Improving the quality and timeliness of internal reports Walter Hamscher Chair, XBRL International Steering Committee Consultant to PricewaterhouseCoopers

The business reporting supply-chain Externa l Financi al Reporti ng Business Operations Internal Financial Reporting Investment, Lending, and Regulation Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators Software Vendors Management Accountants Companies You are here

Improving the quality and timeliness of internal reporting using XBRL  The Goal  The Obstacles  What XBRL Offers  Why XBRL Now  Next Steps

Goal 1: Consistent, uniform data produced efficiently

Goal 2: Repurpose consistent data as needed Supp Info Forms Form Data Submits Receives Division Level Extract Merge Data Group LevelDepartment Level Participants Processes Maintain Definitions Collect Data Distributes Forms Form Data Dept Detail ReceivesSend Requests Prepare Report Submits Query Find Sources Analyze Data Regulator, Partner… Net

Improving the quality and timeliness of internal reporting using XBRL  The Goal  The Obstacles  What XBRL Offers  Why XBRL Now  Next Steps

Reporting challenges  Timeliness and quality of source data and estimates  Inconsistent terminology  Changing collection requirements  Implementation cost & resistance to change Variant of Pareto’s postulate:  80% of effort in reporting goes into dealing with the 20% of the data that is not already well-structured and organized in a stable, widely used format

Solutions offered by a standard language  Timeliness and quality of source data and estimates  Inconsistent terminology  Changing collection requirements  Implementation cost and resistance to collaboration  Minimize data re-keying and copy-and-paste using a universal format  Single definitions shared within an organization by all software applications  Software able to use new and changing data definitions immediately  Open, royalty free, independent standard and consortium

Process efficiencies are hard to achieve Different Data Dictionaries: Field names, field order System 1: AccountNo, Amount, Date System 2: MonetaryAmount, PostDate, AccountNumber System 3: PostingDate, Account#, Value System 4: Date, Journal, Account, Amount Similar Data Account, Amount, Date Different Representations for the same concepts in common data field Journal: PJ, Payroll Journal, Payroll Date: , , 12/31/03 Different Data Formats CSV ASCII WKS XLS

Improving the quality and timeliness of internal reporting using XBRL  The Goal  The Obstacles  What XBRL Offers  Why XBRL Now  Next Steps

What is XBRL? Implications  Maps to existing data in legacy systems or newer ERP systems operating today  Uses standards to leverage investments in financial management systems  Bridges today’s environment to future architectures such as.NET  Enables a financial reporting environment in which results can be shown in a shorter payback period. Technical Details  XBRL = eXtensible Business Reporting Language  Freely available extension of XML (root language)  NOT a new accounting standard, ERP, or software package – Already adopted by SAP, Oracle, PeopleSoft, Microsoft Office, Microsoft Business Solutions, and over 20 other products  Leverages existing technology and can adapt to ANY reporting/ accounting system

How XBRL differs from XML XBRL adds to XML:  Multi dimensional financial data representations  Financial reporting vocabularies (taxonomies)  Aliases and other definition relationships  Mathematical relationships between concepts  Flexibility about how to present items to users  Structure for authoritative policies and guidance Reporting apps need these even when using XML Calculations Cash = Currency + Deposits Calculations Cash = Currency + Deposits Presentation Cash & Cash Equivalents Presentation Cash & Cash Equivalents Formulas Cash ≥ 0 References GAAP I.2.(a) CoA 1100 References GAAP I.2.(a) CoA 1100 Definitions AKA Liquid Assets Definitions AKA Liquid Assets Contexts US $ FY2003 Budgeted Contexts US $ FY2003 Budgeted XBRL Item “200” XBRL Item “200”

What XML Offers

. What XBRL Offers Supp Info Forms Form Data Submits Receives Division Level Extract Merge Data Group LevelDepartment Level Participants Processes Maintain Definitions Collect Data Distributes Forms Form Data Division Detail Receives Send Requests Prepare Report Submits Query Find Sources Std. Data Vocabulary Co. Specific Definitions Std. Data Vocabulary Co. Specific Definitions Distributes Analyze Data Regulators, Partners, Outsourcers Net.

