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The ABCs of XBRL
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The ABCs of XBRL

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The SEC's mandate of XBRL (Extensible Business Reporting Language) has left many searching for answers to a number of important questions. ...

The SEC's mandate of XBRL (Extensible Business Reporting Language) has left many searching for answers to a number of important questions.

The financial reporting community, including investor relations, in-house general counsel, CFOs, accounting and compliance professionals, is now faced with the task of adjusting to this new reporting system. Vintage Filings, a division of PR Newswire, provides clarity around XBRL and helps ensure you are well prepared to meet the necessary deadline associated with the mandate.

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    The ABCs of XBRL The ABCs of XBRL Presentation Transcript

    • The ABCs of XBRL Shawn Aruch Vice President EDGAR Services & Information Technology shawn@vfilings.com Vintage Filings – title title Title title title titleThe ABCs of XBRL 1
    • Overview • What is XBRL? • SEC’s Rules • Best Practices • Process • Deliverables Vintage Filings – title title Title title title titleThe ABCs of XBRL 2
    • XBRL – Fixing Financial Reporting Volume & Complexity has exploded SEC’S EDGAR DATABASE # of 10K Bytes Filed Cumulative # of Pages in Year Filers Per Year # of Bytes Citigroup’s 10k 1996 12,602 25,035,371,249 44,875,133,391 263 1999 13,193 35,245,435,641 147,570,816,546 265 2009 12,069 204,150,536,257 1,271,786,008,874 1,376 • 3rd Party financial data providers are not trusted • 70% of Analysts & Regulators are manually re-keying data from filing • 10-20% of what is reported ends up in a 3rd party financial data set (with errors) • Issuers are Frustrated • Reporting has increased by 4-5x but investor accuracy & understanding has decreased • 50% of US stocks are not covered by an analyst • Regulators are overwhelmed • Armies of people are not spotting the risks • US Equities have best transparency in world • Data Standards are desperately needed ! Vintage Filings – title title Title title title titleThe ABCs of XBRL 3
    • What Is XBRL? What is XBRL? • eXtensible Business Reporting Language (Interactive Data) • International Supply chain standardization effort • Each line item is given data tag standardized by US GAAP and different industries What does it do? • Creates machine-processable disclosures for more effective communication, easy re-use and analysis • Allows for disintermediation of data aggregators • Gives companies more control Vintage Filings – title title Title title title titleThe ABCs of XBRL 4
    • What Is XBRL NOT? XBRL – • Is not a replacement for EDGAR. • Does not change the content of what a company reports, only the format in which it is reported. • Is not the end of the world. Vintage Filings – title title Title title title titleThe ABCs of XBRL 5
    • Key XBRL Terms to Know Tag • Machine-readable “barcode” that gives a standardized definition for each disclosure item in an income statement, SCF, or balance sheet, notes or MD&A • Concept • Precision • Period • Currency Taxonomy A “dictionary” of concepts for: • Specific accounting standards (US GAAP, IFRS) • Industry segments (e.g., Oil & Gas, BASI, Commercial & Industrial, Broker Dealer) • Company-specific disclosures Vintage Filings – title title Title title title titleThe ABCs of XBRL 6
    • What is a Concept? Vintage Filings – title title Title title title titleThe ABCs of XBRL 7
    • Key XBRL Terms to Know Tag • Machine-readable “barcode” that gives a standardized definition for each disclosure item in an income statement, SCF, or balance sheet, notes or MD&A • Concept • Precision • Period • Currency Taxonomy A “dictionary” of concepts for: • Specific accounting standards (US GAAP, IFRS) • Industry segments (e.g., Oil & Gas, BASI, Commercial & Industrial, Broker Dealer) • Company-specific disclosures Instance document • XBRL structured document of company disclosures that is the building block to viewing and analyzing data Vintage Filings – title title Title title title titleThe ABCs of XBRL 8
    • Instance Document Vintage Filings – title title Title title title titleThe ABCs of XBRL 9
    • XBRL filed with SEC – 6 files Vintage Filings – title title Title title title titleThe ABCs of XBRL 10
    • XBRL: Final Rule Overview Impacted What is Timing Form Types Liability Companies Submitted? Phase in over three Year 1: Large Periodic Reports Furnished, not filed Supplement to years Accelerated Filers 10-K, 10-Q, 20-F, for the first HTML/ASCII First mandatory with public float 40-F 2 years only (Rule Applied to 10-K and reporting for >$5B (~500 Current Reports 406T) 10-Q face quarter ending companies) Data files have financials, 8-K, 6-K after 6/15/09 for Year 2: All Large same limited schedules and the 1st 10-Q filed Accelerated Filers Revised financial liability standard footnotes (“F (~1700 companies) information & applied to Pages”) subsequent voluntary XBRL Year 3: All events In Year 1, notes/ companies filing in filings schedules tagged US GAAP (~10,000+ Registration Late filing = loss of as block text companies) Statements S-3 eligibility In Year 2, detailed S-1, S-3, S-4, S- (automatic footnote tagging 11, F-1, F-3, F-4, suspension and F-9, F-10 30 day grace period automatic curing) in each of phase ins Containing financial statements Only acquiring company Vintage Filings – title title Title title title titleThe ABCs of XBRL 11
