Dr. Ernest Capozzoli Kennesaw State University

The purpose of this presentation is to: Discuss XBRL history Discuss XBRL history Discuss Global Implications Discuss Global Implications Discuss the SEC mandate Discuss the SEC mandate Discuss the structure of the U.S. GAAP Taxonomy and the IFRS Taxonomy. Discuss the structure of the U.S. GAAP Taxonomy and the IFRS Taxonomy. Share experiences in tagging financial statements using USGAAP and IFRS. Share experiences in tagging financial statements using USGAAP and IFRS. Discuss ongoing XBRL initiatives Discuss ongoing XBRL initiatives 2

The Unknown As we know, There are known knowns. There are things we know we know. We also know There are known unknowns. That is to say We know there are some things We do not know. But there are also unknown unknowns, The ones we don't know We don't know. Don Rumsfeld 3

There is much we don’t know about XBRL like: Scope and Role Scope and Role What is it? What is it? What is a taxonomy? What is a taxonomy? What is an XBRL tool? What is an XBRL tool? What are the implications of the SEC mandate? What are the implications of the SEC mandate? What are the Global implications? What are the Global implications? What should we do? What should we do? 4

A linkbase is a collection of XML Linking Language [XLINK] extended links that document the semantics of concepts in a taxonomy. Calculation Linkbase - A calculation linkbase is used to relate XBRL concepts through the application of basic calculation rules (e.g., A + B = C). This ensures the accuracy of the many accounting equations that comprise XBRL reports and enables XBRL software to interpret these relationships correctly and automatically derive the correct values from the input data. Label Linkbase - This linkbase provides human readable strings for concepts. Using the label linkbase, multiple languages can be supported, as well as multiple strings within each language. Reference Linkbase - This linkbase associates concepts with citations of some body of authoritative literature. For example an SFAS or SEC ruls. Definition Linkbase - This linkbase associates concepts with other concepts using a variety of arc roles to express relations such as is-a, whole-part, etc. Presentation Linkbase - This linkbase associates concepts with other concepts so that the resulting relations can guide the creation of a user interface, rendering, or visualisation. 5

A taxonomy is a classification of financial concepts A taxonomy is a classification of financial concepts Hierarchical in nature – a loose tree structure with parents- children – grandchildren etc Hierarchical in nature – a loose tree structure with parents- children – grandchildren etc Example: Example: – Assets (Parent) Current Assets (Child) Current Assets (Child) – Cash (Grandchild) 6

Web pages are displayed using HTML however HTML is not robust or flexible enough to structure data Web pages are displayed using HTML however HTML is not robust or flexible enough to structure data With XML, it is much easier to write software that accesses the document's information, since the data structures are expressed in a formal, relatively simple way. With XML, it is much easier to write software that accesses the document's information, since the data structures are expressed in a formal, relatively simple way. 7

Charles Hoffman, a CPA, begins project in April 1998 to define financial statements and audit schedules using XML thus begins XBRL development this link goes to a history page Charles Hoffman, a CPA, begins project in April 1998 to define financial statements and audit schedules using XML thus begins XBRL development this link goes to a history pagebegins XBRL developmentbegins XBRL development July 1999 AICPA funds XBRL initiative July 1999 AICPA funds XBRL initiative June 2001 XBRL announces development effort to create XBRL for General Ledger to allow tagged data to be moved into and out of the general ledger. This will serve as a bridge between business reporting and transaction reporting. June 2001 XBRL announces development effort to create XBRL for General Ledger to allow tagged data to be moved into and out of the general ledger. This will serve as a bridge between business reporting and transaction reporting. 8

September XBRL-US unveils new taxonomies for US GAAP September XBRL-US unveils new taxonomies for US GAAP October 2005 FDIC requires call report data be submitted in XBRL +- 8,200 organizations October 2005 FDIC requires call report data be submitted in XBRL +- 8,200 organizations December 2007 SEC completed a massive project to update the US-GAAP taxonomy December 2007 SEC completed a massive project to update the US-GAAP taxonomy 9

Taxonomy has been updated in 2008, 2009, 2011 with a release expected in 2012 this link will take you to the taxonomy as well as other information GAAP2011.aspx Taxonomy has been updated in 2008, 2009, 2011 with a release expected in 2012 this link will take you to the taxonomy as well as other information GAAP2011.aspx GAAP2011.aspx GAAP2011.aspx Link to spreadsheet = Contains approximately 15,966 concepts Link to spreadsheet = Contains approximately 15,966 conceptsContains approximately 15,966 conceptsContains approximately 15,966 concepts SEC has mandated XBRL use beginning on June SEC has mandated XBRL use beginning on June

The SEC released Rule on January 30, 2009 with an effective date of April 13, 2009 The SEC released Rule on January 30, 2009 with an effective date of April 13, approximately 500 domestic and foreign large-cap filers that have a $5 billion float were required to furnish tagged financial statements and block-tagged notes approximately 500 domestic and foreign large-cap filers that have a $5 billion float were required to furnish tagged financial statements and block-tagged notes other large US GAAP filers - those with a $750 million float other large US GAAP filers - those with a $750 million float will include the remaining US GAAP filers and foreign private issuers using IFRS will include the remaining US GAAP filers and foreign private issuers using IFRS. In subsequent years the level of tagging detail will be expanded to require that each table and note amount be tagged separately In subsequent years the level of tagging detail will be expanded to require that each table and note amount be tagged separately 11

