Transcript Slide 1

eXtensible Business Reporting Language
“XBRL”
SEC Filings Using XBRL
“A CFO’s Perspective”
Greg Adams, CFO & COO
EDGAR Online, Inc.
SEC Filings Using XBRL:
Corporate Pressures
SEC’s Voluntary Filing Program
Financial Reporting Process & XBRL
Sample Form 8-K Filing
Benefits of XBRL to Information Consumers
Financial Executives
 Have a critical responsibility to communicate operational results to
stakeholders
 Are facing a growing demand for efficient delivery in an interactive
medium
 Need better tools for faster decision making
 Want their internal control environment enhanced through less
retyping, more system integration, etc.
Dwindling Coverage
18% reduction
Number of stocks followed by some Wall Street firms at the end of 2000
and 2003
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Firm
2000
Merrill Lynch
3,500
CSFB
3,077
Smith Barney
3,000
J.P. Morgan Chase 2,400
Goldman Sachs
2,315
Morgan Stanley
2,150
Lehman Brothers
1,650
2003
2,469
2,373
2,300
2,260
1,950
1,925
1,605
Source: WSJ Research; Includes both U.S. and abroad.
SEC Voluntary Reporting Program
“The annual report of the 21st century will not
be annual and it will not be a report: it will be
an up to date, informative dialogue”
- Alan Benjamin in the 21st Century Annual Report
XBRL Value Proposition
Transparency and the U.S. Securities and Exchange Commission (SEC)
Business
Events
Business
Events
Business
Events
Business
Events
Business
Events
People Practices
Control Practices
Financial
Systems
Financial
Systems
Mgmt Reports
Accounting Practices
Business
Events
External Reports
Shareholder
View to
Business
Events
The SEC is driving for reporting transparency. In many organizations, each step along the
path to the final external reports clouds the view of information back to the original
business event (inconsistent account definitions, incomplete GL reconciliation's,
management adjustments, top side entries, etc.)
How linked to XBRL initiative?
 Move towards transparency
 If items were tagged and identified more information could be
made available for investors and analysts to analyze in the
manner that chose to do so
 Enhances information acquisition, evaluation and combination
 Improves transparency without additional disclosures
 Newfound discovery capabilities
 Can benefit nonprofessional users
[Release Nos. 33-8496, 34-50453, 35-27894, 39-2498, IC-26622; File Number S7-35-04]
XBRL VOLUNTARY FINANCIAL REPORTING PROGRAM ON THE EDGAR SYSTEM
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
SUMMARY: We are proposing rule amendments to enable registrants to submit voluntarily
supplemental tagged financial information using the eXtensible Business Reporting Language (XBRL)
format as exhibits to specified EDGAR filings under the Securities Exchange Act of 1934 and the
Investment Company Act of 1940. Registrants choosing to participate in the voluntary program, expected
to begin in early 2005, also would continue to file their financial information in HTML or ASCII format,
as currently required. The voluntary program is intended to help us evaluate the usefulness of data
tagging in
general, and
XBRL in particular,
to registrants, “The
investors, the
Commission and the
Effective
Date:
March
16, 2005
voluntary
marketplace generally. A companion concept release also being issued today provides additional
program
is intended to help us evaluate the usefulness
information on tagged data and solicits comment on the development of data tagging.
of data tagging and XBRL to registrants, investors,
BACKGROUND: All registrants who file with the Commission are now generally required to file
the Commission
the Electronic
marketplace”.…
electronically on theand
Commission's
Data Gathering, Analysis and Retrieval System
("EDGAR")……
As discussed in the accompanying concept release, we are evaluating whether tagged data in
Commission filings would provide a better means to provide and obtain necessary information and, if so,
whether we should permit or require XBRL tagged data in Commission filings.22 The Division of
Corporation Finance, Office of the Chief Accountant, Division of Investment Management, and Office of
Information Technology have formed a task force to assess the implications of tagged data for filers,
investors, the Commission and other market participants.23 In order to test and evaluate data tagging, we
propose to allow registrants to supplement their Commission filings by furnishing financial data on
EDGAR as an exhibit using eXtensible Business Reporting Language ("XBRL"), beginning with the
XBRL Voluntary Filing and FAQs
 SEC commenced the voluntary program for receiving financial
information on EDGAR using XBRL in early April 2005
 Approved Taxonomies (classification systems) for commercial and industrial
companies, banking and savings institutions, and insurance companies.
 In August 2005, SEC Extends Voluntary Program to Investment
Companies
 The expansion will allow mutual funds to file exhibits to their annual report to
shareholders (N-CSR) and quarterly statement of portfolio holdings (N-Q) in XBRL
 SEC believes “tagged data will improved the quality of information and
speed of its availability”
 Will help the Commission determine whether these improvements will
empower individual investors to get information faster and more
conveniently and to choose more wisely by making better-informed
comparisons.