    • Recent SEC Rule Adjustments • During a March 23, 2010 XBRL seminar, the SEC provided guidance on how companies are classified in Tiers 1-3 based on public float. • For the first year of XBRL adoption, tier one companies were defined as those large accelerated filers with a public float greater than $5 billion as of their second quarter 2008 filing. • Per the SEC, companies whose public float decreased to below $5 billion as of their second quarter 2009 filing have now been reclassified as tier two or tier three companies. • This change will delay the detailed footnote requirement by one year if a company slips from Tier 1 to tier 2. Additionally, it provides a temporary hiatus for the 2010 first quarter 10-Q XBRL filing. • If a company's public float increased to above $5 billion as a companies second quarter 2009 filing, they will be accelerated to the tier one status. • If you think your company is affected, please talk to your general counsel and contact the SEC for confirmation. • Contact SEC: Email: Ask-OID@sec.gov Ted Uhlinger Vintage Filings – title title Title title title titleThe ABCs of XBRL 12
    • Detailed Footnote Tagging Vintage Filings – title title Title title title titleThe ABCs of XBRL 13
    • XBRL Best Practices – Start Early!! • Prepare Primary Financial Statement and Block Tagged Notes XBRL documents at least one to two quarters ahead of your mandated timeframe even if they are not formally filed with the SEC #1 – On-boarding (setup): establish Initial Template via Tag Approval for a filed 10-Q #2 – Dry Run test to time with Concurrent EDGAR filing #3 – Repeat above for 10-K if desired (some issuers have opted to do as well) • For Detailed Footnote tagging, examine the structure and presentation of your companies financial disclosure and get an estimate of the number of concepts that will need to be tagged in both your 10-K and 10-Q documents. • Focus on XBRL data creation and not too much on rendering issues on public sites including the SEC. According to the SEC there is no rendering requirement in the mandate. Vintage Filings – title title Title title title titleThe ABCs of XBRL 14
    • XBRL Best Practices • Extensions - where to extend or not extend? SEC Staff Feedback published in May’09 • When choosing between two US-GAAP Standard Tags (narrow vs. broad), narrow is preferred • When choosing between an existing Standard and Custom/Extension Tag, every effort should be made to utilize existing US GAAP tag found in taxonomy • Tags may cross industry classifications • Clients could review their tags against peer tags for comparison Vintage Filings – title title Title title title titleThe ABCs of XBRL 15
    • Planning - Who should be involved • External reporting – education and build in more time for review! • Special project team • Legal Counsel - Internal or External – do they review notes? • Audit committee - may need to alter meeting dates down the road? • Internal/external auditors - get them involved earlier if needed • Investor relations – posting of XBRL on web site • Information Technology • Consultants • Others? Educate senior staff? Vintage Filings – title title Title title title titleThe ABCs of XBRL 16
    • Process Overview – Setup Document Processed 6-8 Months Rules Before 1st Filing Creation Unknown Known Tag Tag • 1-4 week process Rule Extension Extension Created of Label of Definition • As filed data is processed Rule Created Rule Created Vintage Filings – title title Title title title titleThe ABCs of XBRL 17
    • Process Overview – Setup Files are Client Conference Reviews Edits processed calls • Year 1 • Year 1 • Year 1 • 3-7 days • 20-40 hours • 24-36 hours • Years 2 • Years 2 • Years 2 • 1-3 weeks • 2-3 weeks • 2-7 days Vintage Filings – title title Title title title titleThe ABCs of XBRL 18
    • Process Overview – Pro Forma • Document is checked for new / changed / removed 6-8 Pro items Rules 1-3 Weeks Forma Months Before Before 1st Creation Financials • Document is updated for Filing Filing Test changes in US GAAP taxonomy - new / changed / depreciated concepts • Filing is checked against • 1-4 week process • 24-96 hour turn latest EDGAR filer manual rules • As filed data is processed Vintage Filings – title title Title title title titleThe ABCs of XBRL 19
    • Process Overview – Filing Time 24-96 6-8 Months 1-3 Weeks Pro Forma After Rules hours to Before 1st Before Financials EDGAR Filing Creation Filing Conversion XBRL Final Test Document • 1-4 week process • 24-96 hour turn • Final EDGAR needed 24-96 hours prior to • As filed data is filing processed Vintage Filings – title title Title title title titleThe ABCs of XBRL 20
