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

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CreditsPrepared by: Rajendra P. Srivastava Ernst & Young Professor University of Kansas

Sponsored by: Ernst & Young, LLP(August 2005)

XBRL ModulePart 1: Introduction to

XBRL

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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

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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.”

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Value of XBRL

Video Clip

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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

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Browsing the Web (Content –without Context)

4,350 hits for IBM’s property plant and equipment

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Current Reporting Process

RegulatoryFilings

Web Site

Tax Return

Trade Filings

Printed Financials

Accounting System

Third Party Information

ExplanatoryText

• Rework and Delays• Ad hoc and non

repeatable Processes

InternalReports

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XBRL Reporting Process

RegulatoryFilings

Web Site

Tax Return

Trade Filings

Printed Financials

Accounting System

Third Party Information

ExplanatoryText

XBRLDocuments

Reduces redundancies & discrepancies

Repeatable processes using tools InternalReports

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Primary Use Cases

Accounting Corporate HQ

Operating Divisions

-External Auditors

Sharing

Information

Eas

ily

Specific Uses

Investors

Lenders

More

Regulators

-Data Intermediaries-Others Tagging

can occur

Regulator Filings

Financial Statements

Earnings Releases

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XBRL Information Chain

ExternalFinancialReporting

Business OperationInternal

FinancialReporting

Investmentand Lending

Analysis

Business Processes

ParticipantsParticipants

AuditorsTradingPartners

Investors

FinancialPublishersand Data

Aggregators

Regulators

XBRL forRegulatory Filings

XBRL for AuditSchedules

XBRL forTax Filings

Software Vendors

ManagementAccountants

Companies

XBRL GL and XBRL for Business Processes

XBRL for Financial Statements

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BUSINESS

Investors

Aggregators

Regulators Creditors LendersTax Website

ERP G/L Packages Other

•Orders•A/P•Delivery

Customer•Orders•A/R•Delivery

Business

2-way2-wayTransaction Creation

Oneway

Oneway

E-Commerce is anInteractive Supply Chain

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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.

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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

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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).

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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)

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XBRL First Adopters:‘Mega’ Users of Company Financial Data

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/MotivationInternal - Reduce Costs,

Improve EffectivenessInternal - Reduce Costs,

Improve EffectivenessInternal & External

External - Create/Expand Revenue Stream

External - Expand Revenue Stream

Collect financial statements from more than 12,000 Super Funds

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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.

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Graph of Cash Flows for 3Mfor Ten Years

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Comparison of Cash Flows for Two Companies