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XBRL as "Interactive Financial Data"

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  • Tagging data is a new task, and companies will need guidance on best practices. For example, companies will need to learn how to optimize “context,” an XBRL concept that represents time periods, business segments, and reporting scenarios. Context represents one-third of the XML in the 10-Q. Financial statement preparers need software tools for rendering XBRL documents. There are tools available, but these tools are early in their product cycle, and still need enhancements to enable ease of use for tagging and extending standard taxonomies. XBRL taxonomy extensions and validation processes present a new and complex technology to preparers.
  • Cash Flows – Flipping signs RealizedGainsLossesSaleInvestments TaxBenefitExerciseStockOptions ChangeReceivables ChangeOtherCurrentAssets ChangesOtherLongTermAssets RepurchaseCommonStock PaymentCommonDividends CapitalAdditionsNet AcquisitionBusinessesNetCashAcquired PurchaseInvestments
  • Infinite
  • Unit divided by the same unit $/$, how would you know that
  • 8,500 on MSN 14,000 on Google Search on FAS123R 16 Extensions for Microsoft
  • Transcript

    • 1. XBRL as “Interactive Financial Data” Why should you care about this technology standard?
    • 2. Demo Greg Adams CFO & COO Edgar Online
    • 3. "The reason that everyone is not doing their financial reporting using interactive data is simple:  it's a new concept.  People will use it when they discover how much time and money it can save them, by automating and speeding up the process.  We want it at the SEC because it will make the financial reports much more useful.  Companies will want interactive data for the same reason. The truth is, it's inevitable -- and if the 21st century has shown us anything thus far, it's that technological change occurs extremely quickly. "As a result, it's not surprising that we're hearing from both filing agents and accounting firms that their clients are suddenly showing greater interest in interactive data.  Given its enormous potential, there's no doubt this increased interest in interactive data will soon translate into widespread adoption." Chairman Christopher Cox U.S. Securities and Exchange Commission Quote in January, 2006 Financial Executives Magazine Article On XBRL
    • 4. Opportunity and Challenge
      • SEC Chairman Cox vision for interactive financial data
        • Voluntary Filing Program launched, effective Apr 4, 2005
          • Test effectiveness of tagged data
          • Improve quality of information available to investors
        • Request for Information, Oct 4, 2005
          • How best to develop tools that will make “interactive financial data” a reality
          • How the Commission can meet the original goals of the VFP
      • XBRL as an approved filing format is coming
      • There are a number of challenges that need to be addressed in order to enable broad participation
      • How do we ensure this is a compelling solution for all companies?
    • 5. What is XBRL
      • Finance-specific use of XML
      • Open standard
      • Collaborative market effort – 350 member organizations
      • Consortium established in 1999
      • Implemented as a regulatory standard
      Technology Standard
      • Crosses all industries
      • Designed for extensibility
      • Includes XBRL GL
      • Taxonomies: IFRS, US GAAP (e.g. Commercial & Industrial, Banking & Savings Inst., Insurance, Investment Management)…
      Broad Application Standardization Calculation Cash = Currency + Deposits Formulas Cash ≥ 0 Contexts US $ FY2006, Budgeted References GAAP I.2.(a) Instructions Ad Hoc disclosures XBRL Item Label CashCashEquivalentsAnd ShortTermInvestments Validation Presentation 現金及び現金等価物 Presentation Cash & Cash Equivalents
    • 6. Evolving XBRL into a Comprehensive Standard
      • Repeatable, controllable business process
      • Reducing the complexity for preparers
      • Resolve deficiencies with US GAAP taxonomy
      • Rendering & analyzing XBRL documents
      • Sustainable ownership of US GAAP taxonomy
