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Material from XBRL Steering Committee, Wayne Harding and Rick Hayes, Ph.D. June 26, 2005

XBRL An Introduction. Material from XBRL Steering Committee, Wayne Harding and Rick Hayes, Ph.D. June 26, 2005. the XBRL Steering Committee : Zachary Coffin (KPMG Consulting) Walter Hamscher (PricewaterhouseCoopers) Mike Willis (PricewaterhouseCoopers)

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Material from XBRL Steering Committee, Wayne Harding and Rick Hayes, Ph.D. June 26, 2005

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  1. XBRL An Introduction Material from XBRL Steering Committee, Wayne Harding and Rick Hayes, Ph.D. June 26, 2005

  2. the XBRL Steering Committee: • Zachary Coffin (KPMG Consulting) • Walter Hamscher (PricewaterhouseCoopers) • Mike Willis (PricewaterhouseCoopers) • Eric E. Cohen (Cohen Computer Consulting) • Wayne Harding (cpa2biz.com) • Louis Matherne (AICPA) • AND • Professor Rick S. Hayes (California State University LA)

  3. XBRL and the Emergence of ‘e-Standards’ • E-Standards are fundamental to the web. • HTML is the standard that opened the internet to business & personal use and is acknowledged as the web’s first ‘Big Step.’ • XML is having a similar ‘Big Step’ impact in using the web for commerce. • Over 200 XML-Based Specifications and Protocols exist, including— • RosettaNet – computer company supply chain and trading webs • cXML, CBL, eCo - e-Commerce Catalogue interoperability • OBI - Open Buying on the Internet - retail e-commerce • FpML - Financial Products (Derivatives, Swaps, FX) • ACORD XML - Insurance industry information exchange standards derived from EDI. • WAP - Wireless Access Protocol • But—XBRL has no competitors. • XBRLuniquely is focused on reporting. In fact, it can enhance all other XML standards, making them more useable to a company and its finance function.

  4. Innovation Technology Evolution of the Internet Program the Web Browse the Web Web Services Connect pre-Web WebPages Automation FTP, E-Mail,Gopher Presentation Connectivity TCP/IP HTML XML

  5. 4920 useless results in a typical search (“IBM Fixed Assets”)

  6. Credit Application Banks Text + Text + Regulatory Filings EDGAR Text 10-K Report Report Statements in Print + Report + + Tax Returns Statement on Web Today: A Convoluted Information Supply Chain Accounting Information System + + Text Corp. Investors Auditor

  7. XBRL: Multiple Outputs from a Single Specification Printed Financials Accounting System Regulatory Filings XBRL Web Site Tax Returns Other Sources of Information Bank Filings

  8. Printed Financials Investors Regulatory Filings Web Site Tax Returns Other Parties Bank Filings XBRL: Repurposing Continues XBRL

  9. What is XML (“Extensible Markup Language”)? • The next step after HTML toward the “Second-Generation Web” • Established as a standard by the W3C (World Wide Web Consortium) • Uses tags to give context and structure to the content • Provides a common way for disparate systems to exchange specific information (application integration) • Separates information from style, so a single source can be output to any format

  10. Platform Independent • Windows • Unix • Macintosh • Mainframe

  11. What Is XML: Self-Describing • Example: • <DATE>July 26, 1998</DATE> • Describes the information, not the presentation. Format neutral.

  12. The Key Is Context • <purchase-order>    <header-information><po-number>10932</po-number>    <po-order-date>99/5/1</po-order-date><po-request-date/>    <ordered-by-company-name>Cohen ComputerConsulting</ordered-by-company-name>[content removed here]    </header-information>    <line-items>    <line number="1">    <quantity-ordered>1024</quantity-ordered>    <description-of-item>Invoices</description-of-item>    <price-total-for-line>23.50</price-total-for-line>    </line>    </line-items>    <footer-information/></purchase-order>

  13. What Is XML: Expandable • Extensible • Whereas HTML is fixed • <H1>, <B>, <PRE> • XML lets you roll your own • <sugary-substance> • <Shakespearean-character> • <cash-equivalent> • Example: • <Person> <Name>Wayne Harding</Name> <Title>e-Radical</Title> <Age>38</Age></Person>

  14. What Is XML: Tags are the key • <type>cash-equivalents</type> <label>Cash and Securities</label> <amount period=“2000”>10000</amount> <amount period=“1999”>5000</amount></line-item>

  15. balance sheet total-assets asset (current) amount (2000) $91,000,000 What Is XML: Tags give context • Greater context to the information • Tree structure is natural in XML <balance-sheet> <total-assets> <asset-type="current"> <amount-period=“2000"> <amount> $91,000,000 </amount> </amount-period> </asset-type> </total-assets> </balance-sheet>

