Material from XBRL Steering Committee, Wayne Harding and Rick Hayes, Ph.D. June 26, 2005 XBRL An Introduction

the XBRL Steering Committee : Zachary Coffin (KPMG Consulting) Walter Hamscher (PricewaterhouseCoopers) Mike Willis (PricewaterhouseCoopers) Eric E. Cohen (Cohen Computer Consulting) Wayne Harding (cpa2biz.com) Louis Matherne (AICPA) AND Professor Rick S. Hayes (California State University LA)

XBRL and the Emergence of ‘e-Standards’ E-Standards are fundamental to the web. HTML is the standard that opened the internet to business & personal use and is acknowledged as the web’s first ‘Big Step.’ XML is having a similar ‘Big Step’ impact in using the web for commerce.  Over 200 XML-Based Specifications and Protocols exist, including— – RosettaNet – computer company supply chain and trading webs – cXML, CBL, eCo - e-Commerce Catalogue interoperability – OBI - Open Buying on the Internet - retail e-commerce – FpML - Financial Products (Derivatives, Swaps, FX) – ACORD XML - Insurance industry information exchange standards derived from EDI. – WAP - Wireless Access Protocol But— XBRL has no competitors. XBRL uniquely is focused on reporting. In fact, it can enhance all other XML standards, making them more useable to a company and its finance function.

Evolution of the Internet Technology Innovation FTP, , Gopher Web Pages Web Services TCP/IPHTML XML Connectivity Presentation Automation Browse the Web Program the Web Connect pre-Web

4920 useless results in a typical search (“IBM Fixed Assets”)

InvestorsCorp. Accounting Information System ++++ Report Regulatory Filings Text + Tax Returns Statements in Print + Statement on Web Text 10-K EDGAR Today: A Convoluted Information Supply Chain Auditor Credit Application + Banks Text +

Regulatory Filings Web Site Tax Returns Bank Filings Printed Financials Accounting System Other Sources of Information XBRL XBRL: Multiple Outputs from a Single Specification

Regulatory Filings Web Site Tax Returns Bank Filings Printed Financials XBRL Investors Other Parties XBRL: Repurposing Continues

What is XML (“Extensible Markup Language”)? The next step after HTML toward the “Second-Generation Web” Established as a standard 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) Separates information from style, so a single source can be output to any format

Platform Independent Windows Unix Macintosh Mainframe

What Is XML: Self-Describing Example:  July 26, 1998 Describes the information, not the presentation. Format neutral.

The Key Is Context purchase-order> /5/1 Cohen Computer Consulting [content removed here] 1024 Invoices /5/1 Cohen Computer Consulting [content removed here] 1024 Invoices 23.50

What Is XML: Expandable Extensible Whereas HTML is fixed ,, XML lets you roll your own  Example:  Wayne Harding e-Radical 38

What Is XML: Tags are the key cash-equivalents Cash and Securities

balance sheet total-assets asset (current) amount (2000) $91,000,000 $91,000,000 What Is XML: Tags give context  Greater context to the information  Tree structure is natural in XML

USERS Externally,  Creditors and suppliers  Information intermediaries/aggregators  Investors, analysts and advisors Internally,  Any analyst or decision-maker –reporting financial information –evaluating the results of past economic decisions –projecting the future financial position and earnings of the business

XBRL Working Model: Planned Specifications External Financial Reporting Business Operations Internal Financial Reporting Investment and Lending Analysis Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators XBRL for G/L Journal Entry Reporting XBRL for Regulatory Filings Today XBRL for Financial Statements XBRL for Audit Schedules XBRL for Tax Filings XBRL for Business Event Reporting Software Vendors Management Accountants Companies

Two layers of XBRL:  XBRL Core Specifications (for multiple countries) –E.g., XBRL for Financial Statements  XBRL Industry-specific Specifications –E.g., XBRL for Financial Statements in Healthcare

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 CFOs still control disclosure, but now can use XBRL to communicate with investors more efficiently  No change to accounting standards  Easy to do  Makes investors happy

Example: Cost Reduction International Subsidiaries: Large multi-national corporation uses XBRL to quickly analyze and publish the financial statements of numerous subsidiaries— –in different countries –with different languages –using different accounting standards and practices –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 CFOs still control disclosure, but now can use XBRL to communicate with investors more efficiently  No change to accounting standards  Easy to do  Makes investors happy

