XBRL Is Not Xtremely Boring Reporting Language

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XBRL Is Not Xtremely Boring Reporting Language
AGA / ASMC Spring PDC
Joe Kull PricewaterhouseCoopers LLP March 14, 2007
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Well cover

• What is XBRL?
• Why its time has come
• How it works, what it costs
• Global adoption
• XBRL in the US

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So why dont we containerize data and transport
it anywhere..
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So What Is XBRL?

• It is a tool
• An extension of XML
• It is an open standard that tags
• quantitative or qualitative data
• With the containerized data it
• can be moved over any system
• It helps overcome system integration issues by
  making the data interactive with any system
• It is revolutionary by making data a commodity

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XBRL Is A Way To Achieve Interactive Data

• Application System Centric
• System Integrators, developers, architects
  manually program expensive interfaces and batches
  that must be modified for every change and new
  system at every location

• Standards Data Centric
• Business rules are tied to data source,
  tagged in an interoperable format so that data is
  ready in real time for reporting and analysis
  directly from any system

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The Basic Reporting Processes
Publish
Collect

Business Reporting Processes
Analyze
Validate
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The Data Pit
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XBRL GL And XBRL FR
Source Systems
Internal Reporting Pipeline
Reporting
Annual(Quarterly) Reporting
Financial Systems
Journalize
Accounts Payable Accounts Receivable Order
Entries Purchasing Fixed Assets Human
Resource Payroll
Regulatory Reporting
Aggregation Consolidation
Tax
Decision Support
Manual Transaction
Extract Transform
Late Entries Adjustments Manual Entries
Business Activity Management
Financial Data Mart/ Repository
Business Events
Benchmark Analysis
Budgeting Forcasting
Monitor, Audit Control
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Why Now? Consider the Trends

• Time spent doing
• Transactions cut in half to 34
• Controls slight increase to 20
• Analytical almost triple to 40
• Highly Effective Organization more likely to
• Standardize/common processes rules
• Pursue process simplification
• Use best practices
• Cascade metrics through organization
• Focus on exception based reporting and analytics
• Customize internal reporting

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Reporting An Ever Changing Landscape
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So how do we create a flexible, yet reliable and
timely, reporting process?
COSTLY

• Hire more people
• Application integration
• ERP
• XML
• Proprietary schemas/taxonomies
• Standards-based schemas/taxonomies
• (e.g. XBRL, HR-XML)

Solution Options
Cost and Performance Effectiveness
EFFICIENT
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Standards Revolutions

• Industrial Revolution
• Transportation
• Construction
• Retail
• Medical
• Education
• Technology

IT IS TIME FOR DATA
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XML Markup What Does it Look Like?

• ltnamegtGerald Bostocklt/namegt
• ltaddressgt
• ltstreetgt8080 Floppy Disk Drivelt/streetgt
• ltcitygtSan Sushilt/citygt
• ltstategtCalifornialt/stategt
• ltcountrygtUnited States of Americalt/countrygt
• ltpostcodegt94078lt/postcodegt
• lt/addressgt
• lttelephonegt6505551424lt/telephonegt
• ltbirthdategt1958-10-19lt/birthdategt

• Gerald Bostock
• 8080 Floppy Disk Drive
• San Sushi, CA 94078
• 1 [phone]
• Birthdate 19 October 58

Metadata Information About Information
Ordinary Information
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XBRL More Than Just Definitions
Presentation Comptant et Comptant Equivalents
Presentation ?????????
Presentation Kas en Geldmiddelen
Presentation ?????? ? ?? ???????????
Presentation ????? ?? ?? ???????????
Presentation ????????
Presentation Geld Geld nahe Mittel
XBRL Item
XMLItem
XBRL Item
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The Business Reporting Supply Chain
XBRL Financial Statements
XBRL-GL The Journal Standard
Transaction Standards
External Financial Reporting
Business Operations
Internal Financial Reporting
Investment, Lending, and Regulation
Processes
Collaboration is KEY!!!
Investors
Financial Publishers and Data Aggregators
Companies
Participants
Auditors
Trading Partners
Regulators
Management Accountants
Software Vendors
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XBRL International

• Consortium began in 1998
• Currently 450 company members
• Governance by an International Steering Committee
• Established Jurisdictions
• At Large Representatives
• Board of Advisors
• Standards Board

