PwC

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PricewaterhouseCoopers
What does XBRL mean for you November 28, 2007
PwC
connectedthinking
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Discussion Topics

• What is XBRL?
• Where is XBRL relevant?
• What are the benefits / costs?
• Where do you implement?
• What is the SEC doing?
• What should you do next?

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Why Standards are important to you

• In 1883, Emil Christian Hansen developed a
  repeatable method for propagating pure yeast.
  (the standard)
• Revolutionary to the brewing industry.
• Given freely away to other brewers
• Today, used in all lager beers around the world.
• Economic impact Lower costs improved quality
  (consistency) increased volumes accelerated
  frequencies more efficient processes new
  markets.

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What is XBRL?
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What is XBRL?

• eXtensible Business Reporting Language
• International platform for business reporting
• An information standard that enhances the quality
  and efficiency of business information for
  internal and external consumers
• Supply chain understanding of a standardized way
  to communicate business information
• Provides information with identity and context
  that can be understood by a range of software
  applications allowing seamless interface with
  databases, business reporting systems and
  spreadsheets
• Can be used to enhance compliance processes

An International Business Information Format
Standard
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XBRL International, independent non-profit
consortium

• Develops and maintains the XBRL Standard
• Recognizes and encourages XBRL best practices
  (approves taxonomies)
• Provides a framework for further development
• Facilitates knowledge sharing with members
  supports XBRL Jurisdictions

Russia
Sweden
United Kingdom
United States
France
IASB
Belgium
China
Japan
Canada
Denmark
Korea
Poland
Ireland
India
Germany
Spain
Netherlands
Singapore
Switzerland
New Zealand
Colombia
Italy
Brazil
Australia
United Arab Emirates
South Africa
Argentina
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XBRL More Than Just Definitions
Presentation Comptant et Comptant Equivalents
Presentation ?????????
Presentation Kas en Geldmiddelen
Presentation ?????? ? ?? ???????????
Presentation ????? ?? ?? ???????????
Presentation ????????
Presentation Geld Geld nahe Mittel
XBRL Item
XMLItem
XBRL Item
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What does XBRL Look Like?

• What does XBRL look like?
• Example here
• Example here
• What does a Taxonomy look like?
• Example here
• How does it make your life better?
• Example here

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ABRA IFRS Taxonomy Viewer

• Official ABRA IFRS Taxonomy Viewer - open source
  online ABRA viewer
• Languages
• Portuguese
• German
• Italian
• Japanese
• Spanish
• Dutch
• being prepared Polish, Hebrew, Hungarian, Arabic
  etc.

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IFRS-GP Taxonomy
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How do you measure success?

• Is the number of companies reporting in XBRL
  measured in the
• 100s
• 1,000s
• 10,000s
• 100,000s
• 1,000,000s
• Wont raise my hand for free currency

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Where is XBRL relevant?
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XBRL Regulatory Adoption some of those publicly
announced
Commercial Financial Services and Others Canadian
Securities Regulators KOSDAQ Korea Bank of
Spain National Bank of Belgium National Tax
Agency of Japan New Zealand Exchange U.S.
Securities Exchange Commission Shanghai Stock
Exchange s Shenzhen Exchange Singapore
ACRA Tokyo Stock Exchange UK Companies House UK
Inland Revenue/HMRC US Federal Financial
Institutions Examination Council (includes FDIC)

• Government Agencies
• Australian Government
• Australian Tax Office
• Committee of European Banking Supervisors
  (CEBS)/COREP
• Chinese Securities Regulation Commission (CSRC)
  sponsoring Shenzen and Shanghai exchanges
• Dutch Government
• Spanish Stock Exchange Commission 3000
  companies
• Statistics Dept of Ireland
• Other
• Bank of Japan
• Bundesbank
• Eurostat
• Financial Service Agency of Japan
• The Irish Revenue
• Singapore ACRA

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How do you define convergence?

