XBRL Adoption by Tax Administrations

1. XBRL Adoption by Tax Administrations Eric E. Cohen Chair, XBRL US; Co-founder, XBRL; Chief Architect, XBRL GL eric.e.cohen@us.pwc.com

2. What is XBRL? A consortium An archival format XBRL A transfer syntax Supply chains working to develop XMLfor business reports A standardised way to design XML Standards(Not a specific XML standard) Specification: syntax and semantics of taxonomies and instances Optimized for Business Reporting

3. Tax Regulators Investors Creditors Lenders Website Aggregators One way One way XBRL BUSINESS REPORTING XBRL GL Journal Taxonomy BUSINESS ERP G/L Packages CRM Transaction Creation 2-way 2-way (e-)Business X12, UN/CEFACT Forum, UBL, HR-XML, ACORD, MISMO, and other XML INITIATIVES Suppliers Customers • Orders • A/P • Delivery • Orders • A/R • Delivery XBRL GL Fills the GAPS between GAAPS Detail to summary Intra system Detail Accounting recognition/ classification

4. Why are Tax Authorities Looking at XBRL? • EFiling, eGovernment and other efforts • Representing current eFiling in friendlier face • Financial statements and information • Same payload useful for many purposes, comparable • Note: different jurisdictions and the “books” • Universal audit trail • From transactions through the business reporting supply chain • Other business information • XBRL: Summarized, aggregated, filtered, (sorted) • XBRL GL: Underlying detail

5. XML and Other Reusable Formats Note: PDF is a very popular document exchange format, but is primarily designed for human, and not computer, consumption. Likewise, TIF, GIF, JPG, BMP and other binary graphics formats. Note 2: UNICODE is an “update” to ASCII more useful in the international context. weakness workaround strength

6. One Framework • One format • Optimized for business reporting information • Attributes of business reporting information • Needs of business reporting information • Lowering preparation/compliance burden • Smoother collection of data of all kinds • Reduction of things published to reconcile and track • More common adoption by software developers • Web Services

7. XBRL • Internationally Developed • Royalty-free • Optimized for business reporting • Entirely XML-family based • XML, XML Namespaces, XML Schema, XLink • Holistic • One family, one framework, collaborative, compromise for greater common good • Interoperability - validation, comparison across data sources

8. Oxymoron: Customizable Standards • Standardized Customization • X - Extensibility • Greater community gets commonality • Local community gets flexibility, customization • A new world that brings customization and compromise together • Standards • Standardized customization • “Bread trail” from customization to standards

9. XBRL • Post processed reporting • Financial statements • US • IFRS • German • Japan • Many other countries • Bank call reports, tax forms, other formats • Detail (XBRL GL) • Entries, agents, resources, documents • Universal audit trail • Who is using the same version of the same accounting system as 1999?

10. Operations Operations Operations Operations Operations Operations Ledger Ledger Ledger Ledger Ledger Ledger Reporting Reporting Reporting Reporting Reporting Reporting Database Database Database Database Database Database Consolidated Management GAAP Statutory

11. < >

12. KEY Core Saxon Business Multicurrency Customer, vendor, employee

13. Invoice, voucher info Inventory, ValueReporting KEY Core Saxon Business Multicurrency

14. Service Congress Treasury Tax Policy Analysts Regulator filing format CLIENT Guidance Checklists Practitioner Aids Organizer Regulations News Instructions Filing formats Reference Integrated Non-integrated Outsources ASP Trading Partners Lenders Other Regulators The Market Regulator Service Extranet 3rd Parties Regulator Software developers

15. Tax Regulators Involved in XBRL

16. Australian Tax Office • ATO recently joined the XBRL Consortium • Considering XBRL 2.1 as the standard for electronic filings • Phased implementation: • Activity Statements (12 M filings annually) • Phase I scheduled for the end of 2003 • Anticipated benefits: • Time and cost savings • Enhanced information processing

17. Canada Revenue Agency • Active member of XBRL Canada • Presentation to follow • (Slide from last meeting attached - was CCRA)