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XBRL Jurisdictions
NO
SE
FI
NL
DE
CZ
DK
RU
PL
LU
IASB
HU
CA
SI
UK
AT
UA
IR
BE
TR
SP
US
CN
GR
FR
PT
JP
LB
KR
IT
CH
IN
MT
VZ
HK
AE
CO
SG
BR
Established Jurisdictions
AU
ZA
Provisional Jurisdictions
NZ
AR
in Construction in Project
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Software Vendors Include
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XBRL Regulatory Adoption Publicly Announced

• Commercial Financial Services and Others
• Canadian Securities Regulators
• KOSDAQ Korea
• Bank of Spain
• National Bank of Belgium
• National Tax Agency of Japan
• New Zealand Exchange
• U.S. Securities Exchange Commission
• Shanghai Stock Exchange s
• Shenzhen Exchange
• Tokyo Stock Exchange
• UK Companies House
• UK Inland Revenue/HMRC
• US Federal Financial Institutions Examination
  Council (includes FDIC)

• Government Agencies
• Australian Tax Office
• Committee of European Banking Supervisors
  (CEBS)/COREP
• Chinese Securities Regulation Commission (CSRC)
  sponsoring Shenzen and Shanghai exchanges
• Dutch Tax Authority
• Dutch Water Authority
• Spanish Stock Exchange Commission 3000
  companies
• Statistics Dept of Ireland
• Other
• Bank of Japan
• Bundesbank
• Eurostat
• Financial Service Agency of Japan
• The Irish Revenue

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US Public Sector Pilot Programs

• US Department of Interior, National Park Service
  
• Convert annual financial reporting process of
  386 US park areas into an automated, straight
  through reporting architecture using XBRL
  Standards-Based Reporting
• US Department of Housing and Urban Development
• Demonstrate improved data management through
  systems interoperability -- loan servicing and
  property accounting to other Department-wide
  systems
• Securities Exchange Commission
• Looking at state/local pilots with AGA

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US Agencies Adopt XBRL

• US Federal Financial Institutions Examination
  Council mandated XBRL for quarterly Call Reports
  from banks October 2005
• Results demonstrate value compared to legacy
  processes
• More accurate data 100 data received met
  mathematical requirements vs. 70
• Faster data inflow less than one day after
  quarter end vs. weeks after quarter end
• Increased productivity 550 to 600 banks/analyst
  vs. 450 to 500
• Faster data access within 1 day of receipt vs.
  several days
• Greater efficiency workload complete 41 days
  after calendar quarter vs. 48 days
• SEC began a voluntary filing program and strongly
  support the use of the standard and the move to
  interactive data

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Not Convinced?

• Chairman Cox of the SEC
• United Technologies John Stantial
• Harvard Business Review

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XBRL Preparers Viewpoint

• John Stantial
• Director of Financial Reporting
• United Technologies Corporation

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Background United Technologies

• 47B international conglomerate
• Six principal segments
• Otis
• Carrier
• UTC Fire Security
• Pratt Whitney
• Hamilton Sundstrand
• Sikorsky
• Component of the Dow Jones
• Industrial Index

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Costs, Resources and Tools

• Initial investment of 300
• 80 hours on first filing, now down to 4
• Total investment of 40k and 600 hours
• Commercial tools used
• Virtually all work done in house by existing
  resources
• No new information is being required
• Technical knowledge of XML is not necessarily a
  requirement
• Focus moves from format to content

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The Benefits Beyond SEC Reporting

• Single source for ALL possible external reporting
• Benchmarking, peer comaprisons, research
• Internal consistency across all locations
• Enhanced control
• Significant reduction to manual
  handling/manipulation of data
• Facilitates, with increased reliability of ad hoc
  data requests

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Big 6 White Paper

• in a world of mass customization, standard
  financial statements have less and less meaning
  and why in a digitized world, shouldnt users
  have access to information more frequently?
• Experts agree, the current system of reporting
  and auditing will need to change--toward public
  release of more non-financial information..custom
  ized to the user and accessed far more
  frequently it is time to launch a process that
  will lead to the development of a new business
  reporting model
• global XBRL initiative.likely to revolutionize
  the entire company reporting model..