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 CFOs still control disclosure, but now can use XBRL to communicate with investors more efficiently  No change to accounting standards  Easy to do  Makes investors happy

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

Features of XBRL A common data format for many software applications and many types of reporting <group entity=“BigCo” units=“USD” type=“revenues” scale=“6” > Importing data into spreadsheets Creating required SEC filings Displaying financial statements on the web Collecting reports from subsidiaries and JVs What it is

Features of XBRL A common data format for many software applications and many types of reporting A shared data item taxonomy always grounded in existing accounting standards US GAAP C&IP Type Taxonomy (Fragment) · Current Assets (+) · Cash and Cash Equivalents (+) · Short term investments (+) · Marketable securities (+) · Available for sale (+) · Held to Maturity (+) · Trading (+) · Receivables (+) · Accounts Receivable-Trade net (+) · Accounts Receivable-Trade (+) · Allowance for Bad Debts (-) · Receivables - Leasing (+) · Notes Receivables (+) · Other Receivables (+) · Contract receivables (+) · Unbilled receivables (+) · Retention (+) · Income tax (+) · Finance receivables (+) What it is

Features of XBRL A common data format for many software applications and many types of reporting A shared data item vocabulary always grounded in existing accounting standards An extensible language that can preserve the uniqueness of any company’s reporting NE MedCorp: Type Taxonomy · Net Income (+) · Revenues (+) · Patient Billings (+) · Ambulatory Patient Billings (+) · Expenses (-) · Staff Salaries (+) · Physician Salaries (+) · Support Staff Salaries (+) NE MedCorp: Entity Taxonomy · New England Medical Corporation · Massachusetts General · Brigham and Women’s Hospital · Longwood Medical Center What it is

Who benefits Technical Benefits: Leveraging Web and e-Commerce Standards Specification license will be free Vendor neutrality of XML facilitates interface with any third party systems Enables and extends relational database functionality for all business reporting data Enhances XML-enabled wide area search

A fragment of XBRL: Taxonomy <schema xmlns:xbrl=" xmlns:html=" targetNamespace=" 31.xsd">... Revenue from Affiliates... What it is

A fragment of XBRL: Instance

Another fragment of XBRL... The financial statements include the accounts of SquigglyCo and its subsidiaries. Significant inter-company transactions and balances have been eliminated. Investments in 50% owned joint ventures are accounted for using the equity method; the Company's share of joint ventures’ activities is reflected in other expenses. What it is

Navision implementation of XBRL

Roll-out of XBRL Financial Statement Specifications US GAAP Commercial & Industrial (C&I) Companies US GAAP Commercial & Industrial (C&I) Companies Canadian GAAP Commercial & Industrial Companies Canadian Acctg. Commercial & Industrial Companies Australian GAAP Commercial & Industrial Companies Australian Acct. Commercial & Industrial Companies IAS Commercial & Industrial Companies IAS Commercial & Industrial Companies … … US GAAP Financial Services Companies US GAAP Financial Services Companies Canadian GAAP C&I, extended to Software Companies Canadian Acctg. C&I, extended to Software Companies US GAAP C & I, extended to Software Companies US GAAP C & I, extended to Software Companies US GAAP C & I, extended to Media & Entertainment US GAAP C & I, extended to Media & Entertainment … … … … … … … … … … … … … … … … … … … … Financial Reporting Standards - Different Jurisdictions Industry Specific Australian Acctg. C&I, extended to Software Companies Today Within FY00

XBRL Working Model: Strategic Direction Internal Financial Reporting External Financial Reporting Internal Business Operations Reporting External Business Performance Reporting InternalExternal Financial Operational Today: XML Rendering of existing Acctg. Reporting Standards Future: XML supporting Standardized Business Event Vocabularies Near Future: XML supporting G/L Level Information Exchange Standards Far Future: XML supporting Emerging Business Performance Metrics

Additional Information Useful References  CFO Magazines article, “How the Web was Won” about Online IR –  Scientific American article, “XML and the Second-Generation Web” –  FASB’s Electronic Distribution of Business Reporting Information –  IASC’s Business Reporting on the Internet –  XBRL Website – For additional information, please contact  Zachary Coffin, Liaison Chair (213) or  Louis Matherne, AICPA (212) or