• IFRS GAAP
• Local Territory GAAP
• Local Territory Statutory GAAP
• Local Territory Statistical
• Local Territory Tax Federal
• Local Territory Tax State Local
• Local Territory Performance
• Others?

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The Dutch Taxonomy Project http//www.xbrl-ntp.nl
/english
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The benefits to business are ultimately estimated
rise to 795 million per year on an ongoing
basis.
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Banco de Espana
II. Taxonomies building and implementation
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Publish
Access
Business Reporting Processes
Analyze
Validate
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Pervasive Process Problems

• Disparate data stores/warehouses each with their
  unique architecture and/or chart of accounts
• Standard chart of accounts are manually
  maintained and updated across range of disparate
  data stores/warehouses
• Business rules are articulated within proprietary
  applications based on the physical location of
  the data within the specific application
• Presentation templates dictated by applications
  where the data is resident
• Validation and analysis of data is a consumers
  responsibility
• Relationships between processes, data, policies,
  regulations are implicit and reliant on the
  experience and knowledge of individuals

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The business reporting supply chain
Transaction Layer
XBRL Global Ledger
XBRL External Reporting
External Business Reporting
Business Operations
Internal Business Reporting
Investment, Lending, Regulation
Economic Policymaking
Processes
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What application is most commonly used for
reporting?

• Cartesis (SAP)
• Navision
• FRx (Microsoft Dynamics)
• Hyperion Financial Management (Oracle Reports)
• Crystal Reports
• Office
• Other

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United Technologies CorporationCurrent 10-Q
Process Flow
Supplemental Data
ERP
Qtr FS in Word
Qtr FS in HTML
ERP
HFM
ERP
Total Process Time 845 Hours
Review and Check
Review and Check
Edgar
Qtr FS in XBRL
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United Technologies Corporation Future 10-Q
Process Flow
ERP
Qtr FS in XBRL
HFM XBRL Tagged
ERP
ERP
Edgar
Supplemental Data XBRL Tagged
Total Process Time 700 Hours
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What are the benefits and costs?
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First lets highlight existing problems
Analytical concepts / controls are

• Embedded in specific applications
• Redundant across applications
• Inflexible in adjusting to market changes
• Difficult to synchronize across a variety of
  applications
• Opaque and difficult to manage and coordinate
• Others problems as well

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As a result The integration of disparate
systems are

• Based upon the physical integration of various
  software applications
• Implemented by systems integrators and
  consultants
• Inflexible when considering incremental systems
  of newly acquired entities
• Not that supportive of your current compliance
  process needs

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Priority Process Opportunities

• How does information access work?
• Who is responsible for validation?
• Who is responsible for analysis?
• Who is responsible for reporting?

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Business Process Change
Legacy Processor
Validation
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Business Process Change
The current process explicitly defines the data
requirements and related business validation
rules such that they can be applied at the bank
level. This simply shift enabled an increase
in - data quality (from 68 to under a 5 error
rate), - processing time (from over 45 to under
2 days), and - costs (from over 1,000 to under
200 employees).
Current
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Primary Costs

• Collaboration across silos
• Process reengineering / design
• Change management
• Taxonomy development (aka information
  architecture)
• Software enhancements
• Embedded in new versions
• Available plug-ins
• New applications? (Taxonomy Management,
  Validation) http//www.xbrl.org/tools

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Summary Thoughts

• Supply Chain standardization effort
• Economic accrue to all supply chain participants
• Adoption is accelerating around the world
• Convergence of information models
• Processing enhancements available to all
• Validation, Analysis, References
• Cheaper, Smarter, Faster
• Collaboration is critical (at all levels)

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Where do you implement?
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The business reporting supply chain
Design and push back the reporting concepts and
business rules throughout the supply chain
External Business Reporting
Business Operations
Internal Business Reporting
Investment, Lending Regulation
Economic Policy Making
Process Steps
Enables timely, accurate and complete data to
flow back up the supply chain
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Identify the optimal implementation location

• Manual, untimely, inaccurate, incomplete
  aggregation or consolidation processes
• Manual access (cut paste)
• Consumer or inadequate validation
• Analytics embedded/opaque rather than shared
• Implicit knowledge required (e.g. policies)
• Sourcing from wide range of disparate sources
• Multiple ledgers accessed within common processes
• Lack of standard chart of accounts
  implementation
• International operations processes (e.g.
  language)
• Others

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Key Implementation Questions?

