is free. For more information, contact the School of Business at 253-535-7330 or plusbus@plu.edu.

 


Organist cherishes 50 years of service to her church

By Steve Hansen

This past fall, Virginia (McFadden) French ’40 stepped down as head organist at Good Shepherd Lutheran Church in East Tacoma. The 86-year old PLC graduate held the position for 50 years.

French had been playing the piano from an early age, and when she was 8 years old, her mother took her up into the organ loft of their church, where she could watch the church organist play. By age 10, she was playing the keys for her Sunday school.

She took some piano classes during her time at PLC and, upon receiving her teaching certificate, spent a year teaching elementary education near Yakima, Wash. Ultimately, she wound up back in Tacoma, where she grew up, and at Good Shepherd, where she found herself serving as the choir director. “You know how things go: I sat down at the organ one day, and they said ‘why didn’t you tell us you played the organ?’ ”

And the rest is 50 years of history. She served double-duty as organist and choir director for a while, but she soon focused on what she loved. “I thought about being a concert organist, but I prefer being a church organist,” she said. “I really enjoy being able to sit down and play – to really be able to put my feelings into a hymn.”

Over the years, she’s been a regular at Sunday morning services, weddings, funerals and other events at the church. The weddings were particularly poignant. “I’ve played for a person’s wedding, and then I’ve been able to play for their children’s wedding,” she said.

She has also played for five different pastors, each with their own preferences of musical styles. “Not a one of the five kicked me out,” she said with a laugh.

Most of all, French looks back on her time as nothing more than serving a congregation of which she was an integral member. “I was doing something for my church,” she said. “I felt like I was just doing my duty.”

And how is she enjoying retirement? Exactly as one might expect from someone who has dutifully served her church for 50 consecutive years.

“I’ve already substituted for the new organist once,” she said.”

 

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© Scene 2006  •  Pacific Lutheran University  •  Spring 2006

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