1 Japan FSA's XBRL Project - Launch of New Public Disclosure System with Mandatory XBRL - May 2008 Toshinori Kobayashi Financial Services Agency, The Japanese Government

2 Outline of EDINET Electronic Disclosure for Investors’ NETwork Electronic disclosure system under the Financial Instruments and Exchange Act –Used for Annual Reports, Semi-annual Reports, Quarterly Reports, Securities Registration Statements, etc. Launched in June 2001 Number of issuers (Annual Report) : –Approx. 5,000 companies (mainly listed companies) –Approx. 3,000 investment funds

3 Issues of previous EDINET No function for downloading reusable data Investors can browse information on Web browsers but need to retype data when conducting analysis thereof. HTML format EDINET HTML Browse Analysis Retype

4 EDINET Renovation Project By introducing the XBRL download function, investors can analyze the financial information efficiently. XBRL format New EDINET XBRL HTML Browse Analysis XBRL

5 EDINET Renovation Project – Timeline Jan-Feb 2007 Jul-Aug 2007 Feb 8th, 2008 Mar 17th, 2008 Release Taxonomy (Final version ) Launch new EDINET system - XBRL filing will be mandated from the first quarterly report in FY st Pilot Program 2 nd Pilot Program Taxonomy test (Offline test ) 50 companies participated System & Taxonomy test (Online test) 1,200 companies participated Aug 2006Start System & Taxonomy development

6 EDINET Renovation Project – Scope of XBRL Consolidated and Non-consolidated financial statements –contained in Annual report, Semi-annual report, Quarterly report and Securities registration statement –excluding notes and non-financial information Japanese GAAP filers –excluding US GAAP filers, IFRS filers, etc.

7 EDINET Renovation Project XBRL filing of financial statements is mandated in principle. XBRL data is open to all investors and analysts. The financial information of 5,000 companies and 3,000 investment funds is XBRLized One of the most advanced XBRL systems in the world One of the most advanced XBRL systems in the world

8 EDINET Renovation Project – Impact of XBRL - From “Readable Information” To “Usable Information” XBRL provides the strategic solution to Investors. - Providing “Global infrastructure” with “Global Technical Standard” XBRL encourages companies and investors to active more globally. Global, transparent and vibrant market

9 Feedback from EDINET Renovation Project Road to Mandatory XBRL Extraction of Account Items Time & Difficult Point to Prepare Topics

10 Feedback from EDINET Renovation Project – Road to Mandatory XBRL Filers Familiarity XBRL Tools Enhancement User’s Guideline Quality System Quality Taxonomy Quality Communication with Tool Vendors Seminar for Filers Taxonomy Review (Public, Expert, Industry) Pilot Program EDINET Advancement Council & Working Group Hurdle for mandateActions

11 Feedback from EDINET Renovation Project – Road to Mandatory XBRL  This council has been established to make collaborative efforts with EDINET stakeholders.  Members: industry, analysts, CPA, stock exchanges and others Communication with Tool Vendors Seminar for Filers Taxonomy Review Pilot Program EDINET Advancement Council & WG  Many collaboration to enhance XBRL preparing environment.  1 st review by industries & experts, 2 nd review by public  Several thousand comments were generated.  To modify the taxonomy took 3 months per review  Two pilot programs were held in January and July  30 seminars were held and 4,000 companies are attended.