• What critical information is not available in a
  timely, accurate or complete manner?
• Where is there the most pain?
• Is poor data quality a common topic?
• Are there common controls that have different
  implementation concepts depending upon the
  software?
• Is there a track record of collaboration or silo
  oriented efforts?
• Where is there the largest opportunity for cost
  savings?
• Do you have the proper tools? And training?
• Does your organizational culture favor big bang
  or evolutionary change?

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Common implementation areas

• Compliance/consolidation/aggregation processes
• Spreadsheet aggregation processes
• Standardized or Virtual warehouse
• Standardized Ledgers, Journals, etc.
• Analytical processes (controls, internal audit)
• Reporting processes
• Business Intelligence
• Corporate Policies
• Entity services
• Others

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What is the SEC doing?
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Chairman Christopher Cox of the SEC

• I'd like to invite every public company,
  especially those companies not yet involved in
  our voluntary filing program, to consider whether
  they should obtain a copy of this new GAAP set of
  data tags ... and its supporting documentation
  and consider using it alongside your current
  process as you prepare your calendar 2007 filings
  or your filings for the fourth quarter of 2007.
• Will XBRL be mandated?
• This is the recommendation that we will be
  seeking from all of the offices within the Spring
  of next year.

From the Major Announcement About Interactive
Data in Financial Reporting, Tuesday, September
25, 2007
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Voluntary Filing Program

• Test group opened in early 2006 and over 40
  companies have joined to date
• Commitment to submit 4 XBRL based filings over 12
  months
• Commitment to provide feedback on level of effort
  and cost
• SEC staff provides accelerated reviews of
  registration statements or annual reports to test
  group participants
• Test group continues to remain open to new
  participants (contact Jeff Naumann at
  naumannj_at_sec.gov for more information)
• Cost is nominal 5k to 25k for initial bolt on
  approach.

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SEC Voluntary Filing Program http//www.sec.gov/s
potlight/xbrl.htm
Market Cap gt 2 Trillion

• Includes range of notable filers including
• 3M Company
• Alcoa Inc.
• Anadarko Petroleum Corporation
• Automatic Data Processing, Inc.
• Altria Group, Inc.
• Banco Bradesco S.A.
• Banco Itaú Holding Financeira S.A.
• Bowne Co. Inc.
• Brazilian Petroleum Corporation (a/k/a Petrobras
  SA)
• Bristol-Myers Squibb Company
• Broadridge Financial Solutions, Inc.
• Comcast Corporation
• Commonwealth Edison Company
• Crystal International Travel Group, Inc.
• The Dow Chemical Company
• Dupont E. I. de Nemours and Company
• EDGAR Online Inc.
• ETRADE Financial Corporation

Exelon Generation Company, LLC Fastenal Co. Ford
Motor Company Ford Motor Credit Company General
Electric Company Gol Intelligent Airlines,
Inc. Infosys Technologies Limited Lehman Brothers
Holdings Inc. Liberty Media Corporation Microsoft
Corporation Net Servicos De Comunicacao SA NYSE
Euronext Old Mutual Capital, Inc. PECO Energy
Company PepsiCo, Inc. Pfizer, Inc. R.R. Donnelley
Sons Company Radyne Corporation South Financial
Group, Inc. Tenet Healthcare Corporation United
Technologies Corporation W. R. Grace Co. Xerox
Corporation XM Satellite Radio Holdings, Inc.
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SEC - XBRL Related Activities