  16. USERS • Externally, • Creditors and suppliers • Information intermediaries/aggregators • Investors, analysts and advisors • Internally, • Any analyst or decision-maker • reporting financial information • evaluating the results of past economic decisions • projecting the future financial position and earnings of the business

  17. Today XBRL for Financial Statements XBRL for G/L Journal Entry XBRL for Reporting Regulatory Filings Internal External Investment Business Processes Processes Financial Financial and Lending Operations Reporting Reporting Analysis XBRL for Business XBRL for Audit XBRL for Event Reporting Schedules Tax Filings Financial Publishers Companies Investors Participants Participants and Data Aggregators Trading Management Auditors Regulators Partners Accountants Software Vendors XBRL Working Model: Planned Specifications

  18. Two layers of XBRL: • XBRL Core Specifications (for multiple countries) • E.g., XBRL for Financial Statements • XBRL Industry-specific Specifications • E.g., XBRL for Financial Statements in Healthcare

  19. Benefits • 1. Reduce cost of analyzing and reporting financial information • 2. Increase the speed and efficiency of business decisions • 3. Enhance the distribution and usability of existing financial statement information • CFOs still control disclosure, but now can use XBRL to communicate with investors more efficiently • No change to accounting standards • Easy to do • Makes investors happy

  20. Example: Cost Reduction • International Subsidiaries: • Large multi-national corporation uses XBRL to quickly analyze and publish the financial statements of numerous subsidiaries— • in different countries • with different languages • using different accounting standards and practices • on different computer systems

  21. Benefits • 1. Reduce cost of analyzing and reporting financial information • 2.Increase the speed and efficiency of business decisions • 3. Enhance the distribution and usability of existing financial statement information • CFOs still control disclosure, but now can use XBRL to communicate with investors more efficiently • No change to accounting standards • Easy to do • Makes investors happy

  22. Example: Efficient Decisions • Major mutual fund company feeds XBRL-ized information to customers to differentiate their funds as more objective and reliable investments • An investor uses XBRL to compare the financials for a range of companies— • Belonging to different revenue levels • Located within an industry sector • Along multiple analytical criteria

  23. Benefits • 1. Reduce cost of analyzing and reporting financial information • 2. Increase the speed and efficiency of business decisions • 3. Enhance the distribution and usability of existing financial statement information • CFOs still control disclosure, but now can use XBRL to communicate with investors more efficiently • No change to accounting standards • Easy to do • Makes investors happy

  24. Example: Credit • Loan Approval: • Small Business provides Bank with their financial information in XBRL and receives loan approval in 1 minute instead of 2 days • Credit Approval: • Company approves customer credit request with automated assessment processes facilitated by XBRL • Line of Credit: • Company provides capital markets with financial information in XBRL and receives expedited line of credit

  25. A common data format for many software applications and many types of reporting Displaying financial statements on the web Creating required SEC filings Collecting reports from subsidiaries and JVs Importing data into spreadsheets <group entity=“BigCo” units=“USD” type=“revenues” scale=“6” > <item period=“1998”>100</item> <item period=“1997”>95</item> </group> Features of XBRL What it is

  26. A common data format for many software applications and many types of reporting A shared data item taxonomy always grounded in existing accounting standards Features of XBRL What it is • US GAAP C&IP Type Taxonomy (Fragment) • · Current Assets (+) • · Cash and Cash Equivalents (+) • · Short term investments (+) • · Marketable securities (+) • · Available for sale (+) • · Held to Maturity (+) • · Trading (+) • · Receivables (+) • · Accounts Receivable-Trade net (+) • · Accounts Receivable-Trade (+) • · Allowance for Bad Debts (-) • · Receivables - Leasing (+) • · Notes Receivables (+) • · Other Receivables (+) • · Contract receivables (+) • · Unbilled receivables (+) • · Retention (+) • · Income tax (+) • · Finance receivables (+)

  27. A common data format for many software applications and many types of reporting A shared data item vocabulary always grounded in existing accounting standards An extensible language that can preserve the uniqueness of any company’s reporting Features of XBRL What it is • NE MedCorp: Type Taxonomy • · Net Income (+) • · Revenues (+) • · Patient Billings (+) • · Ambulatory Patient Billings (+) • · Expenses (-) • · Staff Salaries (+) • · Physician Salaries (+) • · Support Staff Salaries (+) • NE MedCorp: Entity Taxonomy • · New England Medical Corporation • · Massachusetts General • · Brigham and Women’s Hospital • · Longwood Medical Center

