CPA’s and the Company Business Information Supply Chain Mike Willis Founding Chairman, XBRL International Partner, PricewaterhouseCoopers

Business Trends  Detroit Automobile Company, 1899  Ford, 1903  The impact:  1908  12 to 14 hours to assemble  $1000 price per car  1914  93 minutes to assemble  $360 price per car  1929  1 in 5 Americans owned a car

Business Trends (cont.)  1974  Average Grocery Store had 9000 SKU’s  Chewing gum sale in Ohio changed that forever  Today – UPC implications  $17B annual savings in grocery chain savings alone  Average Store over 30,000 SKU’s  Greater controls over assortment, inventory levels and pricing  Scanning /self check out are routine We showed that it could be done on a massive scale, that cooperation without antitrust implications was possible for the common good, and that business didn’t need the government to shove it in the right direction. — Alan Haberman, Chairman, Symbol Standardization Subcommittee

Open Standards – Discussion Topics  Company Applications  Operational Use  Risk & Credit Assessment  Internal Reporting  External Reporting

The Corporate Reporting Supply Chain External Financial Reporting Business Operations Internal Financial Reporting Investment and Lending Analysis Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators Software Vendors Management Accountants Companies What ACORD XBRL Ledger XBRL Financial Statements

The Corporate Reporting Supply Chain External Financial Reporting Business Operations Internal Financial Reporting Investment and Lending Analysis Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators Software Vendors Management Accountants Companies What ACORD XBRL Ledger XBRL Financial Statements You are here

Transaction Data Multiple Departmental Excel Spreadsheets Senior Management Consolidated spreadsheets for management & File Servers Management Reporting Current Architecture 2000 elements = 6500 spreadsheets (this is not a typo) SQL

Transaction Data Multiple Departmental Excel Spreadsheets Senior Management Consolidated spreadsheets for management & File Servers Management Reporting Current Architecture SQL

Subsidiary ERP’s Senior Management Internal Reporting Supplemental information aggregation

Transaction and or subsidiary Data Senior Management Viewing and aggregation for department & management Web Services Architecture XML Web Services Schema

Visibility of Information  The first obstacle is……….?  Language  XBRL can help to increase the consumers access to information in their own language regardless of what language the report is published in.  Let’s find the amount for ‘financial income’

Once you have virtual access to the underlying detail data; then you can begin to access it. Management can access Board members can access it Others??? How they access it is also part of their ability to analyze it?

Visualization – A better way of analyzing information today Most information today is in columns of numbers

Visualization – A better way of analyzing information today Identified business drivers that contribute to a company-defined outcome (EVA, ROCE etc) can be mapped out; Performance in each of those drivers can be colour coded Management are provided with a clear view of what caused a given outcome and the scale of their impact. Includes organisation charts that reflect financial performance; Favourable performance shown in blue (and adverse performance shown in red); Enables an immediate top-down view of business unit performance throughout the global company. Business templates: to portray financial/non-financial information

Visualization – A better way of analyzing information today Monthly financial data can be compared against either budget and/or against previous year to get idea of under/over performance; The data can then be smoothed into a Moving Annual Average to clarify the underlying trend of the variable The standard deviation of any financial variable may be calculated for every business unit in group; Business units with a high standard deviation for a given financial variable (i.e. > 2) can be immediately identified and ranked in order; The analysis provides an immediate way of identifying unusual performance amongst a large group of business units. Statistical analyses: to identify trends and outliers

Visualization – A better way of analyzing information today Possible end-of-year sales, profit.etc outcomes can be calculated on the basis of a number of forecast scenarios; The average of these scenarios can then calculated and assessed against management forecasts; Enables an immediate identification of over optimistic forecasts and the possibility of profits warnings. Variables can be plotted against one another to determine their respective influence on a given outcome; In the above example, gross profit margin is shown against sales for FY2002 and actual outcomes are shown against those that were budgeted for. Graphical structures: to reveal “hidden” facts

The Corporate Reporting Supply Chain External Financial Reporting Business Operations Internal Financial Reporting Investment and Lending Analysis Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators Software Vendors Management Accountants Companies XBRL Ledger XBRL Financial Statements You are here ACORD

How does XBRL leverage 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 Label US $ FY2003 Budgeted Label US $ FY2003 Budgeted XBRL Item “200” XBRL Item “200”

Solution development Step 1. Company Regulator Problem = Exchange of data between regulated entity and regulator Regulator solution = Use XML Schema to define terms for exchange XML Schema

Company Solution development. Regulator Perspective Company Regulator XML Schema Company Proprietary solution for Regulator Looks good to the regulator

Regulator XML Schemas Regulator Solution development. Company Perspective Company Proprietary solutions looks different to the companies and is a costly and complex model Regulator

Solution development Step 2. Company Regulator XBRL Internal Reporting Instructions 3 rd Party Interpretative Guidance Reporting Sources Regulations Interpretative Guidance Instructions Stds (FASB, NAIC) Audit Guidance Validation

What you can do? ……..with a new tool. Internal Reporting  Enhance Reporting Processes (ADT)  Enhanced Reporting (ValueReporting)  Benchmarking (ADT)  Taxonomy development  Connectivity to internal reporting policies  Optimized Reporting Templates  Intra-organizational reporting (ADT)

What you can do? ……..with a new tool. Internal Reporting  Risk Management (ADT)  Visualization Modeling (ADT)  Compliance Reporting (ADT)  Compliance Assessments (ADT)  Compliance Monitoring (ADT)  Continuous Monitoring  Continuous Auditing

CPA’s and the Company Business Information Supply Chain Mike Willis Founding Chairman, XBRL International Partner, PricewaterhouseCoopers

Lower Costs “…………[financial services] companies can reduce their publishing expenses 46%, by adapting an XML centric means for document development, assembly and distribution.” Zap Think, March 2002 Financial Services XML Report

The Corporate Reporting Supply Chain External Financial Reporting Business Operations Internal Financial Reporting Investment and Lending Analysis Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators Software Vendors Management Accountants Companies XBRL Ledger XBRL Financial Statements You are here ACORD

Benefit Considerations XBRL benefits for consumers –Enhanced analytical capabilities –More timely, accurate, data for decisions –Enhanced functionality –Ease of use –Facilitates language translations XBRL benefits for producers –Tell your own story (precise & clear) –Accelerate adoption of reporting models –Enhanced functionality –Ease of use –Better control environment –Enhanced analytical capabilities –More timely, accurate, data for decisions

Benefit Considerations XBRL benefits specifically for regulators –Enhanced functionality of information –More timely, accurate, information for decisions –Enhanced analytical capabilities –Promotes more effective processes –Accelerates adoption of reporting changes –Includes regulatory input and perspectives –Lowers cost of regulation by spreading development among collaborators –Enhanced effectiveness of supply chain

XBRL – Ready for Prime Time? “Some critics have suggested that XBRL is not ready for primetime. In fact, it is.” Hon. Richard H. Baker Chairman, Capital Markets Subcommittee