• 49m EDGAR Modernization project (XBRL Compliant)
• 5.5m US GAAP XBRL Taxonomy Enhancement Project
• XBRL viewer released on December 5th 2006
  http//www.sec.gov/spotlight/xbrl.htm
• New SEC Office of Interactive Disclosure created
• Advisory Committee on Improvements to Financial
  Reporting includes Delivering Financial
  Information Subcommittee
• Executive compensation XBRL project launching
  later this year
• Proxy XBRL Taxonomy under development
• Round Table discussions (June 06, Oct 06, March
  07)
• SEC XBRL Spotlight site http//www.sec.gov/spotlig
  ht/xbrl.htm

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What should you do next?
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What should you do next?

• Investigate/target internal compliance process
  areas
• Apply to your priority pervasive process problems
• Educate yourself and your team
• see Appendix for sources and case studies
• Attend Free XBRL Webinars
• XBRL conferences http//xbrl.us/events/Lists/allev
  ents/all.aspx
• Talk with others who have implemented
• Develop Project plan and ROI assessment for a
  specific process
• Assess tooling needs, availability, fit
• Implement and assess cost/benefit realities

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Thank you

• Mike Willis
• Partner, PricewaterhouseCoopers, LLP
• Founding Chairman, XBRL International
• mike.willis_at_us.pwc.com
• cell 813 340 0932

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Appendix I
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Relevant Resources

• IMA Suggested Reading http//www.imanet.org/resea
  rch_technology_reading.asp
• SEC XBRL VFP SEC http//www.sec.gov/spotlight/xbrl
  .htm
• XBRL
• http//www.xbrl.org
• XBRL GL http//www.xbrl.org/GLTaxonomy/
• Tools http//www.xbrl.org/tools
• Products and Services http//www.xbrl.org/produc
  tsandservices
• XBRL US Site http//www.xbrl/us
• SEC VFP http//xbrl.org/us/frontend.aspx?clkLKva
  l27
• SEC VFP Coaching http//www.xbrl.org/us/coaching/
  
• Resources http//xbrl.org/us/frontend.aspx?clkLK
  val35
• FEI XBRL http//www.fei.org/advocacy/xbrl.cfm
• CFO.com XBRL site http//www.cfo.com/guides/guide
  .cfm/8310234

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Suggested Reading

• Global Ledger Practices Guide for Study
  http//www.gl.iphix.net/
• ROI on XBRL http//www.aicpa.org/pubs/jofa/jun200
  7/stantial.htm
• Hitachi Blogs
• http//blog.hitachixbrl.com/2006/10/05/welcome/
• http//blog.hitachixbrl.com/2007/01/16/the-entity-
  problem/
• http//blog.hitachixbrl.com/2007/01/30/relationshi
  ps-matter/
• http//blog.hitachixbrl.com/2007/02/13/in-pursuit-
  of-process/
• http//blog.hitachixbrl.com/2007/01/09/master-data
  -management-the-xbrl-way/
• http//blog.hitachixbrl.com/2006/12/08/adaptation-
  or-evolution-what-is-your-xbrl-strategy/
• XBRL Ledger white paper http//www.imanet.org/pdf
  /8xbrl.pdf
• FFIEC White Paper http//www.xbrl.org/us/us/FFIEC
  20White20Paper2002Feb2006.pdf

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Demonstrations

• Edgar-Online IMetric
• http//www.edgar-online.com
• http//www.edgar-online.com/products/imetrix.aspx
  
• Rivet Software Crossfire
• http//www.rivetsoftware.com
• http//www.rivetsoftware.com/content/index.cfm?fus
  eactionshowContentcontentID195navID166
• http//www.rivetsoftware.com/resources/files/Cross
  fireLaunch/CrossfireAnalystReportCreation.htm
• Google OneBox
• http//www.iphix.net/resources/nunavut.htm

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