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					“Business Reporting in
  the New Economy”
                  www.xbrl.org
                        Presented by
                    J. Louis Matherne
            Director – Information Technology
                          AICPA
 Federation of Schools of Accountancy - 2000 Annual Meeting
           December 4 and 5 - San Antonio, Texas
Today‘s Agenda
 Who is Involved
 Why XBRL
 What is XML and XBRL (with demo)
 Information Supply Chain - Users &
  Benefits
 What is Involved
 Future Direction
 Implications for education
Additionally…
Confirmed New Members (as of 15 November 2000):
 Deutche Bundesbank          National Center of Charitable
 U.S. Department of           Statistics
  Defense (DFAS)              Seattle Pacific University,
 Dresdner Kleinwort           Center for Professional
  Benson                       Development
 Nikkei (Nihon Keizai        Global Filings
  Shimbun)
                              Business Wire
 New River
 Practitioners Publishing    Hong Kong Society of
  Company                      Accountants
                              Innovision
XBRL International is Gaining Strength
XBRL activities occurring in—
  United States                 China & Hong Kong
  Canada                        Malaysia
  United Kingdom                New Zealand
                                 Taiwan
  Australia
                                 Japan
  Singapore                     Netherlands
  Germany                       Nordic Federation (Denmark,
  Ireland                        Norway, Sweden)
  France                        Spain

                 And on a global level through the—
                    International Accounting Standards Committee
                    International Press Telecommunications Council
                    International Standards Organization
Arthur Levitt Says …
  ―I would like to see you develop valuation models that result in
  consistent, comparable and fair values of assets and liabilities. I
  would like to see you hone specific, but plain English definitions
  for the types of information you believe should be included in
  public disclosure. I would like to see you take your XBRL
  project a step further, providing account classifications
  for companies in common industries. In short, I challenge
  you to turn all of this data into meaningful information for
  investors.‖

- Arthur Levitt, Chairman, U.S. Securities & Exchange Commission
     October 24, 2000, at the Fall Council of the AICPA (Las Vegas, Nevada)
Why XBRL ?

Improve communication to investors


  More efficient aggregation and analysis


     More efficient creation of financial statements
Why Now ?

            Internet



  XML                  CPA
XBRL & the Internet

    "The explosive growth of the Internet is
      not only changing the way companies
                     conduct their business,
   it also promises to forever alter the way
                they communicate business
                              performance.‖
- CFO Magazine, February 2000
XBRL: Extensible Business Reporting Language
        XBRL is a global e-business language
  for financial information, reporting and analysis.


HTML is the language that opened up the internet.
   Enabled users to browse the web
        Simple problem:
4921 results in a typical search
   (e.g. “IBM Fixed Assets”)
Browsing the Web (Content—without Context)
Searching for the word “Mercury” on the Web can provide
a wide variety of results—too many—such as:




                                Hg
―Content in Context‖ (Industry-specific)

     Auto Industry         <CAR-MODEL>

   Chemical Industry        <SYMBOL>

     Publishing or            <GOD>
      Mythology

     Music Industry       <RECORD-LABEL>

   Aerospace Industry       <PROGRAM>

       Astronomy             <PLANET>
XBRL: Extensible Business Reporting Language
        XBRL is a global e-business language
  for financial information, reporting and analysis.


HTML is the language that opened up the internet.
    Enabled users to browse the web.

XML is the next step to using the internet for business.
XML
Widely expected to reduce cost of publishing to
 the Net by as much as 50%.

And by next year …

     70% of all B2B transactions executed on
     the Web will be done using XML.

                      Gartner Group prediction
XML


  XML stands for:
   eXtensible
     Markup
         Language

  Universally accepted method of exchanging
  information
What Is XML?