18. Canadian Value Proposition Benefits T2 GST Others Other Gov’ts CCRA CCRA XBRL Taxonomy STF snapshot XBRL Chart of Accounts (GAAP) BI/DS Instance Document CCRA Taxonomies Other Gov’t Depts XML Exchange/Transformation XML Exchange/Transformation XML Exchange/Transformation TBD Individ.Tax T4 Corp. Tax T2 Excise VAT GST Employers Tax Other Levels of Gov’ts New and Legacy Systems TBD Externally Internally Externally

19. German Tax Agency (Oberfinanzdirektion München) • Workgroup "XBRL Taxonomie Steuern" (Taxonomy for Tax Filing) • XBRL Deutschland e.V. workgroup establishing XBRL as a standard for electronic tax filing in Germany. • The workgroup's agenda comprises: • Development of a taxonomy (or expansion of the existing taxonomy GermanAP) in order to render all pertinent data • Processing and operating (data delivery workflow, assurance, certifying data quality) • Information exchange with international workgroups and other jurisdictions focusing on this issue • Back end processing still an issue • Staffing • Staffed by Oberfinanzdirektion München (tax authority), DATEV, and software providers. • Date of last update: May 27, 2003 - see http://www.ofd.bayern.de/ofdmuenchen/

20. Japan - National Tax Agency • What: Portion of Electronic Tax Filing, i.e. Financial Statements • Crucial Project for XBRL Japan • NTA will nominate/endorse any XML-based FS submission if it proves to work • Currently only XBRL is on NTA’s radar screen. • Large Scale Project • Impact on virtually all companies • When: NTA plans to make tools available in November 2003, to go live in March, 2004 (corporate tax filing for the year 2003). • How: Based on the latest XBRL Specification • Based on XBRL Japan’s “sample” Taxonomy • Effect: XBRL-enabled accounting software products emerging. • When actually started, it will accelerate adoption at large scale. • Updated news as of Dec-03 as follows:

21. Their “e-tax” project is positioned as a part of implementation of e-government plan (“e-Japan”) using digital signature. Adoption of XBRL is admitted as a one of acceptable formats for the financial statements attached to filing information. • The financial statements received in XBRL format are to be printed in paper to validate the contents. Direct linking to the agency’s internal system is considered difficult at this point. • This system is giving clear priorities on interface to taxpayers. Implementation of STP in NTA is left unfulfilled. • Filers create tax returns in XML format in this system, and adoption of XBRL is admitted for some documents in accompanying materials (corporate financial statements, business summary report, etc.) • Verification of numerical consistency and accuracy, between tax returns in XML and attached financial statements in XBRL, is not available yet in a systematic way. The NTA should perform those procedures in manual fashion in the meanwhile. • The reason of selecting Nagoya as the first jurisdiction to launch e-tax system: 1) it has 10% of the nation wide tax revenue and 2) it has well-assorted kinds of taxpayers. • NTA has a system to perform complex validation, analysis and statistical work, called “KSK system” (a back office system). • Software application for creating tax return will be distributed to taxpayers in a CD-ROM. • NTA can issue certificates of tax payment (electronic certificate of tax payment) to taxpayers, however NTA cannot show those certificates to a third party since law prohibits it. Certificates are only seeable within local government agency. • When a taxpayer presents a tax return to the NTA, he also prepares a copy of the return. The NTA affixes a reception stamp on the copy for the taxpayer; however, it only proves that the NTA has received his/her return, not that the copy is identical to the submitted return. On the e-tax system, the NTA returns e-mail that says they received a return. • < Upcoming schedule > • February 2, 2004 – e-tax filing for income tax and consumption tax filing (for personal business) will be available for the taxpayers in the jurisdiction of Nagoya Regional Taxation Bureau (including the prefecture of Gifu, Shizuoka, Aichi and Mie). • March 22, 2004 – other than the tax filing listed above, e-tax filing for corporate tax, consumption tax (corporate), tax payment for all tax items and some of the submission process for tax applications and notifications will be available for the taxpayers in the jurisdiction of Nagoya Regional Taxation Bureau. • June 1, 2004 – all e-tax procedures started in Nagoya jurisdiction will be available throughout the country. • From September 2004 – e-tax filings for other submission processes for tax applications and notifications will be available for the taxpayers nationwide.