  28. Technical Benefits:Leveraging Web and e-Commerce Standards Who benefits • Specification license will be free • Vendor neutrality of XML facilitates interface with any third party systems • Enables and extends relational database functionality for all business reporting data • Enhances XML-enabled wide area search

  29. A fragment of XBRL: Taxonomy What it is <?xml version="1.0" encoding="utf-8"?> <schema xmlns:xbrl="http://www.xbrl.org/core/metamodel" xmlns:html="http://www.w3.org/1999/xhtml" targetNamespace="http://www.xbrl.org/us/us-gaap-ci-2000-07- 31.xsd"> ... <element name="salesRevenueGross.revenueFromAffiliates" type="monetary"> <annotation> <appinfo> <xbrl:rollup to="salesRevenueNet.salesRevenueGross" sense="add" order="3" /> <xbrl:label xml:lang="en">Revenue from Affiliates</xbrl:label> </appinfo> </annotation> </element> ... </schema>

  30. A fragment of XBRL: Instance • <?xml version="1.0" encoding="utf-8"?> • ... • <group type=“grossProfit.salesRevenueNet”> • <item period="1999-05-31">8671</item> • <item period="1998-05-31">11358</item> • <item period="1997-05-31">14484</item> • </group> • <group type=“operatingProfit.operatingExpenses”> • <item period="1999-05-31">5612</item> • <item period="1998-05-31">6487</item> • <item period="1997-05-31">8070</item> • </group> • <group type=“grossProfit.costOfGoodsAndServicesSold”> • <item period="1999-05-31">1188</item> • <item period="1998-05-31">1085</item> • <item period="1997-05-31">1197</item> • ... • </group>

  31. Another fragment of XBRL What it is <?xml version=“1.0”?> ... <item type=“statements.notesToFinancialStatements”/> <item type=“notesToFinancialStatements.significantAccountingPoliciesNote”/> <item type=“significantAccountingPoliciesNote.consolidationPolicy”/> <item type=“consolidationPolicy.allWhollyOwnedSubsidiaries”>The financial statements include the accounts of SquigglyCo and its subsidiaries. Significant inter-company transactions and balances have been eliminated. Investments in 50% owned joint ventures are accounted for using the equity method; the Company's share of joint ventures’ activities is reflected in other expenses.</item>

  32. Navision implementation of XBRL

  33. Industry Specific Roll-out of XBRL Financial Statement Specifications Financial Reporting Standards - Different Jurisdictions Today US GAAP Canadian GAAP Australian GAAP IAS US GAAP Canadian Acctg. Australian Acct. IAS Commercial & Industrial Commercial & Industrial Commercial & Industrial Commercial & Industrial Commercial & Industrial Commercial & Industrial Commercial & Industrial Commercial & Industrial (C&I) Companies Companies Companies Companies (C&I) Companies Companies Companies Companies US GAAP Canadian GAAP Australian Acctg. US GAAP Canadian Acctg. C & I, extended to C&I, extended to … C & I, extended to C&I, extended to C&I, extended to … Software Companies Software Companies Software Companies Software Companies Software Companies US GAAP US GAAP … … … C & I, extended to … … … C & I, extended to Media & Entertainment Media & Entertainment US GAAP US GAAP … … … Financial Services … … … Financial Services Companies Companies … … … … … … … … Within FY00

  34. External Internal External Internal Financial Financial Reporting Reporting Financial Financial External Internal Operational Operational Business Business Performance Operations Reporting Reporting XBRL Working Model: Strategic Direction Near Future: XML supporting Today: G/L Level XML Rendering Information of existing Acctg. Exchange Reporting Standards Standards Future: Far Future: XML supporting XML supporting Standardized Emerging Business Business Event Performance Vocabularies Metrics

  35. Additional Information • Useful References • CFO Magazines article, “How the Web was Won” about Online IR • http://www.cfonet.com/html/Articles/CFO/2000/00FEhowt.html • Scientific American article, “XML and the Second-Generation Web” • http://www.sciam.com/1999/0599issue/0599bosak.html • FASB’s Electronic Distribution of Business Reporting Information • http://www.rutgers.edu/Accounting/raw/fasb • IASC’s Business Reporting on the Internet • http://www.iasc.org.uk/frame/cen3_26.htm • XBRL Website • http://www.XBRL.org • For additional information, please contact • Zachary Coffin, Liaison Chair (213) 955-8508 or zcoffin@kpmg.com • Louis Matherne, AICPA (212) 596-6027 or Lmatherne@aicpa.org

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