     ―XML is a
        platform-independent,
        self-describing,
        expandable,
        standard data exchange format‖
XML is Platform Independent

 Windows
 Unix
 Macintosh
 Mainframe
XML is Self-Describing

Example:
    <DATE>July 26, 1998</DATE>
Describes the information, not the presentation
Format neutral
XML is Extensible

Whereas HTML has a fixed set of tags
    <H1>, <B>, <PRE>
XML lets you create your own tags
    <sugary-substance>
    <Shakespearean-character>
    <cash-equivalent>
HTML vs. XML

HTML                                            XML
<html>                                          <purchase_order/>
  <body>                                        <stock_number>1002</stock_number>
     <p>Purchase Order, Stock Number 1002, 2,               <price>100</nrice>
100</p>                                                     <number>2</number>
   </body>                                      </purchase_order>
</html>
XBRL: A Fragment of a Raw Data
    Raw Data in Spreadsheet…

    Company         Financial       Line Item                       Label                           Year   Value
                    Statement

    Coca Cola Co.   Balance Sheet   CurrentAssets.CashandCashEqui   CurrentAssets.CashandCashEqui   1999   1611
                                    valents                         valents


    Coca Cola Co.   Balance Sheet   CurrentAssets.CashandCashEqui   CurrentAssets.CashandCashEqui   1998   1648
                                    valents                         valents




    Same Raw Data in XML (XBRL) Format

    <group>
    <group type="CurrentAssets.CashandCashEquivalents">
    <item period="1999">$1,611 </item>
    <item period="1998">$1,648 </item>
    </group>
Who defines the tags?
Tags are defined by industry consortiums
Each industry’s standard tags are commonly
referred to as a taxonomy
Standard .orgs (reporting vs ‗e‘)
Accounting / Auditing
     Reporting
                                   „e-Business‟
   ASB                               W3C
   IASC                              OASIS;UN/CEFACT (ebxml)
   FASB                              xml.org
   IFAC                              RosettaNet
   SEC                               ACORD
   Territory Institutes



CPAs participate / lead in these   What about these?
Who‘s Building Taxonomies?

Accounting     Advertising Architecture
Automotive Banking           Communication
Economics      Education     E-Commerce
 XBRL
EDI          uniquely focused on
          is ERP       Financial
         business reporting
Healthcare HR          Insurance
Legal          Music         News
Publishing     Real Estate   Retail
Science        Software      Supply Chain
    XBRL Adds Reporting to E-Commerce



         Tax   Regulators Investors     Creditors     Lenders Website

One                               Aggregators                           One
way                                                                     way



                            BUSINESS
                    ERP          G/L Packages         CRM


                          Transaction Creation
2-way                                                                   2-way

            Suppliers     •Orders         •Orders         Customers
                          •A/P            •A/R
                          •Delivery       •Delivery
    XBRL Adds Reporting to E-Commerce



         Tax   Regulators Investors     Creditors     Lenders Website

One                               Aggregators                           One
way                                                                     way


                                XBRL
                            BUSINESS
                    ERP    G/L Packages CRM
                     BUSINESS REPORTING

                          Transaction Creation
2-way                                                                   2-way

            Suppliers   (e-)Commerce
                          •Orders
                          •A/P
                                          •Orders
                                          •A/R
                                                          Customers
                          •Delivery       •Delivery
                        OTHER XML INITIATIVES
XML is …
• Published as a recommendation 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)
• Provides a means to separate data from style so a
  single source can be output for multiple uses
• Separates data from logic of applications so that it
  can be reused for multiple purposes.
XBRL is …
 standards-based electronic language for financial
  information, reporting and analysis.
 enables a dramatic improvement in the processing of
  financial reports
 XBRL documents can be—
   Prepared efficiently
   Exchanged reliably
   Published more easily
   Analyzed quickly
   Retrieved by investors simply
   to enable smarter investments
 … communicates business performance for
the financial reporting supply chain

      XBRL …
     Today: A Convoluted Information Supply Chain
                                         Credit                 Banks
              Text             +       Application
              Text

              Text             +       Regulatory
                                                               10-K
Report                                  Filings        EDGAR
                       GL
Report
              +                        Statements
Report                             +     in Print


 +                                     Statement
 +                     +                in PDF
                      C of A
                                       Statement                      Text
Operational
                  +                     on Web
Data Stores
                                   Corp.   Investors
                                       Auditor
 XBRL Multiple Uses
  Systems             Systems               Credit
                                             Credit
                                              Credit
                                               Credit
                                          Reporting
                                           Reporting
                                            Reporting
                                             Reporting
              XBRL
                                                                  Creditors

