XBRL and Financial Reporting

1. XBRL and Financial Reporting SLA - Investment Services Section and College & University Business Libraries (CUBL) Section June 5, 2007 Today we are going to look at XBRL and financial reporting and what it means for librarians. (See also the article �XBRL Changes Financial Reporting� in the December 2006 issue of Information Outlook.)Today we are going to look at XBRL and financial reporting and what it means for librarians. (See also the article �XBRL Changes Financial Reporting� in the December 2006 issue of Information Outlook.)

2. This is today�s outline. After defining XBRL, we�ll look at the SEC�s role in promoting the use of XBRL in financial reporting. If our internet connection is working, we�ll look at actual SEC filings in XBRL. Then we�ll identify other agencies using XBRL in the U.S. and around the world. Finally, we�ll look at what XBRL means for the future.This is today�s outline. After defining XBRL, we�ll look at the SEC�s role in promoting the use of XBRL in financial reporting. If our internet connection is working, we�ll look at actual SEC filings in XBRL. Then we�ll identify other agencies using XBRL in the U.S. and around the world. Finally, we�ll look at what XBRL means for the future.

3. What is XBRL? eXtensible Business Reporting Language Metadata for financial statements Based on approved taxonomies What is XBRL? XBRL is a new way of financial reporting. If you are familiar with XML, XBRL is just another way to use data in software applications. Librarians might be more comfortable thinking about XBRL as a form of metadata. XBRL works like this, every data element in the financial statement (revenue, income, earnings, etc.) is tagged with metadata. The tags put the data in context so that we can easily see what the data represents, how it was calculated and where it came from. Other tags can represent things like language so that, for example, if you are using a Japanese financial statement you can bring it into an XBRL reader and �read� it in English. XBRL tags are based on an open standard, an approved taxonomy, developed by a non-profit consortium called XBRL International. You should also understand the acronym: first, eXtensible means that companies have some leeway to �extend� the tags to suit their circumstances; second, XBRL is a business reporting language, that means it is not confined to financial reporting but covers all kinds of business reporting. What is XBRL? XBRL is a new way of financial reporting. If you are familiar with XML, XBRL is just another way to use data in software applications. Librarians might be more comfortable thinking about XBRL as a form of metadata. XBRL works like this, every data element in the financial statement (revenue, income, earnings, etc.) is tagged with metadata. The tags put the data in context so that we can easily see what the data represents, how it was calculated and where it came from. Other tags can represent things like language so that, for example, if you are using a Japanese financial statement you can bring it into an XBRL reader and �read� it in English. XBRL tags are based on an open standard, an approved taxonomy, developed by a non-profit consortium called XBRL International. You should also understand the acronym: first, eXtensible means that companies have some leeway to �extend� the tags to suit their circumstances; second, XBRL is a business reporting language, that means it is not confined to financial reporting but covers all kinds of business reporting.

4. Using XBRL Data View and manipulate Ask �what if� questions Construct graphs Compare companies against peers View information in any language Change currency View under different accounting conventions Why XBRL? What is its value to us as users of financial documents? The short answer is that it moves us away from a storage and retrieval model to one that encourages interactive use of financial data. So you can see on this slide what you can do with XBRL tagged data � some of the same things you can do with data in a spreadsheet or a financial database. Why XBRL? What is its value to us as users of financial documents? The short answer is that it moves us away from a storage and retrieval model to one that encourages interactive use of financial data. So you can see on this slide what you can do with XBRL tagged data � some of the same things you can do with data in a spreadsheet or a financial database.

5. XBRL International Non-profit consortium of over 2000 accounting firms, corporations, government entities, academic institutions Facilitated by American Institute of Certified Public Accountants (AICPA) Promotes the development and use of XBRL How did XBRL develop? The idea of XBRL has been around for almost ten years. In 1998 Charles Hoffman, a CPA, created the first XBRL prototype and took it to the AICPA. They formed a volunteer committee to look at the issue. In the Fall of 1999 the first public meeting about XBRL was held. By 2000, the first taxonomy was released and quickly got the support of Microsoft and the interest of the SEC. In 2001, the first XBRL International meeting was held and soon after Morgan Stanley and Microsoft filed their first XBRL-tagged financial statements with the SEC. XBRL international and its national members including XBRL US are the groups that develop the XBRL taxonomies and promote the use of XBRL. They work closely with the AICPA and the accounting standards bodies in their respective countries. How did XBRL develop? The idea of XBRL has been around for almost ten years. In 1998 Charles Hoffman, a CPA, created the first XBRL prototype and took it to the AICPA. They formed a volunteer committee to look at the issue. In the Fall of 1999 the first public meeting about XBRL was held. By 2000, the first taxonomy was released and quickly got the support of Microsoft and the interest of the SEC. In 2001, the first XBRL International meeting was held and soon after Morgan Stanley and Microsoft filed their first XBRL-tagged financial statements with the SEC. XBRL international and its national members including XBRL US are the groups that develop the XBRL taxonomies and promote the use of XBRL. They work closely with the AICPA and the accounting standards bodies in their respective countries.

