1 pwc pricewaterhousecoopers what does xbrl mean for you * november 28, 2007 *connectedthinking

1

PricewaterhouseCoopers

What does XBRL mean for you*

November 28, 2007

*connectedthinking

2PricewaterhouseCoopers

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?


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.


What is XBRL?


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


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

Japan

UnitedStates

Australia

Germany

Canada

UnitedKingdom

IASB China

Sweden

Denmark

SwitzerlandNetherlands

NewZealandBrazil

South Africa

Korea

Colombia

Argentina

SingaporeSpain

Ireland

Russia

Italy

France

Belgium

Poland

United Arab Emirates

India


Validation

Standardization

XBRL – More Than Just Definitions

CalculationCash = Currency +

Deposits

CalculationCash = Currency +

DepositsFormulas

Cash ≥ 0Formulas

Cash ≥ 0Contexts

US $FY2004

Budgeted

ContextsUS $

FY2004Budgeted

LabelcashCashEquivalentsAndShortTermInvestment

s

LabelcashCashEquivalentsAndShortTermInvestment

s

ReferencesGAAP I.2.(a)Instructions

Ad Hoc disclosures

ReferencesGAAP I.2.(a)Instructions

Ad Hoc disclosures

PresentationCash & Cash Equivalents

PresentationCash & Cash Equivalents

XBRLItem

XBRLItemXMLItemXMLItem

XBRLItem

XBRLItem

PresentationComptant et Comptant

Equivalents

PresentationComptant et Comptant

Equivalents

PresentationGeld & Geld nahe Mittel

PresentationGeld & Geld nahe Mittel

PresentationKas en Geldmiddelen

PresentationKas en Geldmiddelen

Presentation现金与现金等价物

Presentation现金与现金等价物

Presentation現金及び現金等価物

Presentation現金及び現金等価物

PresentationДеньги и их эквиваленты

PresentationДеньги и их эквиваленты

PresentationГроші та їх еквіваленти

PresentationГроші та їх еквіваленти


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

10PricewaterhouseCoopers 10

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.


IFRS-GP Taxonomy


How do you measure success?

Is the number of companies reporting in XBRL measured in the:

A. 100’s

B. 1,000’s

C. 10,000’s

D. 100,000’s

E. 1,000,000’s

F. Won’t raise my hand for free currency


Where is XBRL relevant?

14 PricewaterhouseCoopers

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

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)


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?


The Dutch Taxonomy Project

http://www.xbrl-ntp.nl/english

“The Dutch government intends to reduce the administrative burden of businesses with 25 percent.”


The benefits to business are ultimately estimated rise to $795 million per year on an ongoing basis.


II. Taxonomies building and implementation

2005-2007 Spanish Taxonomies Done / Developing

IPP Public Periodic Information Stock Exchange Sup.

PGC90 GAAP 1990 ICAC (Government)

SST Property Appraisal Companies Bank of Spain

ES-BE-FS Financial Information Exch. Bank of Spain

ES-BE-CBx Central Balance Sheet Bank of Spain

SEPBLAC Anti Money Laundering Bank of Spain

BP Balance of Payments Bank of Spain

IGAE Public Sector Accounting Gov. Accounting

INE Structural Statistics Nat’l Statistics Institute

RSC Corp. Social Responsibility AECA (Accountants)

LENLOC Rendering of Accounts Local Entities Superv.

XBRL SPAIN GOAL MAIN INICIATIVES LATINOAMERICA APPROACH

Banco de Espana


Business ReportingProcesses

Access

Validate

Analyze

Publish


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 consumer’s responsibility

Relationships between processes, data, policies, regulations are implicit and reliant on the experience and knowledge of individuals


The business reporting supply chain

ExternalBusinessReporting

BusinessOperations

InternalBusinessReporting

Investment,Lending,

RegulationProcesses Economic

Policymaking

Participants

AuditorsTradingPartners

Investors

FinancialPublishersand Data

Aggregators

Regulators

Software Vendors and Service Providers

ManagementAccountants

Companies CentralBanks

XBRLGlobal Ledger

XBRLExternal Reporting

TransactionLayer


What application is most commonly used for reporting?

