The Israeli XBRL Adoption Experience

1. 22nd XBRL International Conference“Sharing Economic Information in a Global World: the XBRL Contribution”17-19 May 2011Brussels, Belgium Track 5, Adoption of XBRL: An Analysis of the Israeli XBRL-Adoption Experience, Ariel Markelevich May 19, 2011

2. The Israeli XBRL Adoption Experience Ariel MarkelevichSuffolk UniversityLewis ShawSuffolk UniversityHagit WeihsBrandeis University

3. Background • In 2008, Israel required most public companies to adopt IFRS and XBRL-tagged reporting format. • Part of an aggressive effort to make its capital markets more transparent and attractive for foreign investors. • In May 2010, Israel was accepted as a member in the Organization for Economic Cooperation and Development (OECD)

4. Conversion to XBRL • Companies type in the financial information in a data entry form on the ISA’s website. • Companies submit the data entered along with a Hebrew pdf file with complete set of the financial statements. • Companies certify that the information entered is in accordance with the information in the full financial statements. • The ISA takes on the responsibility for converting the financial data into XBRL. • A similar data entry form has existed on the ISA’s website for a while.

5. Conversion to XBRL (continued) • XBRL files do not include the footnotes to the financial statements. • They include some information from explanatory disclosures on financial statements: • Accumulated Depreciation and Impairment, Property, Plant and Equipment, Total • Additions, Property, Plant and Equipment, Net • Aggregate Amount of Impairment Losses Recognized (Reversed) • Number of Shares Issued and Fully Paid for Class of Ordinary Share Capital • Amount of Dividend, Ordinary Shares, Gross • Amount of Dividend Proposed or Declared But Not Paid, Ordinary Shares

6. Sample and Methodology • We examine the 2008 annual reports for all companies trading in the Tel-Aviv Stock Exchange (TASE) as of 12/31/2008. • Download each company’s annual financial statements in both XBRL and PDF format. • As of 12/31/2008, the TASE listed 623 companies. We were not able to obtain data for 58 of them, leaving us with a sample of 565 companies.

7. Sample Distribution by Sector

8. Findings

9. Missing Data

10. Inconsistent Data

11. Frequency of XBRL Data Inconsistencies by Sector

12. Frequency of XBRL Data Inconsistencies by Firm Characteristics – Any XBRL Issue

13. Frequency of XBRL Data Inconsistencies by Firm Characteristics – Any Item Missing

14. Frequency of XBRL Data Inconsistencies by Firm Characteristics – Any Item Inconsistency

15. Initial Findings on 2009 • Only analyzed missing data. • Seems similar to 2008. • 2.09 percent of companies are missing the entire Income Statement. • 1.71 percent of companies are missing the Earnings per Share amounts. • 57.98 percent are missing the “Number of Shares Issued” and “Fully Paid for Class of Ordinary Share Capital”. • 31.18 percent of companies are missing the “Accumulated Depreciation and Impairment, Property, Plant and Equipment, Total” or “Additions, Property, Plant and Equipment, Net or Aggregate Amount of Impairment Losses Recognized (Reversed)”.

16. Conclusion • In 2008, Israel adopted IFRS and started using XBRL. • The ISA is responsible for the XBRL conversion based on a data entry form. • We compare the XBRL data to the complete set of the annual reports in Hebrew pdf format and note a large number of inconsistencies. • We believe that the errors we report could easily be avoided or quickly corrected. • We believe this is primarily a result of lack of awareness to the importance of the XBRL data.