Enhanced Business Reporting

Al Anderson,

Senior Vice President, Member and Public Interests

AICPA

Why Enhance Business Reporting? Elements of Enhanced Business Reporting Conceptual Framework Special Committee On Enhanced Business Reporting

Mission Collaborative Consortium Approach Desired Consortium Representation Draft Consortium Structure Consortium Strategy: Leveraging Existing Structures VMRC Structure and how VMRC will Contribute to

Enhanced Business Reporting How XBRL will Contribute to Enhanced Business

Reporting and the Role of XRBL in the Corporate Reporting Supply Chain

High-Level Timeline

AGENDA

Current reporting model no longer sufficientNot timely -- it’s after-the-fact informationNot informative enough Ignores many factors of performance

To date -- calls for change and some action

Time is NOW for coordinated action

WHY ENHANCE BUSINESS REPORTING?

Historical Financial Statements

Enhanced Business

Reporting

Lagging indicators… One size fits all

(GAAP) Ignores non-

financial measures Reports results of

past decisions

Leading indicators… Tied to mission,

vision and values Tied to factors

critical to success Moves decision

criteria to forefront

Past FuturePresent

Business Reporting: A Changing Dynamic

WHY ENHANCE BUSINESS REPORTING?

Historical Financial Statements

Enhanced Business

Reporting

Lagging indicators… Periodic Historical Cost-basis Financial only Statements Looking backward

Leading indicators… On-demand Real-time/future Value-basis Comprehensive Custom reports Looking forward

Past FuturePresent

Business Reporting: A Changing Dynamic

WHY ENHANCE BUSINESS REPORTING?

System Reliability

Financial and Non-Financial Measures

Information Dissemination

Understandable Disclosures

Corporate Accountability

CONVERGENCE TO “NEAR

REAL-TIME”SCALABLE

ELEMENTS OF ENHANCED BUSINESS REPORTING

5 Elements Deployment

Information Dissemination

Technology XBRL

Business Information

Financial &Non-Financial

Measures

VMRC•Standards Setters

Foundational Concepts System

Reliability

CorporateAccountability

UnderstandableDisclosures

VMRC•SEC Plain English•FASB Projects

•Continuous Audit•Trust Services

•COSO ERM•OCEG•GRI

CONCEPTUAL FRAMEWORK

MISSION: To establish a consortium of

investors, creditors,

regulators, management, &

other stakeholders to improve the

quality & transparency of

information used for decision-making

I: Identification of key

stakeholders whose

collaborative involvement is

critical to successful

development & implementation

II: Overarching goal of making

better information available to investors & creditors,

helping them to see

organizations through the eyes of management

SPECIAL COMMITTEE ON ENHANCED BUSINESS REPORTING MISSION

Work collaboratively Consortium-based Globally focused Comprised of key stakeholders of enhanced business reporting

Build consensus

Help define migration paths to drive adoption by participants in the corporate reporting supply chain

COLLABORATIVE CONSORTIUM APPROACH

IMPLEMENTATION of enhanced business reporting can only be achieved through a collaborative effort including the following stakeholder groups:

Government/Regulatory Agencies

Investment and Lending Community

Public and Private Companies and Industry Associations

Accounting Firms and Associations

Technology and Software Enablers

Academia and Researchers (Think Tanks)

DESIRED CONSORTIUM REPRESENTATION

EBR Framework

Operating CommitteeOperating Committee

Advisory Board(Champions/Visionaries)

Advisory Board(Champions/Visionaries)

Industry

EBR Management

EBR Management

ProducersProducers

Industry Assns. (3), FEIIndustry Assns. (3), FEI

Public Companies (4)Public Companies (4)

Private Companies (1)Private Companies (1)

Supply ChainCommunities

Deployment Groups

ConsumersConsumers

Rating Agencies (1)Rating Agencies (1)

Regulators (4)Regulators (4)

Investmt. Community (5+)Investmt. Community (5+)

EnablersEnablers

Accounting Profession (5)Accounting Profession (5)

Technology Enablers (2)Technology Enablers (2)

Other Enablers (2)Other Enablers (2)

(To be Organized by Industry Sectors) Und. Disclosures

Corp. AccountabilityCorp. Accountability

……

Fin. & Non-Fin. Meas.Fin. & Non-Fin. Meas.

……

……

……

System Reliability

Info. DisseminationInfo. Dissemination

Standards Process

Lending Community (1-2)Lending Community (1-2)

DRAFT CONSORTIUM STRUCTURE

Deployment Groups

Understandable Disclosures

CONSORTIUM STRATEGY:LEVERAGING EXISTING STRUCTURES

System Reliability

Information Dissemination

Financial & Non-Financial Measures

Corporate Accountability

…

Value Measurement & Reporting Collaborative

Continuous Assurance Lab

VMRC Board of DirectorsVMRC Board of Directors

VMRC CONSORTIUM STRUCTURE

Research is Being Conducted in Each of

the Areas Below Across Multiple

Industry Sectors:

VMRC MembersVMRC Members Framework Working Group

Innovation

Human Capital

Customers/Clients

…

…

…

The Framework will be Customized by Industry Sectors,

Including the Following & Others:

Pharmaceuticals

Natural Resources

Telecom

…

…

…

AICPA

CICA

SAICA

Grant Thornton

D&T

McGladrey & Pullen…

Business Community

Accounting Firms

Accounting Institutes

…

…

Research Working Group

Goals: Identify best practices. Debate existing concepts. Test existing and new

concepts. Modify concepts, as

necessary. Develop framework to allow

for comparability between: Organizations. Within Industries

Create: Comparability Consistency Transparency Principles/Criteria

HOW VMRC WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

Enables custom reporting

More precise, clear, consistent reporting

More timely, accurate, useful data for decisions

Less burden on companies

Greater interoperability of data

Accelerates adoption of enhanced reporting

HOW XBRL WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

Lowers cost of e-filing initiatives

Enhanced functionality of processesValidationCompliance with business rulesLinkage from reports to other resources

HOW XBRL WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

ExternalFinancialReporting

BusinessOperations

InternalFinancialReporting

Investmentand Lending

AnalysisProcessesProcesses

ParticipantsParticipants

AuditorsTradingPartners

Investors/Creditors

FinancialPublishersand Data

Aggregators

Regulators

XBRL for G/LJournal Entry

ReportingXBRL for

Regulatory Filings

TodayXBRL for Financial

Statements

XBRL for AuditSchedules

XBRL forCredit Filings

XBRL for BusinessEvent Reporting

Software Vendors

ManagementAccountants

Companies

New

THE ROLE OF XBRL IN THE CORPORATE REPORTING SUPPLY CHAIN

HIGH-LEVEL TIMELINE

September 2002

Special Committee on Enhanced Business Reporting approved

by AICPA BOD

January 2003

First meeting of Special Committee on Enhanced Business

Reporting

Champions identified, contacts initiated

June 2003

Strategic Planning

June 2004

Consortium launched

Consortium Launch

Planning

Communications plan launched

January 2004

Invitations extended to desired consortium participants: sales &

negotiation phase

Develop conceptual framework for enhanced business reporting and prototype report

QUESTIONS?