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Harvard Business Review

• Wacoal, a Kyoto-based maker of lingerie, has use
  XBRL to enhance its ability to aggregrate
  operating information from the 24 proprietary IT
  systems used by its businesses in 23 countries.
  Wacoal needed six months and 50 million to
  implement the system-a sixth of the time and a
  third of the money that would have been required
  for a traditional ERP solution it had
  considered. Harvard Business Review, February
  2007, Breakthrough Ideas for 2007

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SEC Chairman Cox-March 07 JoA

• XBRL is a tool, a way to use financial
  information in the same way we use almost every
  other kind of information today on the Internet.
• The genius of what I call interactive data is
  that the computer standards are open source and
  market driven. XBRL can be used to tag data of
  all kinds both numbers and text. So if youve
  got a complicated mixture of text and numbers in
  a government report to the EPA, it canb be
  produced in XBRL format, for the benefit of both
  the provider and the government agency.

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• Jake was dying. His wife sat at the bedside.
• He looked up and said weakly "I have something
  I must confess."
• "There's no need to, " his wife lovingly
  replied.
• "No," he insisted, "I want to die in peace. I
  slept with your sister, your best friend, and her
  best friend!"

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• "I know," she replied, now just rest and let
  the poison work."

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These processes are pervasive all along the
business reporting supply chain
XBRL Ledger
XBRL External Reporting
Processes
External Business Reporting
Business Operations
Internal Business Reporting
Investment, Lending Regulation Agencies
Economic Policy Making
Participants
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XBRL Taxonomy Growth
February, 2005 US GAAP CI US GAAP Bank US GAAP
Ins SEC Certification Mgmt Report Accountants
Report MDA
This does not include any private taxonomies
such as those prepared for statutory purposes.
Nov, 2005 General Ledger
June, 2004 IFRS GAAP NZ GAAP UK GAAP
July, 2005 China Framework IFRS GAAP US GAAP
Invest Mgt
January, 2004 UK GAAP 2.0 Canada GAAP
June, 2001 General Ledger
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XBRL Tools Growth(Representative Listing)
FDIC Vendors DBI Financial Systems,
Inc.FinArchFRS Global Financial Reporting
AnalyticsIDOM, Inc.Information Technology,
Inc.Fidelity Regulatory SolutionsJack Henry
Associates Inc.
Semansys Integrator Semansys Analyzer
Core Filings
Microsoft Business Solutions
Snappy Reports
Carthesis
J2R Batavia Data Driver
FR Solutions
Semansys Deployment Manager
Metapraxis
Adobe
DecisionSoft True North
High Ridge Technologies
UBMatrix Automator Pro
IBS Open Digital Reporting
Ipedo EII
Software AG
Hyperion
Covarity
Fujitsu XWand
Oracle
Fujitsu
XBI Software
Rivet Software
UBMatrix Converter
IBMatrix
SAP
DynAccSys Xabra
UBMatrix Tool Kit
XBRL Solutions
SavaNet
Caseware
Semansys Composer
Hitachi CBRP
Allocation Solutions
Hitachi Ximba
Navision
Creative Solutions
Edgar-Online IMetrix
Hitachi XiRute
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XBRL-US, Inc

• SEC dedicated funds
• Spun off from AICPA September 2006
• CEO hired December 2006
• VP, Internet Strategies and Member Services
• VP, Domain and Taxonomy Development
• VP, Adoption and Communication
• Interim Board in place
• Mission to support the implementation of XBRL
  in the United States through the development of
  US-specific taxonomies for use by the public and
  private sectors working with a goal of
  interoperability between sectors, and by
  promoting adoption of XBRL through the
  collaboration of business reporting supply chain
  participants.
• Adoption strategy
• Build awareness
• Develop membership to represent supply chain
• Establish XBRL-US, Inc. as primary source of
  information, education, research
• Establish pilot programs

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EBR JoA, June 2005

• the more closely external
• reporting mirrors internal
• reporting, the more efficient
• it will be
• after decades of increasingly
• complex reporting requirements,
• disclosures are difficult for even the
• most sophisticated users to understand.
  disclosure requirements and reporting processes
  are inefficient and error-prone

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Why Participate Now?

• Eliminate learning curve
• Open and flexible program
• Establish processes and controls
• Influence the development of taxonomies, tools,
• processes
• Potential for increased analyst/investor
  visibility
• Begin exploring potential benefits and future
  opportunities
• No valid reason not to!