News Releases

New technology developed by faculty member

Wednesday, January 28, 2009

Rajendra Srivastava, Ernst & Young Distinguished Professor of Business, has developed an online technology that can quickly access and analyze financial information for the world's top companies. Within seconds, the technology, known as FRAANK, can search for both financial and non-financial information, compile it and prepare risk assessment models.

If you want to study a major firm's financial health, you can pore over reams of paper statements, financial reports and endless line items. Or, thanks to a KU professor's brainchild, you can click the mouse a few times and have the information in seconds.

Rajendra Srivastava, the Ernst and Young Distinguished Professor of Business and director of the Ernst and Young Center for Auditing Research and Advanced Technology, has developed a program that can access and analyze thousands of financial reports for publicly traded companies. Known as FRAANK (Financial Reporting and Auditing Agent with Net Knowledge) the program can vastly improve the efficiency and accuracy of investors, traders, financial analysts and researchers.
"Anyone interested in financial information can use FRAANK," Srivastava said. "Banks, lenders, traders and researchers at universities can especially benefit from it."

The Securities and Exchange Commission requires companies to file annual 10K and 10Q reports, containing all kinds of financial data, including profit, annual cash flow, inventory, balance sheets and more. That information is stored at the commission in its Edgar database in text files either in ASCII or HTML format. FRAANK accesses those reports, parses them and can put them in easy to read and understand reports. The technology can also use that information to create financial risk assessment models for public companies, credit worthiness reports or provide a solid starting point for potential investors.

Srivastava began working on the technology in 1996 with Rutgers University professors Miklos Vasarhelyi and Alex Kogan. During the development, an electronic business reporting language known as XBRL, based on XML technology, evolved. The technology, which stands for Extensible Business Reporting Language, actually made life easier for Srivastava, his colleagues and FRAANK. Before XBRL, there was no uniform language for companies to use in their financial reports. The securities commission will require top 500 companies to file their reports in XBRL format along with the text filings starting in December.

"It is expected that, just as HTML revolutionized Web browsing, XBRL will revolutionize the processing, reporting and accessing of business information," Srivastava said. "The XBRL technology will not only make the use and sharing of information seamless irrespective of computer platform or applications, but will also make the information more transparent for the user."

FRAANK has been licensed to neo Abacus a technology company based in Kansas City for commercialization of the technology. The company, Srivastava and his colleagues are working together to further refine the technology and develop XBRL software applications for the securities commission while converting old financial information into the new language.

Perhaps the greatest asset of FRAANK is its versatility. Users can pull up years of financial and non-financial information or simply find one specific category, such as a company's inventory for 2005. The program can search reports in general or by tagged information, such as headings, footnotes, line items, statements or other options. Once the desired information is found, FRAANK can translate it to style sheets in text, Excel or Access formats. The technology not only can greatly improve efficiency in financial research, it can also help eliminate human error that can occur in the transcription of data.

FRAANK is a natur...