6. SEC�s Standard Setting $ 54 Million to improve EDGAR Complete taxonomies for all industries by September 2007 Build improved analytical tools Mandate filing with XBRL In the United States, the key group that will determine if XBRL is adopted is the SEC. Many companies believe that XBRL will not become a reality in the U.S. until the SEC mandates its use. When this will happen no one knows although Chairman Cox was recently quoted as saying it will be �in months, not years.� The SEC is spending considerable money to revamp their EDGAR system and change it from a storage system to an interactive search tool. Part of the $54 million is going into taxonomy development � the goal is to finish taxonomies for all industries by September 2007. In the United States, the key group that will determine if XBRL is adopted is the SEC. Many companies believe that XBRL will not become a reality in the U.S. until the SEC mandates its use. When this will happen no one knows although Chairman Cox was recently quoted as saying it will be �in months, not years.� The SEC is spending considerable money to revamp their EDGAR system and change it from a storage system to an interactive search tool. Part of the $54 million is going into taxonomy development � the goal is to finish taxonomies for all industries by September 2007.

7. The SEC Program Today Voluntary XBRL Filing Program originally 17, now 30 companies Executive compensation data tagged beginning 2Q, 2007 What XBRL programs does the SEC have in place today? In 2006, the SEC began a Voluntary Filing Program (VFP). They asked public companies to join the program, file reports (8K, 10Q or 10K) with XBRL tags and offer feedback to the SEC for at least one year. In return they would receive expedited review of their registration statements and annual reports. Thirty companies are now in the program. The SEC has also recently started their own XBRL tagging program. They are tagging executive compensation data of the largest public companies. This taxonomy will be released for comment this summer. The XBRL readable documents could be available as soon as the 2nd quarter, 2007. What XBRL programs does the SEC have in place today? In 2006, the SEC began a Voluntary Filing Program (VFP). They asked public companies to join the program, file reports (8K, 10Q or 10K) with XBRL tags and offer feedback to the SEC for at least one year. In return they would receive expedited review of their registration statements and annual reports. Thirty companies are now in the program. The SEC has also recently started their own XBRL tagging program. They are tagging executive compensation data of the largest public companies. This taxonomy will be released for comment this summer. The XBRL readable documents could be available as soon as the 2nd quarter, 2007.

8. SEC Voluntary Filing Program 3M CompanyAnadarko Petroleum Automatic Data ProcessingAltria Group, Inc.Bowne & Co. Inc.Brazilian Petroleum Corp. Bristol-Myers Squibb Comcast CorporationCommonwealth Edison Crystal International Travel Group, Inc.The Dow Chemical CompanyEDGAR Online Inc.Exelon CorporationExelon Generation Co Fastenal Co.Ford Motor CompanyFord Motor Credit CompanyGeneral Electric CompanyGol Intelligent Airlines, Inc.Infosys Technologies Microsoft CorporationOld Mutual Capital, Inc.PECO Energy CompanyPepsiCo, Inc.Pfizer, Inc.R.R. Donnelley & Sons South Financial Group, Inc.United Technologies Xerox CorporationXM Satellite Radio Holdings This is a list of some (not all) of the companies in the Voluntary Filing Program. You will note that many of these companies have a business interest in joining the program � companies like Microsoft, Bowne, and R.R. Donnelley. Others like Pepsico believe that XBRL is good for investor relations and transparency. They have appeared at XBRL International forums to say so.This is a list of some (not all) of the companies in the Voluntary Filing Program. You will note that many of these companies have a business interest in joining the program � companies like Microsoft, Bowne, and R.R. Donnelley. Others like Pepsico believe that XBRL is good for investor relations and transparency. They have appeared at XBRL International forums to say so.

9. SEC Financial Report Viewer Now let�s look at the SEC�s Financial Report Viewer. This is their first tool for using XBRL and it is free. It gives multi-tabbed views of financial statements filed in XBRL. Use it to compare companies across industries or look at one company�s filings over a multi-quarter/annual time period. Print, export data to Excel, view the XBRL tagging or make quick graphs. Create alerts for a particular company or all VFP companies by subscribing to their RSS feed. Now let�s look at the SEC�s Financial Report Viewer. This is their first tool for using XBRL and it is free. It gives multi-tabbed views of financial statements filed in XBRL. Use it to compare companies across industries or look at one company�s filings over a multi-quarter/annual time period. Print, export data to Excel, view the XBRL tagging or make quick graphs. Create alerts for a particular company or all VFP companies by subscribing to their RSS feed.

