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Enhancing Corporate Reporting for the Capital Markets. Rob Blake Second Vice-Chair, XBRL International Director - Emerging Technologies, Microsoft robblake@microsoft.com. Mike Willis Founding Chairman, XBRL International Partner, PricewaterhouseCoopers mike.willis@us.pwc.com.
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Enhancing Corporate Reporting for the Capital Markets Rob Blake Second Vice-Chair, XBRL International Director - Emerging Technologies, Microsoft robblake@microsoft.com Mike Willis Founding Chairman, XBRL International Partner, PricewaterhouseCoopers mike.willis@us.pwc.com
Enhancing Corporate Reporting for the Capital Markets – XBRL • Exchange Reporting Objectives • What XBRL Offers • What is XBRL • Why XBRL Now • Next Steps
Exchange Reporting Objectives • Timely, accurate and reliable access to data • Increased visibility of reported data • Enhanced flexibility of changes in reporting • More effective production of data • More effective consumption of data • Better security • Lower costs • Increased frequency
Enhancing Corporate Reporting for the Capital Markets – XBRL • Exchange Reporting Objectives • What XBRL Offers • What is XBRL • Why XBRL Now • Next Steps
Why is Transparency Important? Greater transparency will enhance trust. • The effectiveness of the world’s capital markets depends on public trust, and trust depends on the timely availability of complete, relevant, and reliable information • Corporations have the obligation to provide information to their stakeholders • Stakeholders are demanding greater transparency • XBRL & Web Services enable simple desktop analytical tools to deliver greater transparency
XBRL – Ready for Prime Time “Some critics have suggested that XBRL is not ready for primetime. In fact, it is.” Hon. Richard H. Baker Chairman, Capital Markets Subcommittee
Enhancements to Reporting • Clearer communication • More cost effective • Enhanced flexibility to meet changing requirements • More accurate, timely and reliable reporting • Easier to use than current formats • Enhanced analysis capabilities • Let’s see what this means to investors and regulators……….……….
Here is how this works http://www.nasdaq.com/xbrl
High Consumption Cost Impacts Visibility Includes all common stock on NASDAQ National Market and NYSE. Source: Thomson Financial. December 2002.
Visibility of Information • The first obstacle to visibility • Language • XBRL can help to increase the consumers access to information in their own language regardless of what language the report is published in.
Enhancing Corporate Reporting for the Capital Markets – XBRL • Exchange Reporting Objectives • What XBRL Offers • What is XBRL • Why XBRL Now • Next Steps
What is XBRL? XBRL (eXtensible Business Reporting Language) is: • An information format designed for the Internet. • Freely available • Developed and maintained by over 220 supply chain participants • Based on accepted reporting standards • The convergence of: • Technology = XML-based specification • Language/dictionary = Terms by jurisdiction/industry • Consortium Participants = Supply chain members …a digital language for business reporting!
XBRL XBRL XBRL XBRL Companies Financial Publishers and Data Aggregators Investors Central Banks Participants Trading Partners Auditors Regulators Management Accountants Software Vendors Scope and Role of XBRL Today XBRL for Financial Statements XBRL for G/L Journal Entry Reporting Business Operations Internal Financial Reporting External Financial Reporting Investment, Lending, Regulation Economic Policymaking Processes
Members of XBRL International… The Growing Family ‘99 ‘00 ‘01 ‘02 ‘03
XBRL International • Non-profit organization • Manages the royalty-free intellectual property • Facilitates knowledge sharing among members and the public • Provides global framework for XBRL development IASB Sweden United States United Kingdom Japan Ireland Korea Denmark China Netherlands Germany Canada Singapore Spain Switzerland Argentina Colombia Brazil South Africa New Zealand Australia
XBRL Guiding Principles • Market driven model … win, win, win • Start simple, be inclusive, “agree to agree” • Broad supply chain participation • XBRL International members support XBRL • Members do not compete on framework • Build structure and systems to support open community and parallel taxonomy development • Liaise with other XML efforts • Neutral third party facilitator • For long term success – XBRL International
XBRL “Building Blocks” Bank of Germany Terms Company Specific Terms IFRS GAAP Bank Terms Provides a cost effective platform for IFRS/GAAP convergence Industry Terms IFRS GAAP FS Terms IFRS GAAP Primary Terms Foundational Terms IFRS GAAP Conceptual Framework Reporting Framework
Enhancing Corporate Reporting for the Capital Markets – XBRL • Exchange Reporting Objectives • What XBRL Offers • What is XBRL • Why XBRL Now • Next Steps
Pervasive Supply Chain Problems • Production costs are high • Consumption costs are high • Leads to process delays, higher risks, and poorly informed business decisions
Benefits of XBRL for Producers • Tell your own story (precise & clear) • Lower cost of producing information • Accelerate adoption of reporting models • Enhanced functionality • Ease of use • Better control environment • Enhanced analytical capabilities • More timely, accurate, data for decisions
Benefits of XBRL for Consumers • Enhanced analytical capabilities • More timely, accurate, data for decisions • Enhanced functionality • Ease of use • Facilitates language translations • Faster access to information • Lower cost of consuming information
Live Applications • APRA (2001) • EDGAR Online (2001) • DATEV/Bundesbank (3Q 2002) • Wacoal (4Q 2002) – Internal Reporting • OneSource (1Q 2003) • Tokyo Stock Exchange (1Q 2003) • Sumitomo Mitsui Banking Corp. (1Q 2003) • Danish Commerce & Companies Agency (1Q 2004) • Dutch Water Authority (3Q 2003) – Internal Reporting • UK Inland Revenue (4Q 2003) • KOSDAQ – Korea (4Q 2003) • National Tax Agency of Japan (1Q 2004) • US FDIC (3Q 2004) • Morgan Stanley, Reuters, Microsoft • NASDAQ-MSFT-PricewaterhouseCoopers Pilot
Exchange Projects • KOSDAQ • Tokyo Stock Exchange • Luxembourg Exchange • Shenzen Exchange • New Zealand Exchange • NASDAQ
Market Implementation Considerations • Taxonomy development • External reporting – GAAP • External reporting – Statutory • FASB/IASB Fellowships • Tools • Assurance guidance
Representative XBRL-enabled Products • Shipping • SAP mySAP financials • Microsoft Business Solutions Navision • Oracle FSG • Creative Solutions (et al.) • Announced • Microsoft Office Solution Accelerator for XBRL • Hyperion Financials • PeopleSoft Enterprise Financial Management • CaseWare Financials • Hitachi GEMPlanet
Enhancing Corporate Reporting for the Capital Markets – XBRL • Exchange Reporting Objectives • What XBRL Offers • What is XBRL • Why XBRL Now • Next Steps
Next Steps…. • Provide local market leadership • Initiate XBRL project in your market • Evangelize benefits/thought leadership • Liaison with and/or join XBRL International consortium • Collaborate on forming provisional jurisdiction • Develop reporting objectives and framework • Assess inventory of tools • Participate in XBRL International conferences • Seattle Conference Nov. 2003 (www.xbrl.org/seattle) • New Zealand May 2004
Enhancing Corporate Reporting for the Capital Markets Rob Blake Second Vice-Chair, XBRL International Director - Emerging Technologies, Microsoft robblake@microsoft.com Mike Willis Founding Chairman, XBRL International Partner, PricewaterhouseCoopers mike.willis@us.pwc.com