    • Considerations when choosing tool or outsource • In-house/Software tool only • BOTH – Speed of taxonomy loading – Support – hours, what form – Web based, ASP, PC-based? – Training, FAQ’s, Webinars – File size if PC-based – Does block tagging – Handling changes to taxonomy – Software updates – Does detailed tagging – Processing times – Handling Changes – Is Support time extra ($$) – Provides rendering – Has a repeatable process • Outsource/Service only – Security policies – Turnaround times – Maintains user groups – Quality Control levels – Provides validation – SAS70 certified – Any Restatements made – Provides alternative tag options – Version control between EDGAR HTML & XBRL process Vintage Filings – title title Title title title titleThe ABCs of XBRL 21
    • Vintage XBRL Time Savings • Company Specific XBRL Template is created and saved for future • XBRL Proofs available in 3-7 days. Ongoing Edits – 24-36 hours (8 hour average turnaround) • Taxonomy experts complete the initial tagging, saving 80-100 hours • XBRL specialists transfer knowledge to ensure understanding of the taxonomies, mapping process and SEC requirements • No need to purchase, install and learn software Cost Effective & Easy Review Process • Repeatable Process derived from rules based engine (reuse of company XBRL template) • No purchase of software required • No hiring of additional staff to create XBRL in-house, no worries of retraining staff or absenteeism during critical periods • Low cost, full-service solution • Ease of Use/Easy Step process: review and approve, then file • Reviewer’s Guide for easy review Vintage Filings – title title Title title title titleThe ABCs of XBRL 22
    • Common Errors • Company Identifier, scheme, namespace, and the naming of context IDs or the XBRL files are not in compliance with the requirements of the EDGAR Filer Manual. • Extension elements are created when an appropriate element exists within the standard taxonomy. • Element labels are not customized to conform to the financial statement presentation. • Element attributes are missing for extension elements that were created (e.g., balance type). • The names of the extension elements contain company-specific information. • Presentation/order of elements is inconsistent with the financial statements. • Numeric values are incorrectly stated in the instance document. • Decimal attributes are not properly set for numeric values in the instance document. • Duplicate or unused contexts are included in the instance document. • Structural problems are created in tables within the extension taxonomy. • Calculation errors are included in the calculation linkbase, causing validation errors. Vintage Filings – title title Title title title titleThe ABCs of XBRL 23
    • We : Validation • check the quality of your EDGAR document • guarantee compliance with the latest XBRL standard and the SEC filer manual • ensure the consistency of tagging period-to-period and filing-to-filing • help you make decisions on your extensions versus your peers • synchronize your XBRL rendering with your EDGAR Document and the SEC viewer • capture all your comments and changes and create an audit trail of your decisions • verify the calculations in your statements- if we find errors, we let you know • cross-check to ensure the categories and sub-categories foot properly • make sure the same tags are used to represent the same concepts across balance sheet, income statement, cash flow statement and shareholder’s equity Vintage Filings – title title Title title title titleThe ABCs of XBRL 24
    • Resources • www.xbrl.us – Software and Services Comparison Matrix http://xbrl.us/Learn/Pages/ToolsAndServices.aspx – Taxonomy http://xbrl.us/taxonomies/Pages/US-GAAP2009.aspx – Case studies http://xbrl.us/Learn/Pages/CaseStudies.aspx – Newsletter signup http://xbrl.us/News/pages/newsletter.aspx • SEC’s XBRL information portal: http://xbrl.sec.gov – View XBRL-formatted financial statements http://www.sec.gov/spotlight/xbrl/filings-and-feeds.shtml – SEC’s XBRL Submission Previewer https://datapreview.sec.gov/previewer/ – SEC’s Information for EDGAR Filers (EDGAR Filer Manual) http://www.sec.gov/info/edgar/edmanuals.htm – Staff Observations from Review of Interactive Data Financial Statements http://www.sec.gov/spotlight/xbrl/staff-review-observations.shtml Vintage Filings – title title Title title title titleThe ABCs of XBRL 25
    • Vintage Filings – title title Title title title titleThe ABCs of XBRL 26
    • Vintage Filings – title title Title title title titleThe ABCs of XBRL 27
    • Vintage Filings – title title Title title title titleThe ABCs of XBRL 28
    • Takeaways • Timing – GET STARTED EARLY – Filings may take days not hours • Collaborative Process – no longer just formatting – Start building teams and assigning responsibility • Validate and Double Check Vintage Filings – title title Title title title titleThe ABCs of XBRL 29
    • The ABCs of XBRL Shawn Aruch Vice President EDGAR Services & Information Technology shawn@vfilings.com Vintage Filings – title title Title title title titleThe ABCs of XBRL 30