10. The FFIEC Program FFIEC requires quarterly Call Reports filed in XBRL (October 2005) Over 8,200 banks report to Central Data Depository at www.FFIEC.gov/FIND/ Validation and accuracy improved Now we are going to look at other agencies that are using XBRL. The largest implementation of XBRL in the United States is in the banking sector. The Federal Financial Institutions Examination Council (and its members the FDIC, FRB and OCC) developed a Central Data Depository for call reports as part of their recent Call Report Modernization Program. You will find it at www.FFIEC.gov/FIND/ Results of this program were reported in a widely cited white paper �Improved Business Process through XBRL.� The typical 30% error rate has been reduced to zero. The reporting software recognizes errors so that financial institutions must now complete edit resolutions before submitting their call reports via the Web. In addition to improvement in data accuracy, reports are processed in hours not days and are made available to users starting 15 days after the close of the quarter. Now we are going to look at other agencies that are using XBRL. The largest implementation of XBRL in the United States is in the banking sector. The Federal Financial Institutions Examination Council (and its members the FDIC, FRB and OCC) developed a Central Data Depository for call reports as part of their recent Call Report Modernization Program. You will find it at www.FFIEC.gov/FIND/ Results of this program were reported in a widely cited white paper �Improved Business Process through XBRL.� The typical 30% error rate has been reduced to zero. The reporting software recognizes errors so that financial institutions must now complete edit resolutions before submitting their call reports via the Web. In addition to improvement in data accuracy, reports are processed in hours not days and are made available to users starting 15 days after the close of the quarter.

11. Investment Company Institute XBRL taxonomy for Risk/Return Summary (N-1A) (released January 2007) Proposal to join the SEC�s voluntary filing program (submitted March 2007) Here is a program that expands the use of XBRL beyond the financial statement. ICI is the national trade association for the mutual funds industry. They have found that only one-third of mutual fund purchasers read the prospectus. Their investment in XBRL is tied to their efforts to make disclosure documents more useful and easier to access (on the Web). ICI worked with PriceWaterhouseCoopers on the XBRL taxonomy for the Risk/Return Summary including narrative sections. The Risk/Return Summary includes the fund�s investment objectives, risk characteristics, fee table and data on historical performance. In March the ICI asked the SEC to allow funds to join the Voluntary Filing Program. Funds in the program would file either a full financial statement or a Risk/Return Summary for one or more of the funds in their fund family. Here is a program that expands the use of XBRL beyond the financial statement. ICI is the national trade association for the mutual funds industry. They have found that only one-third of mutual fund purchasers read the prospectus. Their investment in XBRL is tied to their efforts to make disclosure documents more useful and easier to access (on the Web). ICI worked with PriceWaterhouseCoopers on the XBRL taxonomy for the Risk/Return Summary including narrative sections. The Risk/Return Summary includes the fund�s investment objectives, risk characteristics, fee table and data on historical performance. In March the ICI asked the SEC to allow funds to join the Voluntary Filing Program. Funds in the program would file either a full financial statement or a Risk/Return Summary for one or more of the funds in their fund family.

12. XBRL Around the World Taxonomy Development US GAAP IFRS (International Financial Reporting Standards) COREP (Common Reporting) National �GAAP� Complete in Japan, Germany, Korea & Sweden; Under development in Canada, China, Ireland, New Zealand, Spain, Thailand & UK XBRL is a worldwide movement. In fact the United States lags other countries in the development and use of XBRL. Taxonomies are available worldwide. US GAPP is complete only for commercial and industrial, banking, insurance and investment management; other industries are still under development. The European Union required companies listed on national exchanges to use IFRS beginning in 2005. The IFRS core disclosures are complete. They must be augmented on a country-by-country basis. COREP covers requirements of 25 European banking supervisors under Basel II. XBRL is a worldwide movement. In fact the United States lags other countries in the development and use of XBRL. Taxonomies are available worldwide. US GAPP is complete only for commercial and industrial, banking, insurance and investment management; other industries are still under development. The European Union required companies listed on national exchanges to use IFRS beginning in 2005. The IFRS core disclosures are complete. They must be augmented on a country-by-country basis. COREP covers requirements of 25 European banking supervisors under Basel II.

