Research Framework for Examining XBRL Software to Extend Taxonomies and Create Instance Documents

1. Research Framework for Examining XBRL Software to Extend Taxonomies and Create Instance Documents • Diane Janvrin (Iowa State) • Maureen Mascha (Marquette University) • Seventeenth Annual Research Workshop on AI/ET in Accounting, Auditing and Tax • August 2, 2008

2. Outline • Importance • Research Framework • Illustration • Future Research Opportunities

3. Demand for software to extend taxonomies and create instance documents “Preparers are faced with an ever increasing level of complexity in their financial reporting requirements. To employ XBRL, they are tasked with mating these complex financial statements with an equally complex set of technologies, the XBRL Specification and the appropriate taxonomies. In order to cut through the complexity, these preparers need tools, guidance, and third party assistance to lead them through the process.” Peter Derby, Managing Executive for Operations & Management, Office of the Chairman, U.S. Securities and Exchange Commission, Boston Massachusetts, April 26, 2005. “Software vendors are not currently ready for such a large demand for their services. We have experienced some difficulty in obtaining and installing third party software…” Susan Kinsey, Assistant Treasurer, National City Corporation, July 7, 2008 “XBRL reporting is fine with me. But it is not fine, that to comply, my public clients must buy $10,000 worth of software or retain a printer at 4 times that amount. Where is the SEC tagging tool or an overlay adaptable to a reasonably price xml tool?” Paul M Vuksich, Public Company Attorney, June 20, 2008

4. Importance SEC proposed rule 33-8924 to mandate XBRL adoption Usage by audit firms to steamline analytical review process (Bay et al. 2006; Gunn 2007) Errors in XBRL tagging process may go unnoticed until SEC requires companies to file rather than furnish instance documents

5. Research Framework Identify functionality of software to extend taxonomies and create instance documents Identify financial reporting stage where preparers map information to XBRL Understand process to extend taxonomies and create instance documents Measure preparers’ willingness to accept and use software Measure effort required to use software Examine preparers’ qualitative perceptions of software Analyze data and report results

6. Process to Extend Taxonomies and Create XBRL Instance Documents Choose standard taxonomy Download standard taxonomy to software product Choose financial information to tag Set up context Map each individual account value to specific XBRL element (tag) shown in standard taxonomy Extend taxonomy by creating new elements (tags) for accounts not shown in standard taxonomy Validate tagging process Generate instance document Management reviews instance document for reasonableness Audit instance document (currently optional) Issue instance document

7. Framework Demonstration Two early packages – Dragon Tag and Interstage XWand Difficult to find appropriate subjects – we used 216 ais students Task Taught how to use assigned software to create balance sheet with one taxonomy extension Used assigned software to create simple income statement with one taxonomy extension Data collected Willingness to use software, effort required, qualitative perceptions

8. Framework Demonstration Functionality Review Noted differences Financial Reporting Stage Early adopters more likely to create financial statements and then map XBRL tags to values (i.e. bolt-on approach) Understand process to extend taxonomies and create instance documents

9. Framework Demonstration Measure willingness to accept and use software Dragon Tag had higher PU and PEU Measure effort required to use software Most participants spent between 30 to 60 minutes on simple task Examine qualitative perceptions of software Found tools easy to use with consistent interfaces Noted some interface issues, ability to add new elements and confusions over making corrections

10. Future Research Opportunities Functionality of software Compare perceptions of add-in software to stand-alone Reporting stage Bolt-in software today; examine integrated approaches

11. Future Research Opportunities Understand process Tag footnotes in blocks or components? Simple vs more realistic financial statements Use of unaudited vs auditing financial statements Should XBRL tagging process be audited? Who are most appropriate subjects? Will results differ when using participants with greater knowledge of XBRL concepts?

12. Future Research Opportunities Measure willingness to accept and use software Test possible improvements to software to increase ease of use ratings how do differences between Dragon Tag and Interstage X-Wand influence PU and PEU? Measure effort required to use software Need to include cognitive effort and length of learning curve in effort measurement

13. Future Research Opportunities Examine qualitative perceptions of software Develop and evaluate ways to improve how users extend a taxonomy process of mapping financial values to XBRL tags process of identifying and correcting errors Other issues Do differences in user perception depend on whether software choice is mandatory or optional? Examine preparer learning curve after they tag financial statements for several periods

14. Stand alone XBRL Software • Dragon Tag - Rivet • XWand - Fujutsu • Spider Monkey – Core Filing • True North – Decision Soft • Intelligent Financial Systems – Core Filing • FRx 6.7 - Microsoft • UB Matrix – UB Matrix

15. Dragon Tag

16. XWand

17. Spider Monkey – Core Filing

18. FRx

19. Major Vendors Implementing XBRL Capabilities • Oracle • Hyperion • SAP • PeopleSoft • JD Edwards • Cartesis

20. Oracle • Oracle GL supports the XBRL standard. • Oracle GL’s Financial Statement Generator is responsible for loading taxonomy files, as well as creating instance documents/tagging financial statements in the XBRL format.

21. Hyperion • Hyperion has a built in module called “XBRL Manager.” • It can create XBRL output directly from Hyperion Financial Management & Hyperion Planning and Hyperion Essbase XTD. • Hyperion will be able to create XBRL tagged financial statements as well as create instance documents natively without the help of another piece of ‘enabler’ software.

22. SAP • SAP has a built in XBRL tool that was developed by SAP. • Tool gathers the data directly from the SAP databases (“data warehouse”) and converts them directly into instance documents using various taxonomies. • Capable of creating single/individuals financial statements or consolidated statements based on the selected taxonomy. • The SAP tool has the capability of preparing the statements in a format that is readily publishable to a investor relations website/webportal.

23. Peoplesoft • Peoplesoft General Ledger has the capability built in it for producing instance documents/tagging balance sheet and income statements that conform to the XBRL standard.

24. JD Edwards • Has XBRL capabilities similar to those that are available in Oracle/Peoplesoft for creating instance documents/tagging BS&IS with XBRL tags.

25. Cartesis • Cartesis Finance has built in XBRL technology within it called the Cartesis XBRL Publishing module. • Cartesis has the capability to load a given taxonomy into it, and create instance documents/tag financial statements with the XBRL standard.

26. Challenges to Implementation • Availability of software to create XBRL instance documents • Availability of software to read XBRL instance documents • Use of standard taxonomy vs industry or company specific taxonomy • Need for regulatory support

27. Progress XBRL – business reporting language Provides financial information across platforms Reduces re-entering data for processing Makes it easy to use automated analytical tools SEC voluntary filing program now exists SEC may mandate XBRL filings in 2008??