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XBRL Module Part 1: Introduction to XBRL

XBRL Module Part 1: Introduction to XBRL. Credits Prepared by: Rajendra P. Srivastava Ernst & Young Professor University of Kansas Sponsored by: Ernst & Young, LLP (August 2005). Outline. Definition and Value of XBRL

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XBRL Module Part 1: Introduction to XBRL

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  1. XBRL ModulePart 1: Introduction to XBRL Credits Prepared by:Rajendra P. Srivastava Ernst & Young Professor University of Kansas Sponsored by:Ernst & Young, LLP (August 2005)

  2. Outline • Definition and Value of XBRL • Current and Future Reporting Process • Primary Use Cases • XBRL Information Chain and XBRL GL • XBRL Consortium and Evolution of XBRL • Current Usage and First Adopters of XBRL • Potential Usage of XBRL • Some Examples

  3. XBRL Definition* • XBRL is the specification for the eXtensible Business Reporting Language. XBRL allows software vendors, programmers and end users to enhance the creation, exchange, and comparison of business reporting information. Business reporting includes, but is not limited to, financial statements, financial information, non-financial information and regulatory filings such as annual and quarterly financial statements. • XBRL defines a syntax in which a fact can be reported as the value of a well defined reporting concept within a particular context. The syntax enables software to efficiently and reliably find, extract and interpret those facts. The XBRL framework splits business reporting information into two components: XBRL instances and taxonomies. * The above definition is provided by XBRL.org in “Extensible Business Reporting Language (XBRL) 2.1 RECOMMENDATION - 2003-12-31 + Corrected Errata - 2005-04-25.”

  4. Value of XBRL • Video Clip

  5. Value of XBRL Processing, analyzing, and disseminating information become much more efficient and effective (Better, Faster & Cheaper) • Improves effectiveness by eliminating the need for re-entering data for processing • Improves efficiency by removing redundancies • Saves costs through efficiency and effectiveness • Disseminates information independent of platform • Transparency of information • Makes it easy to use automated analytical tools

  6. Browsing the Web (Content –withoutContext) 4,350 hits for IBM’s property plant and equipment

  7. Current Reporting Process Printed Financials Internal Reports • Rework and Delays • Ad hoc and non repeatable Processes Regulatory Filings Accounting System Web Site Explanatory Text Tax Return Third Party Information Trade Filings

  8. XBRL Documents XBRL Reporting Process Printed Financials Internal Reports • Reduces redundancies & discrepancies • Repeatable processes using tools Regulatory Filings Accounting System Web Site Explanatory Text Tax Return Third Party Information Trade Filings

  9. Tagging can occur Primary Use Cases Operating Divisions Information Accounting Corporate HQ Regulators Regulator Filings Financial Statements Earnings Releases Sharing Lenders Investors Easily More Specific Uses -External Auditors -Data Intermediaries -Others

  10. XBRL Information Chain XBRL for XBRL GL and XBRL for Business Processes XBRL for Financial Statements Regulatory Filings Internal External Investment Business Operation Financial Financial and Lending Reporting Reporting Analysis Business Processes XBRL for Audit XBRL for Schedules Tax Filings Financial Publishers Companies Investors Participants Participants and Data Aggregators Trading Management Auditors Regulators Partners Accountants Software Vendors

  11. Tax Regulators Investors Creditors Lenders Website Aggregators One way One way ERP G/L Packages Other Transaction Creation 2-way 2-way • Orders • A/P • Delivery • Orders • A/R • Delivery E-Commerce is an Interactive Supply Chain BUSINESS Business Customer

  12. The XBRL Organization: XBRL Consortium (www.xbrl.org) • XBRL International • A not-for-profit organization consisting of more than 300 members at the present time. • Organizational Structure • Comprised of local jurisdictions which represent countries, regions or international bodies and focus on the progress of XBRL in their areas as well as contributing to international development.

  13. Evolution of XBRL: A Historical Perspective • April 1998: Charles Hoffman, CPA, investigated the use of eXtensible Markup Language (XML) for the electronic reporting of financial information in the USA for the first time. • October 1998: AICPA decided to fund a project aimed at creating a prototype set of financial statements in XML. • January 1999: Based on the prototype financial statements, the AICPA was convinced that XML was important to the accounting profession. • July 1999: The project to develop eXtensible Financial Reporting Markup Language (XFRML) was funded by The AICPA Board of Directors • This marks the conception of XBRL • XFRML is a predecessor of XBRL • XFRML focused on just reporting of financial information, where as XBRL focused on reporting all business relevant information

  14. Evolution of XBRL: A Historical Perspective • August 1999: 12 companies, (besides the AICPA), including ‘Big 5’ joined the project as members of the XFRML Steering Committee. • October 1999: First meeting of the XFRML Steering Committee. • April 2000: XFRML Steering Committee was officially changed to XBRL Steering Committee. • July 2000: First specification of the XBRL Taxonomy for Financial Statements for the commercial and industrial U.S. companies. • November 2001: The second specification of the XBRL was released for public comment (see at http://www.xbrl.org for details).

  15. Evolution of XBRL: A Historical Perspective • April 2002: International Accounting Standards Board (IASB) released a core taxonomy of XBRL for Financial Statements (IASC 2001). • December 2003: XBRL Specification 2.1 was approved and released by International Steering Committee of XBRL International. • April 2004: Revised XBRL Specification 2.1 was released by International Steering Committee of XBRL International. • April 2005: SEC XBRL Voluntary Financial Reporting Program (VFRP)

  16. Types of Entities Regulators (e.g. FDIC, APRA, CSSF,..) Global Financial Services (e.g. Deutsche Bank, B of A) Market Analysts (e.g. MS) Stock Exchanges (e.g. NASDAQ,Tokyo, ..) Data Intermediaries (e.g. EOL, Reuters, ..) Australian Prudential Regulatory Authority (APRA) Usage/Motivation Internal - Reduce Costs, Improve Effectiveness Internal - Reduce Costs, Improve Effectiveness Internal & External External - Create/Expand Revenue Stream External - Expand Revenue Stream Collect financial statements from more than 12,000 Super Funds XBRL First Adopters:‘Mega’ Users of Company Financial Data

  17. Potential Usage of XBRL • Managerial Reporting • Enhance internal reporting of financial and non-financial production related information • XBRL can lead to effective and efficient management of supply value chain • XBRL can provide timely feedback on personnel performance • Internal Auditing • Efficient and effective evaluation of internal controls, and documentation of material weaknesses • Effective compliance to Sarbanes-Oxley Act • External Auditing • Efficient and effective use of analytical tools for risk assessments, industry comparisons, benchmarking, trend analysis, etc. from remote locations • Others: Loan approval, Credit rating, Mergers & acquisitions, Investment Decisions, etc.

  18. Graph of Cash Flows for 3Mfor Ten Years

  19. Comparison of Cash Flows for Two Companies

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