SEC Voluntary Reporting Program
 Allows companies to “furnish” XBRL tagged financial statements
 Added Rule 401 to Regulation S-T allowing filers to furnish
supplemental information using XBRL
 Allows for company flexibility in filing financial statements, with or
without footnotes and MD&A
 Can submit XBRL tagged document either with the official filing or as
an amendment, however, there is no submission deadline
 Must correlate to a standard GAAP Taxonomy
 Relief for liability if error is not materially misleading or false
XBRL Reports filed with the SEC
SEC Proposed Rule – Voluntary Reporting
SEC would like to study:
 Search capability of EDGAR database
 Capability to perform financial comparisons amongst registrants
 Ability to perform financial analysis (ratios, etc.)
 Impact on staff’s ability to review filings more timely and
efficiently
 Use of tagged data for risk assessment
 Compatibility of XBRL with other Commission requirements
Financial Reporting Process
XBRL-enabled Software: Easing the Burden
ERP
Legacy
Investors/
Analysts
Sales
Excel
Financials
Word
Summary
Forms
8-K
10-K
10-Q
XBRL
Documents
Metrics,
KPI’s
Accounting/
Finance
Convert to
ASCII/Text
Regulatory
Filing
HTML
“View”
Data
“Cleansed”
Preparing XBRL Instance Documents
Publish Instance Document
& Taxonomy
Create an instance document
and validate calculations
Extend the taxonomy if
necessary
Review &
Validate
Instance
Document
Assess Scope of
Reporting & Download
Taxonomy
Identify a team: Accountant &
Developer (XML)
Compare & map
10K/10Q to GAAP
Taxonomy
Output looks like this…..
More Importantly XBRL Output looks like this…..
Sample Form 8-K
XBRL Sample Form 8-K Filing
edgr-20050228.xsd
edgr-2005028_cal.xml
edgr-2005028_lab.xml
edgr-2005028_pre.xml
EDGR_2004_10K.xml
EDGAR Online Facts….
 Effort on Voluntary Filing Program
 160+ Hours for first effort
 Over 200 discrete tagged items
 Over 30 Taxonomy extensions
 Instance document was reviewed 3X by three different people
 Used in-house conversion software to extend and tag plus 2
different tools to validate
 Did not include auditors for review
 Created I-Metrix Excel Add-in
 Was one of the first companies to make XBRL tagged financials
available in Excel (I-Metrix)
Internal Considerations
 Managing and maintaining XBRL taxonomies for internal/external
reporting will require an ongoing effort
 Implementing will impact the internal business rules governing data
and the people who use/process it
 Confusion over XBRL as an internal and/or external reporting
solution
 Enabled software – many vendors have enabled software, but
others are in development
 Existing business process will have to be re-examined as part of
implementation for efficiencies and risk considerations
XBRL Taxonomy and Instance Document Applications
Benefits - How linked to XBRL initiative?
 Timeliness
 Capital markets rely on timely and reliable information for the
allocation of capital resources
 Comparability is enhanced across countries
 Access information more quickly
 Faster processing
 Accelerated filing deadlines can be easier to accomplish
Benefits - How linked to XBRL initiative?
 Section 404/internal controls (SOX)
 A reporting format such as XBRL could enable easier
documentation of internal controls – less manual intervention
and massaging
 Can enable the integration of disparate systems to optimize the
internal control process
 Can be a critical tool for enabling compliance with 404 –
monitoring can occur real time
Benefits - How linked to XBRL initiative?
 Fair value accounting
 A lot of concern regarding the reliability (verifiability) of determining
appropriate fair value – if assumption disclosures were tagged –
management’s choices would be more transparent to users and
easily compared with others
 Principles-based accounting standards
 If information is tagged – much easier to determine judgments
made by management – analysts could easily adjust for their own
analysis
 Comparability is enhanced across companies – makes
management’s financial reporting choices more transparent –
search facilitating technology
Benefits - How linked to XBRL initiative?
 International Convergence
 May be less important in an XBRL environment. Could adapt to
country reporting regimes much more easily
 Comparability is enhanced
 Complimentary toward objective of a single set of high quality,
understandable and enforceable global accounting standards
Summary : Benefits of XBRL for Preparers
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Lower cost of producing information
 Better tools for faster decision making
 More timely accurate data
 XBRL provides an immediate ROI for benchmarking
Have a critical responsibility to communicate operational results to
stakeholders
 Expanded communication “reach”
 Tell your own story to stakeholders (precise & clear)
Better control environment – extension of SOX 404
 Utilized during risk assessment and planning phase
 Facilitate the comparability and granularity of financial
disclosure – comp analysis
Accelerated adoption of reporting model changes
Questions?