  Systems                                 Regulatory
                                           Regulatory
                                            Regulatory
                                             Regulatory
                                            Filings
                                             Filings
                                              Filings
                                                Filings



                                           Financial              Investors
                                   XBRL     Financial
                                             Financial
                                              Financial
                                          Statements
                                                           XBRL
                                           Statements
                                            Statements
                                             Statements


                                          Statements
                                           Statements
   Other                                    Statements
                                               For
                                              Statements
                                                For
Sources of                                       For
                                           Financial
                                                  For              Other
Information                                 Financial
                                              Financial            Parties
                                          Performance
                                               Financial
                                           Performance
                                            Performance
                                             Performance
              XBRL
   Other                Other                 Tax
                                               Tax
Sources of           Sources of                  Tax
                                                  Tax
                                            Filings
                                             Filings
                                              Filings
Information          Information                Filings
What software ‘sees’
is the differentiator
and drives benefits
    (here is an example)
 Financial Institutions—and their Users
SMALL BUSINESS provides FINANCIAL INSTITUTION with
  their information in XBRL and receives loan approval in less
  than a day instead of two days—or two weeks.
             Average Time for Loan Processing—1.75 days


                90% + time spent on Mechanics
              Value-added Analysis and Decision-making?                        <10%


Mechanics                   With => Better
            More Time for AnalysisXBRL? Analysis => Less Risk

                                           Or
Mechanics Analysis    Mechanics Analysis        Mechanics Analysis   Mechanics Analysis

                 Process more loans in the same amount of time
Who Benefits?
 XBRL Working Model: Supply Chain & Beneficiaries

                                              Today
                                        XBRL for Financial
                                           Statements




                              Internal            External            Investment
Processes       Business
                             Financial            Financial          and Lending
               Operations
                             Reporting            Reporting            Analysis




                                                               Financial
                                                               Publishers
                            Companies                                       Investors
Participants                                                   and Data
                                                              Aggregators

                 Trading    Management
                                               Auditors           Regulators
                 Partners   Accountants


                                        Software Vendors
Benefits to Today's Users
1. Reduce cost of analyzing and reporting
   financial information
2. Increase speed and efficiency of business
   decisions
3. Enhance the distribution and access of
   existing financial statement information
4. More readily exchanged
5. Increase and enhance analysis
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
Example: Cost Reduction
International Subsidiaries:
• Large multi-national corporation uses XBRL to
   quickly roll–up, analyze and publish the financial
   statements of numerous subsidiaries—
      – in different countries
      – with different languages
      – using different GAAP
      – on different computer systems
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
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
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
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
Development & Adoption Strategy
XBRL Timeline
 Currently
   – www.xbrl.org web site demos cover a variety of
     uses
   – Core reporting standard plus one document type
     released 7/31
   – Pilot implementations at US- and non-US
     companies of various sizes & industries and by
     vendor/working committee
   – Registration of draft with XML Schema Directories
 Roadmap for Financial Reporting Taxonomies
                                                         Financial Reporting Across Jurisdictions

                                                            Today
                               Illustrative Taxonomy
                                Development Matrix         U.S.       IAS       U.K.    Germany     Australia   Canada

                                    US GAAP
                               Commercial & Industrial
                              Commercial & Industrial      …
                                                           …
                                                           Done      …
                                                                     …          …
                                                                                …         …
                                                                                          …           …
                                                                                                      …          …
                                                                                                                 …
Industry Specific Reporting




                                  (C&I) Companies
                                 (C&I) Companies

                                     US GAAP
                                 CC & I, extended to
                                   & I, extended to        …
                                                           …         …
                                                                     …          …
                                                                                …         …
                                                                                          …           …
                                                                                                      …          …
                                                                                                                 …
                                   Mutual Funds
                                Software Companies

                                    US GAAP
                                 CC & I, extended to
                                   & I, extended to        …
                                                           …         …
                                                                     …          …
                                                                                …         …
                                                                                          …           …
                                                                                                      …          …
                                                                                                                 …
                                Media & Entertainment
                               Media & Entertainment

                                     US GAAP
                                CC & I, extended to
                                  & I, extended to         …
                                                           …         …
                                                                     …          …
                                                                                …         …
                                                                                          …           …
                                                                                                      …          …
                                                                                                                 …
                               Media Agriculture
                                     & Entertainment

