XBRL: the business reporting supply chain and audit impacts

1. XBRL: the business reporting supply chain and audit impacts Neal Hannon, Co-Chair XBRL Education Committee Bryant College

2. XBRL: Today’s Overview intro • A picture to start……. • ‘e-business’ – What does it really mean? • XBRL – • Who • What • When • Why

3. Describe What You See? quiz This is the initial pop quiz……… It is a ‘perception test’………

4. Here Are Some 'Normal' Thoughts, but let’s hear some More. Picture • A guy in an office. • Sleeping on the floor. • Programmer. • Computer engineer. • Shares the cubical space with another employee. • Trashed desk, overflowing junk everywhere. • 29ish look. • ‘Loser’?

5. Why Is This Relevant? Picture • He works at a '.Com' company. • The current market cap for the Company is $57B. • They make money. • ($78M NetIncome/$132m in cash flow last quarter). • He is the CEO. • The company was founded in 1995. • He is worth approx. SIX billion today. • He was worth $500Mwhen the picture was taken.

6. So Who is that Guy?

7. Browsing the Web (Content—without Context) quiz If you search for the word “Mercury” on the what would you get? Hg

8. Change in the supply chain is powerful e-business The efficiencies driven from / in supply chains are significant. Not all will survive. The EDI model The e-business model Channel has a common model Each has an EDI model that is costly.

9. The Range of what is under development today………... e-business “Horizontals” (Infrastructure) there are others….. HR CRM AM CHEMX ACORD FpML ANX RosettaNet “Verticals” (Industry Supply Chains) there are others…….

10. What is XML? e-business • Published as a recommendation by the W3C (World Wide Web Consortium) in early 1998. • Uses tags to give context and structure to the content • Provides a common way for disparate systems to exchange specific information (application integration) • Provides a means to separate data from style (so a single source can be output for multiple uses) • Separates data from logic of applications (so that it can be reused for multiple purposes).

11. So when will this happen?? e-business • Never. • After I retire. • Before I retire but too late for me to have to worry about it. • Sooner than I want to admit, but I still have enough time to procrastinate. • Next five years. • Next two to three years.

13. CFO Magazine on Investor Relations App to fin rep "The explosive growth of the internet is not only changing the way companies conduct their business, it also promises to forever alter the way they communicate business performance. … Information availability may soon determine which companies benefit from market insight and which are hurt by market ignorance.” - CFO magazine, February 2000.

14. Another Quiz? XBRL - Why What word goes in the space? “_____?____ is the language of business” “_____?____is the language of e-business” Accounting XML

15. The Internet Enablement of Reporting App to fin rep XBRL = eXtensible Business Reporting Language A new economy language for business information, reporting and analysis.

16. XBRL Working Model: Planned Specifications XBRL - What 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 Participants Participants and Data Aggregators Trading Management Auditors Regulators Partners Accountants Software Vendors

18. What software ‘sees’ is the differentiator and drives benefits (here is an example) ..\..\..\Program Files\XBRL Demo\XBRLDemo.xls

19. Financial Institutions—and their Users XBRL - Why <10% Mechanics • SMALL BUSINESS provides FINANCIAL INSTITUTION with their information in XBRL and receives loan approval in less than a day instead of two days—or two weeks. Your Client: Average Time for Loan Processing—1.75 days Value-added Analysis and Decision-making? 90% + time spent on Data Discovery and Mechanics With XBRL? More Time for Analysis => Better Analysis => Less Risk Or Mechanics Analysis Mechanics Analysis Mechanics Analysis Mechanics Analysis Process more loans in the same amount of time

20. Key XBRL Components XBRL - What • XBRL / XML Specification (XBRL.org) • Global architecture/technology • XBRL hierarchical vocabulary (jurisdiction/industry) • Dictionary of terms by jurisdiction/industry sector • Style Sheets (preparer) • XBRL enabled tools (market)

21. So What??…. ‘show me the money’ XBRL - Why • Reduces cost to publish information • Significantly reduces cost to use the information • Increases the speed of use and related decisions • New concepts of using existing financial information…. • Virtual documents • Comparison of all components, including disclosures • Linkage to ‘related’ topics

22. What might this enable? XBRL - Why • User reporting/analysis on a personalized basis. • Agents monitoring key indicators. • What is your temperature and blood pressure right now? • More relevant reporting in the dawning of the ASP/outsourcing environment. • How many routers did Cisco manufacture last year? • Virtual closings. • Enhanced insights and transparency. • Quicker, Cheaper and faster decisions.

23. The Growing XBRL Family

28. XBRL and Auditing; What Changes? • XML provides the potential for additional information • XBRL creates nothing new

31. Auditing Systems Using XBRL • I. Planning, Implementing and Maintaining an Integrated Audit Program - Integrated Auditing Defined - Integrating the Audit Group (IS and Financial) - Integrated Audit Planning Procedures - Risk Assessment Procedures and Techniques

32. Auditing XBRL Systems • II. Mainframe Systems Software and Control - Operating System Concepts - Security Applications (ACF2, RACF) - Database Software (IMS, DB2) - Operations Software (Librarian, Schedulers, Change Control)

33. Auditing XBRL Systems • III. Audit of the Systems Development Process - General Controls within System Development Process - Audits of Development Groups - Auditing Purchased Systems - Auditing In-house Development Systems - Linking SDLC Audits to Integrated Application Audits

34. Auditing XBRL Systems • IV. Advanced General Control Audits - Mainframe Audit Program - Audit of the DBA Function - Audits of the Technical Support Areas • V. Audit and Control of the LAN & Database Environment - Understanding Dbase Controls - Database Security - Database Backup and Control - Using Database Tools - LAN Administrative Issues

35. Auditing XBRL Systems • VI. Audit's Role in Pre-Implementation Projects - Relating Pre-implementation Reviews to General Controls - Audit Methodology for Pre-Implementation Audits • VII. Advanced Application Auditing - Auditing Integrated Application - Structured Auditing -- Using Forms and Automated Workpapers - Advanced CAAT TEchniques - Using Audit Command Language (ACL)

36. Is Auditing Different With XBRL? • It Depends on • Representation of financial information • Who is relying on the data and why • How are the XBRL tags applied • Validity of the taxonomy used

37. Is Auditing Different With XBRL? • Special Needs • Care and feeding of Instance documents • Updating Taxonomies • Audit Scope Issues

38. Three Levels of Understanding • Auditing of XBRL financial statements requires understanding: • The system that created the numbers • The XBRL taxonomy that mapped the financial system • The Instance of XBRL document that is used to create reports

39. XBRL: the business reporting supply chain and audit impacts Neal Hannon, Co-Chair XBRL Education Committee Bryant College XBRL Educational Resource Center