13. XBRL Pilot Programs Japan FSA & Tokyo Stock Exchange Full financial statements for all listed companies in 2008 National Bank of Belgium Commerical & industrial companies to file beginning April 2007 Shanghai Stock Exchange Mandated filing since 2005 Many countries have voluntary programs in place or have mandated use of XBRL filings. Japan�s FSA and the Tokyo Stock Exchange has a pilot program. Full financials in XBRL will be mandatory in 2008. The Shanghai Stock Exchange program has been operational since 2005. These are only a few of the working XBRL programs. (They are described in case studies on the XBRL International website). Other stock exchanges including those in Spain, South Korea and Singapore have programs.Many countries have voluntary programs in place or have mandated use of XBRL filings. Japan�s FSA and the Tokyo Stock Exchange has a pilot program. Full financials in XBRL will be mandatory in 2008. The Shanghai Stock Exchange program has been operational since 2005. These are only a few of the working XBRL programs. (They are described in case studies on the XBRL International website). Other stock exchanges including those in Spain, South Korea and Singapore have programs.

14. Canadian Securities Administrators Voluntary filing program to start May 2007 Uses Canadian GAAP taxonomy XBRL Canada Blog at http://www.zorba.ca/xbrlblog.html Canadian librarians should check out the XBRL program that just started this May at SEDAR. It is modeled on the SEC�s Voluntary Filing Program.Canadian librarians should check out the XBRL program that just started this May at SEDAR. It is modeled on the SEC�s Voluntary Filing Program.

15. Other XBRL Users EDGAR Online I-Metrix Earnings Releases Sustainability Reports � GRI � G3 Tax Returns � UK-HMRC and Dutch Tax Authority Data vendor, publishers, and others are using XBRL. You�ll see that XBRL has implications beyond financial reporting. EDGAR Online has converted eight years of 10-K reports to XBRL and they offer an Excel add-in, I-Metrix, with online models and advanced screeners to use with these reports. PR Newswire is working with Microsoft, Bowne, Reuters and others to incorporate XBRL tags in earnings releases. BusinessWire is doing the same thing with their �Earnings Direct� product. Can you see how XBRL tagged releases might provide faster and more analytical access to this news? The Global Reporting Initiative (GRI) has developed an XBRL taxonomy that companies can use for sustainability reporting. Both the UK and the Dutch tax authorities have already mandated filing of corporate tax returns in XBRL. Data vendor, publishers, and others are using XBRL. You�ll see that XBRL has implications beyond financial reporting. EDGAR Online has converted eight years of 10-K reports to XBRL and they offer an Excel add-in, I-Metrix, with online models and advanced screeners to use with these reports. PR Newswire is working with Microsoft, Bowne, Reuters and others to incorporate XBRL tags in earnings releases. BusinessWire is doing the same thing with their �Earnings Direct� product. Can you see how XBRL tagged releases might provide faster and more analytical access to this news? The Global Reporting Initiative (GRI) has developed an XBRL taxonomy that companies can use for sustainability reporting. Both the UK and the Dutch tax authorities have already mandated filing of corporate tax returns in XBRL.

16. The Future Change in marketplace for SEC based fundamental data More accurate, broader, more effective and less expensive research coverage Gartner, September 28, 2006 These are quotes from a recent Gartner report about the impact of XBRL. Investors are not the only users who will be affected. Data providers and analysts will work in a changed environment. Analysts will spend less time gathering data and more time on analysis. They will have more access to data from international companies and small-cap companies (and opportunities to cover more companies or an industry in more depth). These are quotes from a recent Gartner report about the impact of XBRL. Investors are not the only users who will be affected. Data providers and analysts will work in a changed environment. Analysts will spend less time gathering data and more time on analysis. They will have more access to data from international companies and small-cap companies (and opportunities to cover more companies or an industry in more depth).

17. Steps for Librarians Keep abreast of SEC moves Test free XBRL tools Talk to your data vendors So what do librarians need to do? The XBRL environment is constantly changing. Be sure to watch what the SEC is doing. Look at their �Spotlight on Interactive Data� page for announcements and speeches from Chairman Cox. Check out the free XBRL readers and see what they can do. Most importantly, keep in touch with your data vendors. They are all watching the development of XBRL. You should be too.So what do librarians need to do? The XBRL environment is constantly changing. Be sure to watch what the SEC is doing. Look at their �Spotlight on Interactive Data� page for announcements and speeches from Chairman Cox. Check out the free XBRL readers and see what they can do. Most importantly, keep in touch with your data vendors. They are all watching the development of XBRL. You should be too.

18. Thank You Louise Klusek, Assistant Professor, Newman Library, Baruch College, City University of New York Louise_klusek@baruch.cuny.edu