12 Feedback from EDINET Renovation Project – Extraction of Account Items More coverage, - Less onerous for preparer More coverage, - Less onerous for preparer Less items, - More operable for preparer - Better performance for all users Less items, - More operable for preparer - Better performance for all users Covers all account items used in the practice Covers only account items based on accounting standards Coverage - 90% Num. Items – 4,700 Number of Items Coverage 1.Concept of account items coverage

13 Feedback from EDINET Renovation Project – Extraction of Account Items Extract account items EDINET Taxonomy Group A (Account items based on laws) Group A (Account items based on laws) Group B (Account items based on CP) Group B (Account items based on CP) Accounting laws and standards (extracting based on laws) Accounting laws and standards (extracting based on laws) 4,700 items Common practice (extracting based on historical data) Common practice (extracting based on historical data) ・ Standardize account items (grouping same concept) 50,000 items ・ Set Concept layer (Japanese/English Label, Reference) ・ Set Relationship layer (Presentation, Calculation, Definition) ・ Set Concept layer (Japanese/English Label, Reference) ・ Set Relationship layer (Presentation, Calculation, Definition) Set information 2,500 items 2,200 items 30,000 items ・ Select major account items (frequency of use) 2.EDINET Taxonomy Development Process

14 Feedback from EDINET Renovation Project – Time & Difficult Point to Prepare Estimated time spent on preparing XBRL compared to previous EDINET –Analysis of questionnaire data (2nd Pilot Program) Initial yearSubsequent year Increase >100% [22%] Increase 50%-100% [50%] Increase <50% [9%] Same as before [14%] Decrease [0%] Unclear [5%] Increase >100% [6%] Increase 50%-100% [28%] Increase <50% [6%] Same as before [50%] Decrease [4%] Unclear [6%]

15 Feedback from EDINET Renovation Project – Time & Difficult Point to Prepare Difficult point to submit –Analysis of questionnaire data (2nd Pilot Program) Filers Familiarity XBRL Creation Tools Enhancement User’s Guideline Quality System Quality Taxonomy Quality No major issue is found that disturbs submissions. Obtaining XBRL report creation tools Understanding how to use the tools Understanding how to create the XBRL report and how to submit to EDINET Much work beyond the expectations Cost Obtaining XBRL report creation tools Understanding how to use the tools Understanding how to create the XBRL report and how to submit to EDINET Much work beyond the expectations Cost Difficult Point

16 Feedback from EDINET Renovation Project – Time & Difficult Point to Prepare Other Difficult point to submit –Analysis of questionnaire data (2nd Pilot Program) Identifying the cause of error Setting of the English label Choice of the proper items from the taxonomy Identifying the cause of error Setting of the English label Choice of the proper items from the taxonomy

17 Feedback from EDINET Renovation Project – Time & Difficult Point to Prepare Preparation for Mandatory Filing –Analysis of questionnaire data (2nd Pilot Program) Selecting and familiarizing with an XBRL tool Early commencement of creating XBRL report Selection of items from EDINET Taxonomy Consensus-building with auditor Securing human resources and budget Selecting and familiarizing with an XBRL tool Early commencement of creating XBRL report Selection of items from EDINET Taxonomy Consensus-building with auditor Securing human resources and budget

18 –Notes, Non-financials –Dimensions, Versioning, Rendering, Formula Future Issues Investors Analysts Investors Analysts Accounting Rules Global Markets XII Filers Technology Providers Scope of XBRL Multinational Interoperability New technology adoption International Issues Domestic Issues New Technology Best Practice Changes Software -Requirements -Familiarity JFSA

19 Future Issues - Multinational Interoperability To establish a global market, corporate financial information in all countries should be used in a cross- border fashion Differences in data formats for financial information among countries may interfere with global usage. To maximize the benefits of XBRL as global infrastructure, It is necessary to ensure multinational interoperability and comparability of XBRL through global cooperation.

20 Future Issues - Multinational Interoperability JFSA, IASCF, EC and SEC has been discussing towards ”Multinational Interoperable Architecture”. JFSA, IASCF, EC and SEC has been discussing towards ”Multinational Interoperable Architecture”. Policy & Rules Cooperation among Regulators Cooperation among Taxonomy Owners

21  Identify comparison points  Compare 3 taxonomies  Evaluate differences and their impacts  Prioritize the points to be “interoperable”  Decide action items for each point Feedback loop We are here!! Future Issues - Multinational Interoperability

22 Thank You ！