Internal reporting demonstration  Change shape of data, not site user activities  Reduce manual intervention for data quality 2. XBRL Asset Request 1.Today’sToday’s Asset Summary Request 1.Today’sToday’s Asset Summary Request 3. Today’s Asset Report 3. Today’s Asset Report 5.XBRL Asset Summary 5.XBRL Asset Summary 4. XBRL Conversion 4. XBRL Conversion Site User Amherst Analyst Boston

 Change shape of data, not site user activities  Reduce manual intervention for data quality 2. Select from Taxonomy 3. Today’s Payables Reports 3. Today’s Payables Reports 7. Payables Summaries 7. Payables Summaries 4. XBRL Conversio n 4. XBRL Conversio n 5. Payables Details 5. Payables Details 1. Today’s Payables Request 1. Today’s Payables Request 6. XBRL Conversio n 6. XBRL Conversio n Another internal reporting demonstration Site User Amherst Analyst Boston

Basel New Accord (Basel II) 1.Capital Requirements  Standardized Approach  Internal Rating - Foundation  Internal Rating - Advanced 2.Supervisory Review 3.Market Discipline  Core disclosures  Possible supplemental disclosures For each portfolio,  Number of borrowers, and  Distribution of borrowers across rating grades for the last 1, 2 and 3 years  Distribution of rating migrations for the last 1, 2 and 3 years  In the advanced approach, distribution of rating migrations weighted with (a) nominal exposure and (b) EAD, both after 1,2 and 3 years. For each portfolio,  Number of borrowers, and  Distribution of borrowers across rating grades for the last 1, 2 and 3 years  Distribution of rating migrations for the last 1, 2 and 3 years  In the advanced approach, distribution of rating migrations weighted with (a) nominal exposure and (b) EAD, both after 1,2 and 3 years. *

Basel II reporting process Disparate Business units (legal entities) Group level information consolidation Reporting to the market RegulatorsAnalysts Rating Agencies … Investors

Basel II impact on internal reporting Disparate Business units (legal entities) Group level information consolidation Reporting to the market XBRL RegulatorsAnalysts Rating Agencies … Investors

Improving the quality and timeliness of internal reporting using XBRL  The Goal  The Obstacles  What XBRL Offers  Why XBRL Now  Next Steps

Representative XBRL-enabled products  Shipping  SAP mySAP financials  Microsoft Business Solutions Axtapa  Oracle FSG  Creative Solutions (et al.)  Announced  Microsoft Office 2003 Add-in  Hyperion Financials  PeopleSoft Enterprise Financial Management  Custom  CaseWare Financials  Hitachi GEMPlanet

Live applications  APRA (2001)  EDGAR Online (2001)  DATEV/Bundesbank (3Q 2002)  Wacoal (4Q 2002) – Internal Reporting  OneSource (1Q 2003)  Tokyo Stock Exchange (1Q 2003)  Sumitomo Mitsui Banking Corp. (1Q 2003)  Danish Commerce & Companies (2Q 2003)  Dutch Water Authority (3Q 2003) – Internal Reporting  UK Inland Revenue (4Q 2003)  KOSDAQ – Korea (4Q 2003)  National Tax Agency of Japan (1Q 2004)  US FDIC (3Q 2004)  Morgan Stanley, Reuters, Microsoft  NASDAQ-MSFT-PricewaterhouseCoopers Pilot

Improving the quality and timeliness of internal reporting using XBRL  The Goal  The Obstacles  What XBRL Offers  Why XBRL Now  Next Steps

Putting a dollar value on straight-through reporting with XBRL: Sample case  Committee report – known as-is  226 person-hours  2 ½ elapsed weeks  Committee report – estimated to-be  Automating extraction and aggregation, eliminate rework  32 person-hours  Less than 1 week  200 person-hours times # of committee reports  $_, _ _ _, _ _ _ ?

Improving the quality and timeliness of internal reporting using XBRL  The Goal  Consistent, uniform data information produced efficiently  The Obstacles  Inconsistent information models; rule of business reporting  What XBRL Offers  A standardized reporting XML vocabulary that can be deployed at all levels of an organization to accelerate process improvements  Why XBRL Now  XBRL contrasted with coding directly in XML  XBRL software in the marketplace and adoption  Next Steps  Examine your hidden costs of inefficient internal reporting

What you will learn in this session  XBRL-enabled reporting – Tools  Cuthbertson - CaseWare  Furusho - Fujitsu  Hoffman - UBmatrix  Mueller - Corel  Wallis – Hyperion Solutions  Zwiebach - Oracle  Technical directions for XBRL International - Technologies  Cohen - PricewaterhouseCoopers  vun Kannon - KPMG  Live applications – Solutions  Sambuichi - Hitachi  Snijders - Semansys  Are XBRL and your organization ready for each other?  Pryde – KPMG; Panel with E&Y and Microsoft

Improving the quality and timeliness of internal reports Walter Hamscher Chair, XBRL International Steering Committee Consultant to PricewaterhouseCoopers