XBRL as "Interactive Financial Data"

XBRL as “Interactive XBRL as “Interactive Financial Data”Financial Data”

Why should you care about this Why should you care about this technology standard?technology standard?

DemoDemo

Greg AdamsGreg Adams

CFO & COO Edgar OnlineCFO & COO Edgar Online

"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 CoxU.S. Securities and Exchange CommissionQuote in January, 2006 Financial Executives Magazine ArticleOn XBRL

Opportunity and ChallengeOpportunity and Challenge

• SEC Chairman Cox vision for interactive financial dataSEC Chairman Cox vision for interactive financial data– Voluntary Filing Program launched, effective Apr 4, 2005Voluntary Filing Program launched, effective Apr 4, 2005

• Test effectiveness of tagged data Test effectiveness of tagged data • Improve quality of information available to investorsImprove quality of information available to investors

– Request for Information, Oct 4, 2005Request for Information, Oct 4, 2005• How best to develop tools that will make “interactive financial data” a How best to develop tools that will make “interactive financial data” a

reality reality • How the Commission can meet the original goals of the VFPHow the Commission can meet the original goals of the VFP

• XBRL as an approved filing format is XBRL as an approved filing format is comingcoming• There are a number of challenges that need to be addressed in There are a number of challenges that need to be addressed in

order to enable broad participationorder to enable broad participation• How do we ensure this is a compelling solution for all How do we ensure this is a compelling solution for all

companies?companies?

What is XBRLWhat is XBRL

StandardizationStandardization

CalculationCash = Currency + Deposits

CalculationCash = Currency + Deposits

FormulasCash ≥ 0

FormulasCash ≥ 0

ContextsUS $

FY2006, Budgeted

ContextsUS $

FY2006, Budgeted

ReferencesGAAP I.2.(a) Instructions

Ad Hoc disclosures

ReferencesGAAP I.2.(a) Instructions

Ad Hoc disclosures

XBRLItem

XBRLItem

LabelCashCashEquivalentsAnd

ShortTermInvestments

LabelCashCashEquivalentsAnd

ShortTermInvestments

ValidationValidation

Presentation現金及び現金等価物

Presentation現金及び現金等価物

PresentationCash & Cash Equivalents

PresentationCash & Cash Equivalents

Finance-specific use of XMLFinance-specific use of XML Open standardOpen standard Collaborative market effort – 350 member Collaborative market effort – 350 member

organizationsorganizations Consortium established in 1999Consortium established in 1999 Implemented as a regulatory standardImplemented as a regulatory standard

Finance-specific use of XMLFinance-specific use of XML Open standardOpen standard Collaborative market effort – 350 member Collaborative market effort – 350 member

organizationsorganizations Consortium established in 1999Consortium established in 1999 Implemented as a regulatory standardImplemented as a regulatory standard

Technology StandardTechnology Standard

Crosses all industriesCrosses all industries Designed for extensibilityDesigned for extensibility Includes XBRL GLIncludes XBRL GL Taxonomies: IFRS, US GAAP (e.g. Commercial Taxonomies: IFRS, US GAAP (e.g. Commercial

& Industrial, Banking & Savings Inst., Insurance, & Industrial, Banking & Savings Inst., Insurance, Investment Management)…Investment Management)…

Crosses all industriesCrosses all industries Designed for extensibilityDesigned for extensibility Includes XBRL GLIncludes XBRL GL Taxonomies: IFRS, US GAAP (e.g. Commercial Taxonomies: IFRS, US GAAP (e.g. Commercial

& Industrial, Banking & Savings Inst., Insurance, & Industrial, Banking & Savings Inst., Insurance, Investment Management)…Investment Management)…

Broad ApplicationBroad Application

Evolving XBRL into a Comprehensive Evolving XBRL into a Comprehensive StandardStandard

• Repeatable, controllable business processRepeatable, controllable business process

• Reducing the complexity for preparersReducing the complexity for preparers

• Resolve deficiencies with US GAAP taxonomyResolve deficiencies with US GAAP taxonomy

• Rendering & analyzing XBRL documentsRendering & analyzing XBRL documents

• Sustainable ownership of US GAAP taxonomySustainable ownership of US GAAP taxonomy

Extend the taxonomy if Extend the taxonomy if necessarynecessary

External Reporting Business ProcessExternal Reporting Business Process

Create an XBRL document & Create an XBRL document & validate calculationsvalidate calculations

Publish XBRL Document & TaxonomyPublish XBRL Document & Taxonomy

Compare & mapCompare & map10-K / 10-Q to US 10-K / 10-Q to US GAAP TaxonomyGAAP Taxonomy

Assess Scope of Assess Scope of Reporting & Download Reporting & Download

TaxonomyTaxonomy

Review & Validate Review & Validate XBRL DocumentXBRL Document

Identify a team: Accountant & Identify a team: Accountant & Developer (XML)Developer (XML)

A Few Numbers on Microsoft 10-KA Few Numbers on Microsoft 10-K

• 175 pages printed on 8.5x11 in paper 175 pages printed on 8.5x11 in paper • 4400 lines of XML4400 lines of XML• Document validates with two industry toolsDocument validates with two industry tools• 213 MSFT elements added to US GAAP taxonomy213 MSFT elements added to US GAAP taxonomy

– Approx 400+ extensions, modifications Approx 400+ extensions, modifications – Used for 1077 discreet facts Used for 1077 discreet facts

