Enhanced Business Reporting Al Anderson, Senior Vice President, Member and Public Interests AICPA

 Why Enhance Business Reporting?  Elements of Enhanced Business Reporting  Conceptual Framework  Special Committee On Enhanced Business Reporting Mission  Collaborative Consortium Approach  Desired Consortium Representation  Draft Consortium Structure  Consortium Strategy: Leveraging Existing Structures  VMRC Structure and how VMRC will Contribute to Enhanced Business Reporting  How XBRL will Contribute to Enhanced Business Reporting and the Role of XRBL in the Corporate Reporting Supply Chain  High-Level Timeline AGENDA

 Current reporting model no longer sufficient  Not timely -- it’s after-the-fact information  Not informative enough  Ignores many factors of performance  To date -- calls for change and some action  Time is NOW for coordinated action WHY ENHANCE BUSINESS REPORTING?

Historical Financial Statements Enhanced Business Reporting Lagging indicators…  One size fits all (GAAP)  Ignores non- financial measures  Reports results of past decisions Leading indicators…  Tied to mission, vision and values  Tied to factors critical to success  Moves decision criteria to forefront Past FuturePresent Business Reporting: A Changing Dynamic WHY ENHANCE BUSINESS REPORTING?

Historical Financial Statements Enhanced Business Reporting Lagging indicators…  Periodic  Historical  Cost-basis  Financial only  Statements  Looking backward Leading indicators…  On-demand  Real-time/future  Value-basis  Comprehensive  Custom reports  Looking forward Past FuturePresent Business Reporting: A Changing Dynamic WHY ENHANCE BUSINESS REPORTING?

System Reliability Financial and Non- Financial Measures Information Dissemination Understandable Disclosures Corporate Accountability CONVERGENCE TO “NEAR REAL-TIME” SCALABLE ELEMENTS OF ENHANCED BUSINESS REPORTING

5 ElementsDeployment Information Dissemination Technology  XBRL Business Information Financial & Non-Financial Measures  VMRC Standards Setters Foundational Concepts System Reliability Corporate Accountability Understandable Disclosures  VMRC SEC Plain English FASB Projects Continuous Audit Trust Services COSO ERM OCEG GRI CONCEPTUAL FRAMEWORK

MISSION: To establish a consortium of investors, creditors, regulators, management, & other stakeholders to improve the quality & transparency of information used for decision-making I: Identification of key stakeholders whose collaborative involvement is critical to successful development & implementation II: Overarching goal of making better information available to investors & creditors, helping them to see organizations through the eyes of management SPECIAL COMMITTEE ON ENHANCED BUSINESS REPORTING MISSION

 Work collaboratively  Consortium-based  Globally focused  Comprised of key stakeholders of enhanced business reporting  Build consensus  Help define migration paths to drive adoption by participants in the corporate reporting supply chain COLLABORATIVE CONSORTIUM APPROACH

IMPLEMENTATION of enhanced business reporting can only be achieved through a collaborative effort including the following stakeholder groups:  Government/Regulatory Agencies  Investment and Lending Community  Public and Private Companies and Industry Associations  Accounting Firms and Associations  Technology and Software Enablers  Academia and Researchers (Think Tanks) DESIRED CONSORTIUM REPRESENTATION

EBR Framework Operating Committee Advisory Board (Champions/Visionaries) Advisory Board (Champions/Visionaries) Industry EBR Management EBR Management Producers Industry Assns. (3), FEI Public Companies (4) Private Companies (1) Supply Chain Communities Deployment Groups Consumers Rating Agencies (1) Regulators (4) Investmt. Community (5+) Enablers Accounting Profession (5) Technology Enablers (2) Other Enablers (2) (To be Organized by Industry Sectors) Und. Disclosures Corp. Accountability … … Fin. & Non-Fin. Meas. … … … … … … System Reliability Info. Dissemination Standards Process Lending Community (1-2) DRAFT CONSORTIUM STRUCTURE

Deployment Groups Understandable Disclosures CONSORTIUM STRATEGY: LEVERAGING EXISTING STRUCTURES System Reliability Information Dissemination Financial & Non- Financial Measures Corporate Accountability… Value Measurement & Reporting Collaborative Continuous Assurance Lab

VMRC Board of Directors VMRC CONSORTIUM STRUCTURE Research is Being Conducted in Each of the Areas Below Across Multiple Industry Sectors: VMRC Members Framework Working Group InnovationHuman CapitalCustomers/Clients……… The Framework will be Customized by Industry Sectors, Including the Following & Others: PharmaceuticalsNatural ResourcesTelecom……… AICPA CICA SAICA Grant Thornton D&T McGladrey & Pullen … Business Community Accounting Firms Accounting Institutes … … Research Working Group

 Goals:  Identify best practices.  Debate existing concepts.  Test existing and new concepts.  Modify concepts, as necessary.  Develop framework to allow for comparability between:  Organizations.  Within Industries  Create:  Comparability  Consistency  Transparency  Principles/Criteria HOW VMRC WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

 Enables custom reporting  More precise, clear, consistent reporting  More timely, accurate, useful data for decisions  Less burden on companies  Greater interoperability of data  Accelerates adoption of enhanced reporting HOW XBRL WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

 Lowers cost of e-filing initiatives  Enhanced functionality of processes  Validation  Compliance with business rules  Linkage from reports to other resources HOW XBRL WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

External Financial Reporting Business Operations Internal Financial Reporting Investment and Lending Analysis Processes Participants Auditors Trading Partners Investors/ Creditors 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 Credit Filings XBRL for Business Event Reporting Software Vendors Management Accountants Companies New THE ROLE OF XBRL IN THE CORPORATE REPORTING SUPPLY CHAIN

HIGH-LEVEL TIMELINE September 2002 Special Committee on Enhanced Business Reporting approved by AICPA BOD January 2003 First meeting of Special Committee on Enhanced Business Reporting Champions identified, contacts initiated June 2003 Strategic Planning June 2004 Consortiu m launched Consortium Launch Planning Communications plan launched January 2004 Invitations extended to desired consortium participants: sales & negotiation phase Develop conceptual framework for enhanced business reporting and prototype report

QUESTIONS?