Of Advancement Through Knowledge ▪ Interaction ▪ Information ▪ Influence ▪ Integrity ▪ XBRL eXtensible Business Reporting Language

of Advancement Through Knowledge

▪ Interaction ▪ Information ▪ Influence ▪ Integrity ▪

XBRL

eXtensible Business Reporting Language



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Electronically tagging data in financial and other reports, which facilitates retrieval and analysis of the data.

Business information format standard

“UPC” for Financial Statements

Open Standard, No licensing fees

What is eXtensible Business Reporting Language (XBRL)?



Element or Item

Specification

Taxonomy=Financial dictionary

How Does XBRL Work?

Validation

Standardization

CalculationCash = Currency +

Deposits

CalculationCash = Currency +

DepositsFormulas

Cash ≥ 0Formulas

Cash ≥ 0

ContextsUS $

FY2004Budgeted

ContextsUS $

FY2004Budgeted

LabelcashCashEquivalentsAndShortTermInvestments

LabelcashCashEquivalentsAndShortTermInvestments

ReferencesGAAP I.2.(a)Instructions

Ad Hoc disclosures

ReferencesGAAP I.2.(a)Instructions

Ad Hoc disclosures

PresentationCash & Cash Equivalents

PresentationCash & Cash Equivalents

XBRL

Item

XBRL

Item

Tagging Process creates an Instance Document that is readable by software





XBRL InternationalDevelopment in 1998Now 550 companies

XBRL USLocal jurisdiction of XBRL International Mission: Support implementation of XBRL in the United States through development of taxonomies for use by US public and private sectors

Fast tracked by SECProject to review XBRL benefits launched in 2004

FEI/FERF monitoring since approx. 2000

Brief History


FEI provides you with

FEI has a reputation for being a widely-influential voice on behalf of financial executives before the U. S. SEC, FASB, PCAOB, IASB and the U. S. Congress.

FEI Advocacy and Accounting Policy Initiatives

Committee on Corporate ReportingCommented over the years on time, liability, auditor involvement, footnote tagging, taxonomy.Recommended to start filing with SEC Form 10-Q, to use Form 8-K, delayed submissionAll considered through comment process Represented on SEC Committee on improvements to financial reporting (CIFiR) on its interactive data subcommitteeAbout ½ have to adopt this year


FEI provides you with

FEI has a reputation for being a widely-influential voice on behalf of financial executives before the U. S. SEC, FASB, PCAOB, IASB and the U. S. Congress.

FEI Advocacy and Accounting Policy Initiatives

Committee on Finance and Information TechnologyXBRL is an initiative of Technology & Reporting SubcommitteeCommented on U.S. taxonomyMeetings with the XBRL Advisory Committee to the International Accounting Standards Board and with XBRL USAll considered through comment process CFIT member Taylor Hawes is XBRL US board memberCFIT technical advisor Mike Willis is XBRL International chairCollaborates with FERF on objective studies on XBRL



Provide the SEC a new exhibit with their financial statements, including the footnotes and schedules to the financial statements, in interactive data format (XBRL)

Will not replace traditional filing formats in ASCII or HTMLLocal jurisdiction of XBRL International Mission: Support implementation of XBRL in the United States through development of taxonomies for use by US public and private sectors

Required on SEC forms and on corporate websites SEC forms: Annual 10-K, Quarterly 10-Q, foreign forms 20-F and 40-F, registration statements

3-year phase-in period based on size and status

The SEC Rules



Domestic and foreign large accelerated filers on US GAAPPublic float above $5 billion Beginning with quarterly report containing financial statements for a fiscal period on or ending after June 15, 2009

All other domestic and foreign large accelerated filers on US GAAP

Beginning with periodic report containing financial statements for a fiscal period on or ending after June 15, 2010

Remaining filers on US GAAP and foreign private issuers on IFRS

Beginning with periodic report containing financial statements for a fiscal period on or ending after June 15, 2011

The SEC Rules



FootnotesTag as a block of text in year one of useTag detailed qualitative disclosures in subsequent years (but each narrative not required)

File exhibit at the same time as report except:For initial interactive data exhibits (can file within 30 days)For detailed footnote and schedules in year two

If you don’t file…Will be deemed NOT current with Exchange Act reportsWill NOT be deemed to have adequate current info for safe harborBut, once data is provided, will be deemed current again-will NOT lose timely filing status

The SEC Rules



Voluntary XBRL filing program ends for 50 companies

LiabilityInteractive data (XBRL) file subject to federal securities laws if submitted within 24 months of when it was requiredFurnished, not filed for specified liability provisionsProtected from liability for initial failure to comply as long as good faith effort and prompt corrections made

The SEC Rules



Voluntary filer program: initial XBRL-formatted 10-Q for 2nd quarter of 2007

Financial reporting team plan involving software, identification of filings and extensions100 hours of training and preparation

Since then…Took 2 hours until filing of 10-Q for 2nd quarter of 2008 that was filed on the same dayImplementation Cost=$10,000 for creation and submission of four quarterly and one annual set of XBRL financials over a year