IFRS taxonomy has also been through several revisions S+Taxonomy.htm IFRS taxonomy has also been through several revisions S+Taxonomy.htm S+Taxonomy.htm S+Taxonomy.htm Latest release is 4/1/2011 Latest release is 4/1/2011 Contains approximately 2,757 elements Contains approximately 2,757 elements The IFRS Taxonomy 2012 is currently being developed by the IASC Foundation XBRL Team and is due for release by April The IFRS Taxonomy 2012 is currently being developed by the IASC Foundation XBRL Team and is due for release by April

Established Jurisdictions XBRL Australia XBRL Belgium XBRL Canada XBRL Denmark XBRL France XBRL Germany International Accounting Standards Board XBRL International, Inc XBRL Ireland XBRL Italy XBRL Japan XBRL Korea XBRL Luxembourg XBRL Netherlands XBRL South Africa XBRL Spain XBRL Sweden XBRL UAE XBRL United Kingdom XBRL United States Affiliate Organization - XBRL Europe Provisional Jurisdictions Open Compliance Ethics Group GRC-XML XBRL China XBRL India XBRL Poland XBRL CH - Switzerland 13

The US-GAAP taxonomy is much more detailed The US-GAAP taxonomy is much more detailed Contains all disclosures required by the SEC and FASB as well as common practices. Contains all disclosures required by the SEC and FASB as well as common practices. The question is - should US Filers give up the level of financial reporting detail provided by the current taxonomy in a move to IFRS adoption? The question is - should US Filers give up the level of financial reporting detail provided by the current taxonomy in a move to IFRS adoption? 14

The IFRS implementations are not monolithic The IFRS implementations are not monolithic There are country specific implementations of IFRS There are country specific implementations of IFRS Likewise – there will be country specific implementations of the IFRS taxonomy. Likewise – there will be country specific implementations of the IFRS taxonomy. 15

To meet current SEC filing requirements will require extensions to the taxonomy. To meet current SEC filing requirements will require extensions to the taxonomy. Using the IFRS taxonomy will require a substantial amount of extensions! Using the IFRS taxonomy will require a substantial amount of extensions! Extensions by their nature impact consistency and comparability. Extensions by their nature impact consistency and comparability. 16

– Outsourcing – Bowne, Donnelly etc Bowne, Donnelly etc – High level – Bolt-on Rivet Crossfire Rivet Crossfire Fujitsu Interstage Xwand Fujitsu Interstage Xwand – Embedded / Integrated - XBRL & XBRL Global Ledger From legacy system straight into XBRL From legacy system straight into XBRL

What is tagging? What is tagging? – It is the process of associating am element in the taxonomy to an item on the financial statements. – An XBRL tool (software) is required. – Rivet Software has numerous products- the one most commonly used is Crossfire. – It is relatively easy to use. – Uses Word and Excel. – I will briefly demonstrate Crossfire Dr Ernest Capozzoli and Dr Radwan Ali18

XBRL requires that a tool be used to both view and work with a taxonomy XBRL requires that a tool be used to both view and work with a taxonomy Numerous tools exist such as: Numerous tools exist such as: – Rivet Software – Crossfire Rivet Software – Crossfire Rivet Software – Crossfire – Fujitsu software – Interstage Xwand Fujitsu software – Interstage Xwand Fujitsu software – Interstage Xwand Viewers Viewers – Rivet Crossview – Bowne/Donnelly Viewer – XBRL US – Yeti Yeti 19

Many of our students have tagged Many of our students have tagged – Financial statements (Balance Sheet, Income Statement and Statement of Cash Flows) for Macy’s, Coke, Exxon, and others – Disclosures / Notes for Accounting Policies, Debt, Accruals, Taxes, Pensions as well as others – IFRS filings for Fiat and converted Exxon and Coke into IFRS using the IFRS taxonomy I will share with you some of the results of these assignments I will share with you some of the results of these assignments Dr Ernest Capozzoli20

KSU we perform: KSU we perform: – Financial statement tagging (AIS) – Disclosure tagging (Advanced Financial Reporting) – IFRS tagging using IFRS taxonomy (International Course) Still to be developed – Auditing XBRL documents Still to be developed – Auditing XBRL documents Dr Ernest Capozzoli21

So what should be done? Be aware that taxonomy development is driving some level of standardization for financial reporting as well as other reports Be aware that software is changing at all levels QuickBooks to SAP Dr Ernest Capozzoli22

Become familiar with the terminology Become familiar with the terminology Understand the merits and limits of the technology Understand the merits and limits of the technology Ask yourself: Ask yourself: – What skills do I need to effectively implement XBRL? – Need to learn a tool – Explore viewers Dr Ernest Capozzoli23

Dr. Ernest Capozzoli Kennesaw State University

25 US-GAAPIFRS Total Elements13,4512,757 Monetary6,0911,542 String4,5981,180 Decimal9328 Shares2005 Date1042 Dimensions (tables)2809