                                      US GAAP
                                   Financial Services
                                  Financial Services       …
                                                           …         …
                                                                     …          …
                                                                                …         …
                                                                                          …           …
                                                                                                      …          …
                                                                                                                 …
                                      Companies
                                     Companies

                                        …
                                        …                  …
                                                           …         …
                                                                     …          …
                                                                                …         …
                                                                                          …           …
                                                                                                      …          …
                                                                                                                 …

                                                                     Within FY01
 Timeline – and beyond

 Working/publishing the balance of the matrix over the next 18 to
  24 months
 Significant Adoption anticipated in this 18 to 24 month
  timeframe
                                                   App to fin rep
XBRL Taxonomies Under Development

 Commercial and Industrial Companies, US GAAP -
  Published
 Federal Departments, US
 Mutual Funds, US
 Financial Institutions, US
 Commercial and Industrial, IASC
 Commercial and Industrial, German GAAP
                                                 App to fin rep
XBRL Taxonomies Under Development

  Commercial and Industrial, Canadian GAAP
  Commercial and Industrial, Australian GAAP
  Commercial and Industrial, New Zealand GAAP
  Commercial and Industrial, Singapore GAAP
  Financial Institutions, Australian GAAP
  Public Sector, Australian GAAP
  General Ledger Transactions
  Not for profit financial reporting
   XBRL Development & Adoption


         Adoption

         Tool Development

         Taxonomy Development
   -00




                       -01




                                             -02




                                                                -03
             -00




                                    -01




                                                       -02
         De c




                                De c




                                                   De c
Jun




                    Jun




                                          Jun




                                                             Jun
 XBRL Working Model: Planned Specifications

                                                     Today
                       XBRL for G/L             XBRL for Financial
                        Journal Entry              Statements                 XBRL for
                         Reporting                                          Regulatory Filings



                                         Internal           External               Investment
Processes         Business
                                        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                                                               and Data
                                                                          Aggregators

                    Trading         Management
                                                         Auditors             Regulators
                    Partners        Accountants


                                                 Software Vendors
XBRL Uses

XBRL for Financial Statements
XBRL for General Ledger
XBRL for Journal Entry Reporting
XBRL for Credit Line Reporting
XBRL for Mutual Fund Performance
XBRL for Economic Indicators
XBRL for Performance-related Press Releases
XBRL for Risk Reporting
XBRL for Regulatory Filings
XBRL for Tax Filings
XBRL for Assurance Schedules
XBRL for Authoritative Literature
XBRL for “Business” Reporting
    Balanced Scorecard, Benchmarking, and other performance
     reporting
                                               quiz
So when will this happen??

A. Never.
B. After I retire.
C. Before I retire but too late for me to have to
   worry about it.
D. Sooner than I want to admit, but I still have
   enough time to procrastinate.
E. Next five years.
F. Next two to three years.
quiz
Implications for
      Education
Technology enables change

    Producer &          Client &          Assurer &
      Creator          Consumer            Advisor


                 Business Opportunities               IS Consulting


                    Business Issues
                                                      Internal
                                                      Control

                      Applications                    Financial
                                                      Applications
                       Enabling
                     Technologies
                                                      PCs
Technology enables change

    Producer &          Client &          Assurer &
      Creator          Consumer            Advisor


                 Business Opportunities               ????


                    Business Issues
                                                      Data
                                                      Centric
                                                      New
                      Applications                    Reporting
                                                      Systems
                       Enabling                       XBRL
                     Technologies
                                                      XML
The 21st Century Annual Report (ICAEW 1998)

                             Reporting in a period of change
                   The “old” system             The ”new” system
                   Shareholder focus         Stakeholder focus
                         Paper based         Web based
            Standardized information         Customized information
                 Company controlled          Information available from a variety
      information on performance and          of sources
                            prospects
                   Periodic reporting        Continuous reporting
          Distribution of information        Dialogue
                 Financial statements        Broader range of performance
                                              measures
                    Past performance         Greater emphasis on future prospects
                       Historical cost       Substantial value-based information
                   Audit of accounts         Assurance of underlying system
                Nationally orientated        Globally based
             Essentially static system       Continuously changing model
             Preparer-led regulations        Satisfying market-place demands
TODAY: Business Reporting on Eurostoxx 100 Websites
                                                  Eurotop 100         Eurostoxx 50

