XBRL as Interactive Financial Data

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XBRL as Interactive Financial Data

• Why should you care about this technology
  standard?

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Demo

• Greg Adams
• CFO COO Edgar Online

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"The reason that everyone is not doing their
financial reporting using interactive data is
simple  it's a new concept.  People will use it
when they discover how much time and money it can
save them, by automating and speeding up the
process.  We want it at the SEC because it will
make the financial reports much more useful. 
Companies will want interactive data for the same
reason. The truth is, it's inevitable -- and if
the 21st century has shown us anything thus far,
it's that technological change occurs extremely
quickly. "As a result, it's not surprising that
we're hearing from both filing agents and
accounting firms that their clients are suddenly
showing greater interest in interactive data. 
Given its enormous potential, there's no doubt
this increased interest in interactive data will
soon translate into widespread adoption."
Chairman Christopher Cox U.S. Securities and
Exchange Commission Quote in January, 2006
Financial Executives Magazine Article On XBRL
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Opportunity and Challenge

• SEC Chairman Cox vision for interactive financial
  data
• Voluntary Filing Program launched, effective Apr
  4, 2005
• Test effectiveness of tagged data
• Improve quality of information available to
  investors
• Request for Information, Oct 4, 2005
• How best to develop tools that will make
  interactive financial data a reality
• How the Commission can meet the original goals of
  the VFP
• XBRL as an approved filing format is coming
• There are a number of challenges that need to be
  addressed in order to enable broad participation
• How do we ensure this is a compelling solution
  for all companies?

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What is XBRL
Technology Standard
Broad Application

• Finance-specific use of XML
• Open standard
• Collaborative market effort 350 member
  organizations
• Consortium established in 1999
• Implemented as a regulatory standard

• Crosses all industries
• Designed for extensibility
• Includes XBRL GL
• Taxonomies IFRS, US GAAP (e.g. Commercial
  Industrial, Banking Savings Inst., Insurance,
  Investment Management)

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Evolving XBRL into a Comprehensive Standard

• Repeatable, controllable business process
• Reducing the complexity for preparers
• Resolve deficiencies with US GAAP taxonomy
• Rendering analyzing XBRL documents
• Sustainable ownership of US GAAP taxonomy

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External Reporting Business Process
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A Few Numbers on Microsoft 10-K

• 175 pages printed on 8.5x11 in paper
• 4400 lines of XML
• Document validates with two industry tools
• 213 MSFT elements added to US GAAP taxonomy
• Approx 400 extensions, modifications
• Used for 1077 discreet facts
• To produce
• Gap analysis to creating file Approx 2 month
  staff accountant
• Extend taxonomy 40 hours
• Validation 3 weeks across 3 resources

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Complexity for Preparers

• A sample of technical detail the accountant must
  handle
• Presented as a set of questions
• Based on real examples from Microsoft experience
  in filing under SEC VFP
• Three 10-Qs, most recent quarter ended Sept 30,
  2005
• Annual report, 10-K, for year ended June 30, 2005
• Included financial statements, notes,
  managements discussion and analysis (MDA)

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In the following example is the highlight a
number or a string?
Table Components of finite-lived intangible
assets acquired
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Are the following numbers positive or negative?
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What does decimalsINF represent? Can you
provide an example?
From Income Statements
ltmsftCashDividendsPerShare contextRef"P1YFY2003
" unitRef"USD" decimals"INF"gt0.08lt/msftCashDivi
dendsPerSharegt ltmsftCashDividendsPerShare
contextRef"P1YFY2004" unitRef"USD"
decimals"INF"gt0.16lt/msftCashDividendsPerSharegt
ltmsftCashDividendsPerShare contextRef"P1YFY2005
" unitRef"USD" decimals"INF"gt3.40lt/msftCashDivi
dendsPerSharegt
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What does pure refer to? When do you use it?
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Deficiencies with US GAAP Taxonomies

• Lack of comprehensive documentation
• Preparer must understand the 6 element types and
  how applied in an XBRL document
• Concepts in US GAAP CI, notes and MDA spans well
  over 1500 terms
• Encoded US GAAP calculations in taxonomies are
  opaque
• Preparer must infer and test these in the XBRL
  document validation process
• Extending taxonomies creates opportunity for
  coding errors
• Taxonomies incomplete Need to cover breadth and
  depth in variety of notes and MDA disclosures
• Need common methodology in XBRL for segment
  reporting, fiscal year comparatives and so forth

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Rendering Analyzing XBRL Documents

• Lack of rendering tools that resemble original
  files in Word with Excel tables
• Taxonomy extensions can negatively impact
  comparison and analysis
• Thousands of registrants each with extensions
  numbering in the hundreds
• Three sets of files required to process XBRL
  documents
• Lack of methodology for context definition
• Multiple industry extension taxonomies such as
  for oil and gas are insufficient for hybrid
  companies
• Standard taxonomy calculations dont match how
  companies report

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Sustainable Ownership of Taxonomies

• Today, US XBRL jurisdiction provides oversight
  project management
• Members work on volunteer basis
• Insufficient funding to evolve into comprehensive
  list of accounting disclosure concepts
• Lack of change management process
• Need to keep in sync with regulation accounting
  pronouncements
• Need for quality assurance review by domain
  experts
• An example

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Illustrating the Need for Ownership

• What is FAS 123(R)?
• How many results do you think there are on the
  Web?
• Lots of folks who will sell you an opinion
• Who in the US jurisdiction should answer
• What are the basic disclosure requirements for
  companies for FAS 123(R)?
• Where is its implementation in the US GAAP CI?
• Do you know what it means for MSFT?

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Closing Remarks

• Recommend that independent private sector entity
  provide US GAAP taxonomy ownership management
• Get involved in the VFP provide feedback so
  that XBRL evolves in to a compelling solution

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QA Panel