XBRL – The New Language of Business Laurie Ball, CPA Swenson Advisors, LLP (Murrieta) Audit Director Accounting Day May 12, 2008

What is XBRL?

XBRL: Officially eXtensible Business Reporting Language Open specification for software that uses XML data tags to describe financial information A standards-based method with which users can prepare, publish in a variety of formats, exchange and analyze financial statements and the information they contain Free! (no licenses or royalties)

XBRL: In English New “language of choice” for electronic communication of business and financial data throughout the world Allows for creation of interactive, intelligent data Digitizes business reports in accordance with the rules of accounting in each country or with other reporting regimes such as banking regulation or performance benchmarking

In Other Words… A customizable set of rules for attaching identifying codes – or "tags“– to items of financial information Often referred to as bar-coding for financial information Provides links to other valuable information

Biggest Supporters XBRL International SEC Chairman Christopher Cox!!  Chairman Cox recently credited XBRL for: “…making business reporting easy, transportable and transparent.” 17 th XBRL International Conference Eindhoven, Netherlands May 7, 2008

History of XBRL “New” technology turning 10 years old later this year! Conceived by a CPA in Tacoma, WA Idea for XBRL originally taken to AICPA High Tech Task Force AICPA funded prototype project in 1998 XBRL Steering Committee formed in 1999  AIPCA, Big 4, Great Plains and Microsoft among first members

History of XBRL XBRL International held first conference in London in February 2001  10 countries attended Jurisdictions of XBRL International formed in October of 2001  Australia  Canada  Germany  IASB  Japan  Netherlands  UK

XBRL International Today, a nonprofit consortium of roughly 550 companies and agencies worldwide working together to promote and support XBRL Comprised of over 20 local jurisdictions (including XBRL United States) Attendees from 37 different countries at annual conference last week

XBRL US A nonprofit consortium of roughly 500 organizations including:  Accounting firms  Software providers  Newswires  Financial printers and filing agents  Information services

XBRL US Members Member organizations a “who’s who” list:  ADP  AICPA  Big 4 firms  CCH Tax and Accounting  Dun and Bradstreet  Financial Accounting Foundation  FDIC  IRS  Microsoft  Morgan Stanley  and the list goes on!

XBRL Vocabulary Based on XML  xEtensible Markup Language  Resembles HTML as same group developed both) Tags Taxonomies Instance Files

Tags Must have u nique name for all tags such as:  Current assets  Inventory  Work-in-process inventory Attributes can be added:  Type of value (number vs. date)  Normally debit or credit Arithmetic relationships can be established:  Equity equals assets minus liabilities  Total assets equals total liabilities and equity

Tags Hierarchical relationships can be established:  Work-in-process is a type of inventory  Inventory is a type of current asset  A current asset is a type of asset Links to relevant accounting literature can be made Translatable into other languages worldwide Syntax includes opening and closing tags

A Simple Example An element, such as a person's first, middle and last name, is “sandwiched” between and opening tag and a closing element tag as follows:  John  Henry  Doe

Taxonomy File A long list of tags:  Includes various accounting concepts,  Information about the attributes of various elements in the list  Databases with information about the external references associated with the various elements  The relationships between the various elements Concepts and relationships only; does not include any values More static (i.e., balance sheet)

Instance File Stores the tagged information for a set of financial statements Collection of facts only (captions, amounts, dates) Fluid; changes year to year Filed as an exhibit along with the Taxonomy File

Who Benefits from XBRL?

Potential Users Public companies Investors Analysts Regulators Financial executives Auditors

Uses of XBRL Aids in preparing, sharing and analyzing financial statements Can be “extended” to address the specific reporting needs of companies, industry groups and regulators Works for non-financial information (performance measures, loan applications, regulatory reporting, statistics)

Primary Benefits Gives investors quick access to information in a form they can easily use Lets companies prepare their financial data more quickly, more accurately and for less cost Makes the world's capital markets truly global and interconnected

Is Anyone Using XBRL Yet?

China Was First China first country in the world to mandate XBRL reporting Started in 2003 with 50 companies on voluntary basis Now required for all listed companies on China Securities Regulatory Commission and the Shanghai Stock Exchange Program now includes more than 800 companies

Others Followed Suit Countries who have also made XBRL reporting mandatory:  China  Singapore  South Korea  Israel  Japan

Others Are Preparing Some of the world's largest economies have made, or announced plans to make, XBRL reporting mandatory:  Australia  India  United Kingdom  Committee of European Securities Regulators  United States

Current US Users Over four dozen public reporting companies now voluntarily participate in the SEC’s pilot program including:  Alcoa Inc.  Xerox Corp  Healthcare Realty Trust, Inc.  ICU Medical, Inc.  Coca Cola Enterprises, Inc.

Is XBRL Required in the US?

Not Yet…but Soon! In May 2008 remarks, Chairman Cox said: “As most of you know, the SEC will be discussing a rule later this month that would set a firm schedule for using interactive data in public company filings in the United States.” Chairman Cox went on to say: “With a complete set of data tags for U.S. generally accepted accounting principles now in hand, we in the United States are ready to "go live" with interactive data. The preparer's guide is there, the software and vendor communities are there, and even the viewers and investor tools are there. Everything is in place.”

Resources & Tools

Tagging Software Reads the line item description and “suggests” the tag or tags that are most likely to be appropriate Usually makes the right guess but can “correct” as needed:  Search list for a different tag  Go directly to the corresponding accounting literature descriptions if uncertain

Accounting Software Tags “automatic” -- XBRL data tagging is an integral part of the system Less costly and easier to prepare financial statements Less risk of human error

Resources Major financial printers and filing agents XBRL International websites:   SEC website: Spotlight on Tagged Data and XBRL Initiatives for EDGAR Filings  ( Software vendors

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