Companies with web site                              100                  100
Financial reporting:
     Annual report                                    99                  100
     Interim report (at least Half year report)       64                   90
     Audit report                                     53                   66
     Five years summary                               47                   62
     Financial ratios                                 24                   38
     International Accounting Standards (IASC)        5                    8
           Formats:
      PDF (First generation)                          86                   88
      HTML (Second generation)                        49                   48
      Excel (Third generation)                        12                   12
      XBRL (Fourth generation)                        0                    0
Information about strategy                            54                   80
Environmental reporting                               34                   40
           Shareholders:
      Shareholders’ structure                         31                   46
      Shareholders’ news                              83                   84
      Shareholders’ meetings                          34                   54
Press releases                                        94                   94
Mailing list                                          28                   42

                                                                (Bonsón et al., 2000)
 Importance of Reporting

“…[W]hat excites the CEO is the ability
 to know what the business is doing at
  any given point in time, react quickly
     to market shifts and competitive
   threats and remain in tight control
 while empowering employees to make
    informed decisions more quickly.

     Year End Earnings Release Call
                    August 10, 1999
                                      John Chambers
                                          Cisco CEO
                                                      ”
 Best Practice

“ Virtual Close … has, in my
The
 opinion, just as much impact
on a company’s future success
  or lack thereof as the well-
 published e-commerce area.

   Year End Earnings Release Call
                  August 10, 1999
                                    John Chambers
                                        Cisco CEO   ”
On the Independent Audit

“[T]he audit remains rooted in historical
      reviews while transactions are
   increasingly processed in a real-time
                  manner.
                     …
We believe real-time auditing is not only
    possible, but it is necessary for the
    independent audit to survive in the
             information age.”

         - Emerson’s 2000 Big Five Annual Report, p. 14
                                                                 Lunch
   Questions for Discussion
 To what extent will corporate accountants need to know
  transactional/operational or reporting level XML data standards to
  understand/interpret operating activities?

 What insights to the transactional or operational level XML data
  standards will external accountants and auditors need to have to
  provide assurance?

 Should students (accounting and IT) become XML experts?
                                                                    Lunch
   Questions for Discussion
 What additional modifications to our current regulatory
  environment (like digital signatures) might facilitate enhanced
  reporting?

 If Linux can be developed in a collaborative fashion to become a
  competitor to Windows; would the same open community
  framework approach work for the development of business
  reporting?

 What will these e-business changes mean to the content of your
  course materials?
                                                              Lunch
Questions for Discussion
 If the virtual close becomes the norm, what implications
  would that have on reporting?….internal reporting AND
  external reporting.

 How will a data centric verses document centric world
  impact audit services? What opportunities does it create?
Request of FSA
Support XBRL
  Membership
  Review and comment on XBRL taxonomies
  Encourage adoption – Help build the case for XBRL
  Identify good XBRL examples
  Research implications of XBRL
  Publish
  Global Collaboration – Circles of Influence
  Integrate XBRL into graduate programs of accounting
 ―I can provide you with any piece of financial
     information, from any company, in any
  language, according to any set of generally
accepted accounting principles, anywhere on
this earth – including on this cell phone, or up
                in that airplane.‖

            XBRL – ride the light…
Useful References and Additional Information
Useful References


           WWW.XBRL.org
Useful References and Additional Information
Useful References
     Journal of Accountancy article, ―XBRL – How to Turn Data Into Strategy‖
        – http://www.aicpa.org/pubs/jofa/aug2000/zarowin.htm
     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
     Mike Willis, XBRL Committee Chair & Strategy Working Group Co-chair
        (813) 340-0932 or mike.willis@us.pwcglobal.com
     Louis Matherne, XBRL Strategy Working Group Co-chair
        (212) 596-6027 or Lmatherne@aicpa.org
     Zachary Coffin, Liaison Chair
        (213) 955-8508 or zcoffin@kpmg.com

				
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