    • 7. External Reporting Business Process Extend the taxonomy if necessary Create an XBRL document & validate calculations Publish XBRL Document & Taxonomy Compare & map 10-K / 10-Q to US GAAP Taxonomy Assess Scope of Reporting & Download Taxonomy Review & Validate XBRL Document Identify a team: Accountant & Developer (XML)
    • 8. A Few Numbers on Microsoft 10-K
      • 175 pages printed on 8.5x11 in paper
      • 4400 lines of XML
      • Document validates with two industry tools
      • 213 MSFT elements added to US GAAP taxonomy
        • Approx 400+ extensions, modifications
        • Used for 1077 discreet facts
      • To produce:
        • Gap analysis to creating file: Approx 2 month staff accountant
        • Extend taxonomy: 40 hours
        • Validation: 3 weeks across 3 resources
    • 9. Complexity for Preparers
      • A sample of technical detail the accountant must handle
        • Presented as a set of questions
      • Based on real examples from Microsoft experience in filing under SEC VFP
        • Three 10-Qs, most recent quarter ended Sept 30, 2005
        • Annual report, 10-K, for year ended June 30, 2005
        • Included financial statements, notes, management’s discussion and analysis (MD&A)
    • 10. In the following example is the highlight a number or a string? Table: Components of finite-lived intangible assets acquired
    • 11. Are the following numbers positive or negative?
    • 12. What does decimals=“INF” represent? Can you provide an example? <msft:CashDividendsPerShare contextRef=&quot;P1YFY2003&quot; unitRef=&quot;USD&quot; decimals=&quot;INF&quot;>0.08</msft:CashDividendsPerShare> <msft:CashDividendsPerShare contextRef=&quot;P1YFY2004&quot; unitRef=&quot;USD&quot; decimals=&quot;INF&quot;>0.16</msft:CashDividendsPerShare> <msft:CashDividendsPerShare contextRef=&quot;P1YFY2005&quot; unitRef=&quot;USD&quot; decimals=&quot;INF&quot;>3.40</msft:CashDividendsPerShare> From Income Statements
    • 13. What does “pure” refer to? When do you use it?
    • 14. Deficiencies with US GAAP Taxonomies
      • Lack of comprehensive documentation
        • Preparer must understand the 6 element types and how applied in an XBRL document
        • Concepts in US GAAP CI, notes and MD&A spans well over 1500 terms
      • Encoded US GAAP calculations in taxonomies are opaque
        • Preparer must infer and test these in the XBRL document validation process
        • Extending taxonomies creates opportunity for coding errors
      • Taxonomies incomplete: Need to cover breadth and depth in variety of notes and MD&A disclosures
      • Need common methodology in XBRL for segment reporting, fiscal year comparatives and so forth
    • 15. Rendering & Analyzing XBRL Documents
      • Lack of rendering tools that resemble original files in Word with Excel tables
      • Taxonomy extensions can negatively impact comparison and analysis
        • Thousands of registrants each with extensions numbering in the hundreds
        • Three sets of files required to process XBRL documents
      • Lack of methodology for context definition
      • Multiple industry extension taxonomies such as for oil and gas are insufficient for hybrid companies
      • Standard taxonomy calculations don’t match how companies report
    • 16. Sustainable Ownership of Taxonomies
      • Today, US XBRL jurisdiction provides oversight & project management
        • Members work on volunteer basis
        • Insufficient funding to evolve into comprehensive list of accounting & disclosure concepts
      • Lack of change management process
        • Need to keep in sync with regulation & accounting pronouncements
      • Need for quality assurance review by domain experts
      • An example…
    • 17. Illustrating the Need for Ownership
      • What is FAS 123(R)?
      • How many results do you think there are on the Web?
        • Lots of folks who will sell you an opinion
      • Who in the US jurisdiction should answer:
        • What are the basic disclosure requirements for companies for FAS 123(R)?
      • Where is its implementation in the US GAAP CI?
      • Do you know what it means for MSFT?
    • 18. Closing Remarks
      • Recommend that independent private sector entity provide US GAAP taxonomy ownership & management
      • Get involved in the VFP – provide feedback so that XBRL evolves in to a compelling solution
    • 19. Q&A Panel

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