A. Cartesis (SAP)

B. Navision

C. FRx (Microsoft Dynamics)

D. Hyperion Financial Management (Oracle Reports)

E. Crystal Reports

F. Office

G. Other


United Technologies CorporationCurrent 10-Q Process Flow

ERP

Qtr FS in Word

Edgar

HFMERP

ERP

Qtr FS in HTML

Qtr FS in XBRL

Supplemental Data

Review and Check

Review and Check

Total Process Time:

845 Hours


United Technologies Corporation Future 10-Q Process Flow

ERP

Qtr FS in XBRL

Edgar

HFM

XBRL TaggedERP

ERP

Supplemental Data

XBRL Tagged

Total Process Time: 700 Hours

25

What are the benefits and costs?


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


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


Priority Process Opportunities

How does information access work?

Who is responsible for validation?

Who is responsible for analysis?

Who is responsible for reporting?


Business Process Change

LegacyProcessor

Validation

The Prior process validation rules were applied too late in the process to do any good. As a result, the errors were sent back to the banks for ‘correction’ and thus a cycle of error and corrections ensued.


Business Process Change

CurrentThe 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).


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


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?


The business reporting supply chain

ExternalBusinessReporting

BusinessOperations

Internal Business Reporting

Investment,Lending

Regulation

ProcessSteps

EconomicPolicy Making

Design and push back the reporting concepts and business rules throughout the supply chain

Enables timely, accurate and complete datato flow back up the supply chain

Definitionsand

Formulas

Definitionsand

Formulas

Definitionsand

Formulas

Definitionsand

Formulas

Definitionsand

Formulas

Definitionsand

Formulas

Definitionsand

Formulas

Definitionsand

Formulas


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


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


What is the SEC doing?


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”


Exelon Generation Company, LLCFastenal Co.Ford Motor CompanyFord Motor Credit CompanyGeneral Electric CompanyGol Intelligent Airlines, Inc.Infosys Technologies LimitedLehman Brothers Holdings Inc.Liberty Media CorporationMicrosoft CorporationNet Servicos De Comunicacao SANYSE EuronextOld Mutual Capital, Inc.PECO Energy CompanyPepsiCo, Inc.Pfizer, Inc.R.R. Donnelley & Sons CompanyRadyne CorporationSouth Financial Group, Inc.Tenet Healthcare CorporationUnited Technologies CorporationW. R. Grace & Co.Xerox CorporationXM Satellite Radio Holdings, Inc.

SEC Voluntary Filing Program http://www.sec.gov/spotlight/xbrl.htm 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.

E*TRADE Financial Corporation

Exelon Corporation

Market Cap > $2 Trillion


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/spotlight/xbrl.htm



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/allevents/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


Thank you

Mike Willis

Partner, PricewaterhouseCoopers, LLP

Founding Chairman, XBRL International

[email protected]

cell: 813 340 0932

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Appendix I


Relevant Resources

IMA Suggested Reading: http://www.imanet.org/research_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/productsandservices

XBRL US Site http://www.xbrl/us • SEC VFP http://xbrl.org/us/frontend.aspx?clk=LK&val=27 • SEC VFP Coaching http://www.xbrl.org/us/coaching/ • Resources http://xbrl.org/us/frontend.aspx?clk=LK&val=35

FEI XBRL http://www.fei.org/advocacy/xbrl.cfm

CFO.com XBRL site http://www.cfo.com/guides/guide.cfm/8310234


Suggested Reading

Global Ledger Practices Guide for Study http://www.gl.iphix.net/

ROI on XBRL: http://www.aicpa.org/pubs/jofa/jun2007/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/relationships-matter/ • http://blog.hitachixbrl.com/2007/02/13/in-pursuit-of-process/ • http://blog.hitachixbrl.com/2007/01/09/master-data-management-the-xbrl-w

ay/

• 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%20White%20Paper%2002Feb2006.pdf


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?

fuseaction=showContent&contentID=195&navID=166• http://www.rivetsoftware.com/resources/files/CrossfireLaunch/

CrossfireAnalystReportCreation.htm

Google OneBox• http://www.iphix.net/resources/nunavut.htm

1 pwc pricewaterhousecoopers what does xbrl mean for you * november 28, 2007 *connectedthinking

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