XBRL: The Basics Symposium on Information Systems Assurance Integrity, Privacy, Security & Trust in an IT Context October 20-22, 2005 Glen L. Gray, PhD CPA Department of Accounting & Information Systems California State University Northridge

Nerd Alert!!

Overview Pre-XBRL history The basic problems What is XBRL and how does it work

A Brief History 1969: Al Gore invents the Internet 1994: Commercialization of the Internet 1999: FASB and IASC each publish reports on financial reporting on the Internet Most large companies are including financial reporting information on their Web sites No consistency in terms of content, format, and navigation Probably violating reporting regulations! (Still true?) Boundary problems (In or out of financials?) Automated searches almost impossible October 1999: First XBRL meeting with 13 members 2005: The XBRL consortium has over 350 members—and still growing

Income Statement (Audited) The Basic Problem GrayCo Income Statement (Audited) Year ended Dec 31, 2004 (millions) 2004 2003 Sales $ 145 $ 132 Cost of Goods Sold 101 92 Gross Profit 44 40 Sales, general, and administrative 10 8 Net Income $ 34 $ 32

The Basic Problem Electronic business and financial information is usually transmitted in human readable form (e.g., SEC filings: 10-Ks, 10-Qs, etc.) Analysts spend 80% of their time extracting and preparing data for subsequent analysis Would need a very intelligent AI parser to automate data extraction But ad hoc reporting would baffle parser

A Potential Solution Tag every piece of data (XML, not XBRL yet) <CostOfGoodsSold currency=“USD” FiscalYear=“2004” scenario=“audited”>101000000</ CostOfGoodsSold > Intelligence built into data (parsing is easy) Map once, use many For analysis For different reporting requirements For different formatting requirements Free lunch? Bigger files Tags pose security risk

Property, Plant and Equipment A Remaining Problem Company Property, Plant and Equipment Sales Cost of Goods Sold Staples Total property and equipment Cost of goods sold and occupancy costs ExxonMobil Property, plant, and equipment, at cost, less accumulated depreciation and depletion Total revenue and other income Crude oil and product purchases Intel Property, plant and equipment, net Net revenue Cost of sales Amazon.com Fixed assets, net Net sales IBM Plant, rental machines and other property Total revenue Total cost Wal-Mart Property and equipment, net

Income Statement (Audited) Some XBRL Terms GrayCo Income Statement (Audited) Year ended Dec 31, 2004 (millions) Scenario Context Label Attribute 2004 2003 Sales $ 145 $ 132 Cost of Goods Sold 101 92 Gross Profit 44 40 Sales, general, and administrative 10 8 Net Income $ 34 $ 32 Value

What is XBRL XBRL stands for the eXtensible Business Reporting Language. Uses XML technology XBRL consists of “tags” that correspond to the concepts and information included in financial reports such as balance sheets and income statements. XBRL can be thought of as a “Bar Code” system for financial information, allowing financial statements to be read and understood by a computer.

How does it work XBRL Specification (Published by XBRL International) Taxonomies Extension Taxonomies Instance Documents

Taxonomies A Taxonomy is a dictionary of financial reporting terms or concepts Separate Taxonomies – also referred to as “Core” or “Building Block” taxonomies are developed for different reporting purposes such as US GAAP, IFRS, bank regulatory reporting. etc The concepts captured in a taxonomy are referred to as ELEMENTS. These Elements form the core of XBRL.

Anatomy of an XBRL Element Financial Reporting Concept Notes:

Anatomy of an XBRL Element Basic Attributes XBRL Element Relationships To other Elements & Information Notes:

Anatomy of an XBRL Element Label e.g. - “Goodwill” Name (i.e. XBRL “Tag”) IntangibleAssetsGoodwill Basic Attributes “Amount paid in excess of the value assigned to the identifiable net assets acquired”. Description Data type Monetary / String, etc. Notes: Balance Type Debit / Credit Period type Instant / Duration

Anatomy of an XBRL Element Publisher : FASB Name : Statement of Financial Accounting Stand. Number : 142 Paragraph : 23 URI : http:/www.fasb.org/pdf/fas142.pdf URIDate : 2004-08-01 Reference Relationships To other Elements & Information Assets Cash & cash equivalents Property plant & equipment Goodwill Total Assets Presentation Notes: Calculation Net Goodwill = Goodwill – Accumulated Amortization

Current Taxonomies @ XBRL.ORG COUNTRY / JURISDICTION TAXONOMY SPECIFICATION LEVEL STATUS Canada GAAP Primary Financial Statements 2.1 Ack Draft Germany AP Commercial and Industrial 2.0 Final IASB IFRS General Purpose, 2004 rules   IFRS General Purpose, 2003 rules Korea New Zealand  GAAP Commercial and Industrial United Kingdom United States GAAP – Commercial and Industrial App GAAP – Banking and Savings GAAP – Insurance      SEC Certification Management Report Accountants Report MD&A     GAAP – Investment Management

U.S. Financial Reporting Taxonomy Framework

Extension Taxonomies Extension Taxonomies allow a company to create and customize concepts and elements for their particular reporting practices. Extension taxonomies import then build on, or “extend” the Core or Building Block taxonomy. They allow for the addition of entity specific elements and the customization of element relationships.

Taxonomies and Extensions can be thought of as the building blocks for XBRL reporting First Raleigh Bank Terms Company Specific Terms US GAAP Bank Terms Industry Terms US GAAP FS Terms US GAAP Primary Terms Foundation terms

Closer Look at Taxonomies

Even Closer Look at Taxonomies

Instance Documents An Instance Document is your XBRL financial report Instance Documents will include Values (ex. numbers, blocks of text etc) Tags to identify the values Taxonomy references – Telling you where the tags are defined Context – Information describing the reporting entity and period Units/Measure – Information on unit of measure, currency etc.

Anatomy of a Instance Document Ex.. –Company Extension , USFR Commercial and Industrial Import Taxonomy “Basics” <usfr-pt:CostGoodsServicesSold precision="INF" contextRef="Qtr_Dur_063004" unitRef="USD"> 1500000 </usfr-pt:CostGoodsServicesSold > Tags Notes: Values $1,500,000

Anatomy of an Instance Document UNIT ID USD Measure Currency: USD, EUR, Shares Instant: As of 12/31/04 Start/End: 1/31/03 – 12/31/04 Period Contexts Segment Financial Printing, Outsourcing etc. Audited, Pro-forma, Restated Scenario Notes: Footnotes (2) In 2003, gain on sale of building of $2.7 million, net of taxes of $0.9 million.

Company Financial Statement XBRL Taxonomy Created by XBRL Consortium TAGGING XBRL Creation XBRL Document Created by Preparer AT 101 Assurance Consumed Rendered

Marking Up Data Tagging financial statements is as simple as selecting a value from a task pane and dragging and dropping them onto the Word/ Excel data to be tagged.

Across data definitions Across file formats The Answer - XBRL GL Across language Across data definitions Across file formats XBRL GL System 1 XBRL GL System 2 XBRL GL System 3 Account# Description Amount PostDate Account Number Account Description Entry Amount Posting Date Identificador de la Cuenta Descripción Principal de la Cuenta Monto Monetario Fecha de Asignación/Ingreso accountMainID accountMainDescription amount postingDate accountMainID accountMainDescription amount postingDate accountMainID accountMainDescription amount postingDate