XBRL Filing Case Study: AGL Resources



Tagging of First Form 8-K earnings release80 hours of software training, establish process, perform tagging and filing

Since then…Process now less than 4 hoursOverall time and cost reduced by over 20%

XBRL Filing Case Study: United Technologies



Beyond the Rules – the XBRL potential



Existing processConstant need to integrate number of different systemsCommon solution is enterprise resource planning (ERP) software applicationFurnished, not filed for specified liability provisionsProtected from liability for initial failure to comply as long as good faith effort and prompt corrections made

XBRL enablesDisparate systems (G/L, transaction and sub-ledgers) to speak the same language

Systems Integration



Case Study: Wacoal ($1.4 billion Japanese apparel manufacturer)Worked with vendor Hitachi to connect 32 disparate systems

Wacoal translated many document types, on a variety of platforms: mainframes, minicomputers, UNIX systems and PC serversDone in under 6 monthsAvoided approximately $100 million for a single instance ERP

Systems Integration

Business Systems

Purchasing

Sales

Wages

XBRL GL Auto JournalizingXBRL GL Auto Journalizing

Add-onsJournalizing

XBRL GLConversion Engine

GL

AP

AR

XBRL GLXBRL GLDocumentDocument

ss

XBRL GLXBRL GLFinancial Financial

InformationInformation

Oracle E-Business Suite



Existing processStill largely manual Wide range of proprietary softwareMultiple reviewers and edits of reports and excel spreadsheets

Data Access, Assembly and Review

By using data extraction tools, XBRL enablesMore effective use of existing report writer apps for financial statement tables, footnotes, MD&ADecreases extraction time and number of documents



Existing processData validation tests prior to moving to data warehouse Errors passed back to data provider

XBRL enables data validation at the source level No data passing back and forthExample: FDIC applied in 2005 for call reports that shared information needs with 8,000 banks

Data error rate dropped from over 68% to under 5%Reduction in processing time from 45 to less than two daysReduction of analytical personnel from over 1,000 to fewer than 200

Data Quality



Existing processManual Control risk from multiple reviewers and editors

Spreadsheets

XBRL enablesSelf-service customized spreadsheet generationAutomated population of prior period informationFunctioning like virtual dashboards



Case Study: Microsoft

Filed 10-Q in XBRL format: financial statements, footnotes even before voluntary filing programFurnished full 10-K for fiscal 2005Working on integrating into internal management reporting system in a few years

Investor CentralReleased in Jan. 2008Portal of information for all investorsDrill down into detailed finances



Some but more awareness needed

But, comparable to awareness building of EDGAR

SEC will replace EDGAR with Interactive Data Electronic Applications (IDEA) that is XBRL based

Are Analysts Using?



ERP Vendor: SAPLaunched XBRL publisher product after SEC rule finalizedPartnered with XBRL software provider UBMatrixUsers of SAP products (Business Objects Planning and Consolidation, Business Suite software packages) can tag data

ERP Vendor: Oracle XBRL manager feature of Oracle Hyperion financial reportingXBRL publisher product consolidates, analyzes, approves XBRL report

Built-in Vendor: Clarity SystemsXBRL reporting services built into financial reporting systemTagging is automated

Bolt-On Tagging VendorsFujitsu, Hitachi, NewClaurs, Rivet

Software: Bolt-On Vs. Built-In Approach



Get educatedSEC final rule and SEC websiteXBRL International, PCAOB websitesConsider free XBRL US webcasts or filer training workshops in New York City, Wed., May 20 and San Francisco, Sept. 16, 2009FEI website and Current Financial Reporting Issues conference in New York City, Mon.-Tues., Nov. 16-17

Learn from others through their actual filings on SEC websiteRead XBRL US preparers guideGet management engaged

Next Steps



Develop a planIdentify a task forceQ2 filing considerations: users need a tag reader, new taxonomies expected, some software better than others

Identify optionsInformation about 64 vendor products on XBRL US website including product/service features, pricing, contact and customer support information Consider talking to auditors, financial printer or wire service for recommendations

Next Steps



Estimate costs/resourcesInstance documents are labor intensive the first timeInformal survey of 45 companies, 15-20 companies have hired vendors; costs for one company is $3K per quarter.

Create a practice run XBRL-enabled instance documentFree or trial tools available

Review taxonomies

Think through the process from start to finish

Start early!

Next Steps



XBRL USTaxonomy for MD&A out for commentIntegrating with standard setters (ISO 9000, Society for Worldwide Interbank Financial Telecommunication) to develop common structure

Potential IFRS transition – IFRS and US taxonomies different

FEI/FERF continues to monitor

Future Considerations



Questions?

Cheryl Graziano

[email protected]

(973) 765-1064

mailto:[email protected]

Documents

Of Advancement Through Knowledge ▪ Interaction ▪ Information ▪ Influence ▪ Integrity ▪ XBRL eXtensible Business Reporting Language