• To produce: To produce: – Gap analysis to creating file: Approx 2 month staff Gap analysis to creating file: Approx 2 month staff

accountantaccountant– Extend taxonomy: 40 hoursExtend taxonomy: 40 hours– Validation: 3 weeks across 3 resourcesValidation: 3 weeks across 3 resources

Complexity for PreparersComplexity for Preparers

• A sample of technical detail the accountant A sample of technical detail the accountant must handlemust handle– Presented as a set of questionsPresented as a set of questions

• Based on real examples from Microsoft Based on real examples from Microsoft experience in filing under SEC VFPexperience in filing under SEC VFP– Three 10-Qs, most recent quarter ended Sept 30, Three 10-Qs, most recent quarter ended Sept 30,

20052005– Annual report, 10-K, for year ended June 30, 2005Annual report, 10-K, for year ended June 30, 2005– Included financial statements, notes, Included financial statements, notes,

management’s discussion and analysis (MD&A)management’s discussion and analysis (MD&A)

In the following example is the In the following example is the highlight a number or a string?highlight a number or a string?

Table: Components of finite-lived intangible assets acquired

Are the following numbers positive Are the following numbers positive or negative?or negative?

What does decimals=“INF” represent? What does decimals=“INF” represent? Can you provide an example?Can you provide an example?

<msft:CashDividendsPerShare contextRef="P1YFY2003" unitRef="USD" decimals="INF">0.08</msft:CashDividendsPerShare>



From Income Statements

What does “pure” refer to? When do What does “pure” refer to? When do you use it?you use it?

Deficiencies with US GAAP Deficiencies with US GAAP TaxonomiesTaxonomies

• Lack of comprehensive documentationLack of comprehensive documentation– Preparer must understand the 6 element types and how applied in Preparer must understand the 6 element types and how applied in

an XBRL documentan XBRL document– Concepts in US GAAP CI, notes and MD&A spans well over 1500 Concepts in US GAAP CI, notes and MD&A spans well over 1500

termsterms• Encoded US GAAP calculations in taxonomies are opaqueEncoded US GAAP calculations in taxonomies are opaque

– Preparer must infer and test these in the XBRL document validation Preparer must infer and test these in the XBRL document validation processprocess

– Extending taxonomies creates opportunity for coding errorsExtending taxonomies creates opportunity for coding errors• Taxonomies incomplete: Need to cover breadth and depth in Taxonomies incomplete: Need to cover breadth and depth in

variety of notes and MD&A disclosuresvariety of notes and MD&A disclosures• Need common methodology in XBRL for segment reporting, Need common methodology in XBRL for segment reporting,

fiscal year comparatives and so forthfiscal year comparatives and so forth

Rendering & Analyzing XBRL Rendering & Analyzing XBRL DocumentsDocuments

• Lack of rendering tools that resemble original files in Word with Lack of rendering tools that resemble original files in Word with Excel tablesExcel tables

• Taxonomy extensions can negatively impact comparison and Taxonomy extensions can negatively impact comparison and analysisanalysis– Thousands of registrants each with extensions numbering in the Thousands of registrants each with extensions numbering in the

hundreds hundreds – Three sets of files required to process XBRL documentsThree sets of files required to process XBRL documents

• Lack of methodology for context definitionLack of methodology for context definition• Multiple industry extension taxonomies such as for oil and gas Multiple industry extension taxonomies such as for oil and gas

are insufficient for hybrid companiesare insufficient for hybrid companies• Standard taxonomy calculations don’t match how companies Standard taxonomy calculations don’t match how companies

reportreport

Sustainable Ownership of Sustainable Ownership of TaxonomiesTaxonomies

• Today, US XBRL jurisdiction provides oversight & Today, US XBRL jurisdiction provides oversight & project managementproject management– Members work on volunteer basisMembers work on volunteer basis– Insufficient funding to evolve into comprehensive list of Insufficient funding to evolve into comprehensive list of

accounting & disclosure conceptsaccounting & disclosure concepts

• Lack of change management process Lack of change management process – Need to keep in sync with regulation & accounting Need to keep in sync with regulation & accounting

pronouncementspronouncements

• Need for quality assurance review by domain expertsNeed for quality assurance review by domain experts• An example…An example…

Illustrating the Need for OwnershipIllustrating the Need for Ownership

• What is FAS 123(R)?What is FAS 123(R)?• How many results do you think there are on the Web?How many results do you think there are on the Web?

– Lots of folks who will sell you an opinionLots of folks who will sell you an opinion

• Who in the US jurisdiction should answer:Who in the US jurisdiction should answer:– What are the basic disclosure requirements for companies What are the basic disclosure requirements for companies

for FAS 123(R)?for FAS 123(R)?

• Where is its implementation in the US GAAP CI?Where is its implementation in the US GAAP CI?• Do you know what it means for MSFT?Do you know what it means for MSFT?

Closing RemarksClosing Remarks

• Recommend that independent private Recommend that independent private sector entity provide US GAAP sector entity provide US GAAP taxonomy ownership & managementtaxonomy ownership & management

• Get involved in the VFP – provide Get involved in the VFP – provide feedback so that XBRL evolves in to a feedback so that XBRL evolves in to a compelling solutioncompelling solution

Q&A PanelQ&A Panel

XBRL as "Interactive Financial Data"

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