22. Netherlands • Dutch Tax and Customs Administration • Mandate for eFiling by 1/2005 • Corporate tax: >90% in XML • Portal access for 100% of corporate tax users • Today • Corporate tax: 1% today in XML • Personal tax, based on simple XML: 90% • Customs: 80% using an EDI model • Options • Offline filing based on standard eMedia Jul-2004 • Online web-based forms starting Feb-2004 • Considering XBRL • Government initiative to reduce compliance burden • XBRL can be catalyst for reducing costs

23. UK Inland Revenue • Electronic filing processes • Persuasive business case • Office of e-envoy • 2004 optional filings • All compliance software vendors in place • Also evaluating role within audit and VAT

24. Other XBRL International Members • Irish Revenue • Inland Revenue Authority of Singapore • Inland Revenue Department of New Zealand • Encouraging development and adoption • Collaborating on financial statement and other taxonomy development • Collaborating on common issues regarding security, audit and other issues - WIN-WIN-WIN

25. Information FINANCIAL STATEMENT TAX FORM TAX INSTRUCTIONS Operational Data Corporate Data feeds direct access or extracts Paper Support

26. Streamlined Processing Extra- Intra- XBRL for Financial Statements XBRL G/L Common Audit Trail XBRL for 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 and Data Participants Participants Aggregators Trading Regulators/Stock exchanges Auditors CFO’s Partners Software Vendors

27. The architecture of XBRL Taxonomy Labels InstanceDocument Reference Definition Concept Presentation Fact Calculation Formulae Context Entity Segment Scenario Unit Precision Period CWA

28. Why XBRL? • XBRL adds to XML: • Multi dimensional data contexts • Mathematical relationships between concepts • Flexibility about how to present items to users • Aliases and other definition relationships • Links to authoritative literature and guidance • Financial reporting vocabularies (taxonomies) Reporting apps need these even when using XML. Definitions AKA Liquid Assets References GAAS I.2.(a) USSGL 1100.00 Presentation Cash & Cash Equivalents XBRL Item Calculations Cash = Currency + Deposits FormulasCash ≥ 0 Contexts USD FY2003 Budgeted

29. How XBRL Compares to Proprietary XML weakness workaround strength

30. Why XBRL Linkbases Over “Standard” XML Schema weakness workaround strength

31. Why XBRL for XML Reporting Standard? • Community developed concepts with communication of meaning, support, requirements • Advantages to development community, users • Greater picture • More than just efficiencies as point-to-point, single use filing • Greater integration with internal systems • Filing • Definition, validation (PRE-validation) • Extensibility • Internal and then external sharing

32. XML Without Agreement … • XML is “self-defining?” • Sure, this looks simple:

33. … is just SYNTAX • But how “self-defining” is this? • To a computer (XML parser), they are the same. • The tags (element names) provide no semantic knowledge to the program. • NEED TO COMMUNICATE MEANING - across languages - enter XBRL!

34. Some Options • Ignore/disallow XBRL altogether • XBRL as an option for filers • Required statutory accounts in local XBRL format as payload • XBRL based standards for one or more tax filings • Mandate that XBRL be used for some or all reporting • XBRL as an INTERNAL efficiency tool • Compliance, audit, reporting to outsiders share common language, tools • Cooperate and collaborate for more global XBRL adoption and usage • Reduce everyone’s costs

35. From the Financials

36. Getting from here to there

37. Representative XBRL-enabled Products • Shipping • Oracle FSG • PeopleSoft • SAP mySAP financials • Hyperion • Microsoft Business Solutions Navision, Axapta • Creative Solutions (et al.) • Caseware • About to ship • Microsoft Office 2003 Add-in

38. XBRL Outreach • XBRL in general • Interoperability pledge • Other efforts • XBRL GL • XBRL GL and audit/continuous audit community • XBRL GL and electronic efforts • XBRL and Tax XML • We have common needs, interests and all fit in the Business Reporting Supply Chain • Not just technical needs • Future development issues - including security/DigiSig

40. XBRL Issues • XBRL is NOT point-to-point, proprietary schemas • Ease of development and fast implementation • Familiarity • XBRL GL is MORE than tax authority needs • Familiarity with Schemas and complexType relationships • XBRL Specification 2.1 and complexTypes • Incentives • Others