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Enhanced Business Reporting

Explore the elements of enhanced business reporting, the collaborative consortium approach, and the desired consortium representation. Understand the mission and strategy behind improved reporting and the role of XBRL and VMRC in the corporate reporting supply chain.

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Enhanced Business Reporting

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  1. Enhanced Business Reporting Al Anderson, Senior Vice President, Member and Public Interests AICPA

  2. AGENDA • Why Enhance Business Reporting? • Elements of Enhanced Business Reporting • Conceptual Framework • Special Committee On Enhanced Business Reporting Mission • Collaborative Consortium Approach • Desired Consortium Representation • Draft Consortium Structure • Consortium Strategy: Leveraging Existing Structures • VMRC Structure and how VMRC will Contribute to Enhanced Business Reporting • How XBRL will Contribute to Enhanced Business Reporting and the Role of XRBL in the Corporate Reporting Supply Chain • High-Level Timeline

  3. WHY ENHANCE BUSINESS REPORTING? • Current reporting model no longer sufficient • Not timely -- it’s after-the-fact information • Not informative enough • Ignores many factors of performance • To date -- calls for change and some action • Time is NOW for coordinated action

  4. Past Present Future WHY ENHANCE BUSINESS REPORTING? Business Reporting: A Changing Dynamic Historical Financial Statements Enhanced Business Reporting • Lagging indicators… • One size fits all (GAAP) • Ignores non-financial measures • Reports results of past decisions • Leading indicators… • Tied to mission, vision and values • Tied to factors critical to success • Moves decision criteria to forefront

  5. Past Present Future WHY ENHANCE BUSINESS REPORTING? Business Reporting: A Changing Dynamic Historical Financial Statements Enhanced Business Reporting • Lagging indicators… • Periodic • Historical • Cost-basis • Financial only • Statements • Looking backward • Leading indicators… • On-demand • Real-time/future • Value-basis • Comprehensive • Custom reports • Looking forward

  6. ELEMENTS OF ENHANCED BUSINESS REPORTING CONVERGENCE TO “NEAR REAL-TIME” SCALABLE System Reliability Financial and Non-Financial Measures Corporate Accountability Understandable Disclosures Information Dissemination

  7. Information Dissemination Technology • XBRL Financial & Non-Financial Measures • VMRC • Standards Setters Business Information • VMRC • SEC Plain English • FASB Projects Understandable Disclosures Foundational Concepts System Reliability • Continuous Audit • Trust Services Corporate Accountability • COSO ERM • OCEG • GRI CONCEPTUAL FRAMEWORK 5 Elements Deployment

  8. SPECIAL COMMITTEE ON ENHANCED BUSINESS REPORTING MISSION I: Identification of key stakeholders whose collaborative involvement is critical to successful development & implementation MISSION: To establish a consortium of investors, creditors, regulators, management, & other stakeholdersto improve the quality & transparency of information used for decision-making II: Overarching goal of making better information available to investors & creditors, helping them to see organizations through the eyes of management

  9. COLLABORATIVE CONSORTIUM APPROACH • Work collaboratively • Consortium-based • Globally focused • Comprised of key stakeholders of enhanced business reporting • Build consensus • Help define migration paths to drive adoption by participants in the corporate reporting supply chain

  10. DESIRED CONSORTIUM REPRESENTATION IMPLEMENTATION of enhanced business reporting can only be achieved through a collaborative effort including the following stakeholder groups: • Government/Regulatory Agencies • Investment and Lending Community • Public and Private Companies and Industry Associations • Accounting Firms and Associations • Technology and Software Enablers • Academia and Researchers (Think Tanks)

  11. DRAFT CONSORTIUM STRUCTURE Operating Committee Advisory Board (Champions/Visionaries) EBR Management Supply Chain Communities Producers Industry Deployment Groups Public Companies (4) Private Companies (1) EBR Framework Info. Dissemination Industry Assns. (3), FEI Standards Process System Reliability Consumers Corp. Accountability (To be Organized by Industry Sectors) Regulators (4) Investmt. Community (5+) Und. Disclosures Lending Community (1-2) Fin. & Non-Fin. Meas. Rating Agencies (1) … Enablers … Accounting Profession (5) … Technology Enablers (2) … Other Enablers (2)

  12. CONSORTIUM STRATEGY:LEVERAGING EXISTING STRUCTURES System Reliability Information Dissemination Financial & Non-Financial Measures Corporate Accountability … Continuous Assurance Lab Understandable Disclosures Value Measurement & Reporting Collaborative Deployment Groups

  13. … D&T … Grant Thornton SAICA CICA AICPA … McGladrey & Pullen … Business Community Accounting Institutes Accounting Firms Innovation Human Capital Customers/Clients … … Pharmaceuticals Natural Resources Telecom … … … VMRC CONSORTIUM STRUCTURE VMRC Board of Directors Framework Working Group Research Working Group VMRC Members Research is Being Conducted in Each of the Areas Below Across Multiple Industry Sectors: The Framework will be Customized by Industry Sectors, Including the Following & Others:

  14. Goals: Identify best practices. Debate existing concepts. Test existing and new concepts. Modify concepts, as necessary. Develop framework to allow for comparability between: Organizations. Within Industries Create: Comparability Consistency Transparency Principles/Criteria HOW VMRC WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

  15. Enables custom reporting More precise, clear, consistent reporting More timely, accurate, useful data for decisions Less burden on companies Greater interoperability of data Accelerates adoption of enhanced reporting HOW XBRL WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

  16. Lowers cost of e-filing initiatives Enhanced functionality of processes Validation Compliance with business rules Linkage from reports to other resources HOW XBRL WILL CONTRIBUTE TO ENHANCED BUSINESS REPORTING

  17. THE ROLE OF XBRL IN THE CORPORATE REPORTING SUPPLY CHAIN New Today XBRL for Financial Statements XBRL for G/L Journal Entry XBRL for Reporting Regulatory Filings Internal External Investment Business Processes Processes Financial Financial and Lending Operations Reporting Reporting Analysis XBRL for Business XBRL for Audit XBRL for Event Reporting Schedules Credit Filings Financial Publishers Companies Investors/ Creditors Participants Participants and Data Aggregators Trading Management Auditors Regulators Partners Accountants Software Vendors

  18. HIGH-LEVEL TIMELINE Develop conceptual framework for enhanced business reporting and prototype report Strategic Planning Invitations extended to desired consortium participants: sales & negotiation phase First meeting of Special Committee on Enhanced Business Reporting Consortium launched June 2003 January 2004 September 2002 June 2004 January 2003 Special Committee on Enhanced Business Reporting approved by AICPA BOD Champions identified, contacts initiated Consortium Launch Planning Communications plan launched

  19. QUESTIONS?

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