1 Liv A. Watson E-Mail: [email protected] Phone: (812) 499-8149 What Financial Executives Need to Know About XBRL .

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Liv A. WatsonE-Mail: [email protected]

Phone: (812) 499-8149

What Financial Executives What Financial Executives Need to Know About XBRLNeed to Know About XBRL

www.xbrl.orgwww.xbrl.org

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Today’s ObjectivesToday’s Objectives• Overview of XML & XBRL

• Show you how this technology makes doing E-Business:

– Faster

– Cheaper

– Better

• Obtain your views

• Determine how your company will embrace this technology

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Evolution to WEvolution to Webeb Services Services

TechnologyInn

ova

tio

n

FTP, E-Mail,Gopher

Web Pages

Web Services

TCP/IP HTML XML

Connectivity

Presentation

Automation

Browse the Web

Program the Web

4 From Evansville Courier and Press

Is There A Problem?

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Searching for the word “Mercury” on the Web can provide search results such as--

Hg

Content—without Context

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Astronomy

Aerospace

Music Industry

Publishing or Mythology

Chemical Industry

Auto Industry

<RECORD-LABEL>

<PROGRAM>

<PLANET>

<GOD>

<SYMBOL>

<CAR-MODEL>

“Content in Context” (Industry-specific)

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What is XML?What is XML?XML stands for:

eXtensible

Markup

Language

Universally accepted method of exchanging information

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How does it work?How does it work?• XML gives meaning to information through

the use of tags

<Customer> <Name>Liv A. Watson</Name> <Title>Director</Title> <Company>Edgar Online Inc</Company></Customer>

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Who defines the tags?Who defines the tags?• Tags are defined by industry consortiums • Each industry’s standard tags are commonly

referred to as a taxonomy

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Who’s Building Taxonomies? Who’s Building Taxonomies?

Accounting Advertising Architecture

Automotive Banking Communication

Economics Education E-Commerce

EDI ERP Financial

Healthcare HR Insurance

Legal Music News

Publishing Real Estate Retail

Science Software Supply Chain

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What Is XML?What Is XML?

• “XML is aplatform-independent,

self-describing,

expandable,

standard data exchange format

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XML is Platform IndependentXML is Platform Independent

• Windows

• Unix

• Macintosh

• Mainframe

• Linux

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XML is Self-DescribingXML is Self-Describing

• Example:– <DATE>July 26, 1998</DATE>

• Describes the information, not the presentation

• Format neutral

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XML is ExpandableXML is Expandable

• Whereas HTML has a fixed set of tags– <H1>, <B>, <PRE>

• XML lets you create your own tags– <sugary-substance>– <Shakespearean-character>– <cash-equivalent>

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Who’s Embracing XML now?Who’s Embracing XML now?

• Software developersUsing XML as the core technology for new products

• Database developers Building XML support into their products.

• Industry groupsDeciding how information should be shared.

• Organizations Investigating how to tie their inter and intra company processes together.

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XML Makes Doing E-Business:XML Makes Doing E-Business:

Better

Faster

Cheaper

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• XML for Financial Reporting

• Enables a dramatic improvement in the processing of financial reports

• XBRL documents can be—– Prepared efficiently– Exchanged reliably– Published more easily– Analyzed quickly– Retrieved by investors simply

to enable smarter investments

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• XBRL is:– NOT a new accounting standards but enhances

the distribution and usability of existing financial statement information

– Enabler and an extension for relational database functionality for all financial statement information

Benefits

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Problems XBRL AddressesProblems XBRL Addresses

• Ineffective communication to investors

• Inefficient aggregation and analysis

• Inefficient creation of financial statements

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Process Benefits:Process Benefits:Lowering Financial Reporting CostLowering Financial Reporting Cost

Who benefits

RegulatoryFilings

Web Site

Tax Return

Trade Filings

Printed Financials

Accounting System

Third Party Information

ExplanatoryText

• Today’s external reporting processes– Rework and delay

– Ad hoc and non repeatable

– No path forward

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Process Benefits:Process Benefits:Lowering Financial Reporting CostLowering Financial Reporting Cost

Who benefits

RegulatoryFilings

Web Site

Tax Return

Trade Filings

Printed Financials

Accounting System

Third Party Information

ExplanatoryText

XBRLDocuments

• Common interchange format and storage is good information management practice– Reduces redundancies & discrepancies

– Repeatable processes using tools

– A platform for continuous reporting

XBRL: Interoperability & Multiple XBRL: Interoperability & Multiple OutputsOutputs

Other Sources of Information

RegulatoryFilings

Intranet /Internet /Extranet

Tax Returns

Bank Filings

Printed Financials

XBRL XBRL

Creditors

Other Parties

Investors

Other Sources of Information

Accounting System(s)

XBRL

Accounting System(s)

Accounting System(s)

Other Sources of Information

XBRL

XBRL Working Model: Planned Specifications

ExternalFinancialReporting

BusinessOperations

InternalFinancialReporting

Investmentand Lending

AnalysisProcessesProcesses

ParticipantsParticipants

AuditorsTradingPartners

Investors

FinancialPublishersand Data

Aggregators

Regulators

XBRL for G/L Journal Entry

ReportingXBRL for

EDGAR Filings

XBRL for Financial Statements

XBRL for Tax Filings

XBRL for Business Event Reporting

Software Vendors

ManagementAccountants

Companies

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As Presented on the Web

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• Reduces Cost / Enhances Revenue

• Improves Financial Reporting

• Improves Audit Quality

• Improves Client Satisfaction

XBRL and its BenefitsXBRL and its BenefitsBenefits

05Audit.scm

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XMLDocument

XMLDocument

Core Schema

Core Schema

Company Specific

Vocabulary

Company Specific

Vocabulary

Industry Specific Vocabularies

Industry Specific Vocabularies

Transformation

Tools

Transformation

Tools

The XML PuzzleThe XML Puzzle

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Internal to company –Internal to company –Proprietary formatProprietary format

XBRL/XML used to transfer data XBRL/XML used to transfer data across the Internet across the Internet

– – common vocabulary -common vocabulary -

Internal to company –Internal to company –Proprietary formatProprietary format

Company ACompany AData StoresData Stores

Company BCompany BData StoresData Stores

<XBRL><XBRL><XML><XML>

XM

L T

ranslator

XM

L T

ranslator

InterneInternett

<XBRL><XBRL><XML><XML>

XM

L T

ranslator

XM

L T

ranslator

ApplicationsApplicationssuch assuch as

Accounting Accounting SystemsSystems

ApplicationsApplicationssuch assuch as

Accounting Accounting SystemsSystems

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Steps in Technology AcceptanceSteps in Technology Acceptance

VisionariesVisionaries

TaxonomyTaxonomy

Simplification/ToolsSimplification/Tools

AcceptanceAcceptance

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How Do You Get There?How Do You Get There?

Needs AssessmentNeeds Assessment

Design Solution/Business PlanDesign Solution/Business Plan

Training & EducationTraining & Education

ImplementationImplementation

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XBRL Makes Business Reporting EasierXBRL Makes Business Reporting Easier

Better

Faster

Cheaper

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Additional Education SourcesAdditional Education Sources• www.xbrl.org• www.xml.org• www.ebxml.org• www.w3.org• www.rosettanet.org• www.ibm.com/developer/xml• www.microsoft.com/industry/biztalk

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When Will It Reach Critical Mass?When Will It Reach Critical Mass?• “The phonograph is of no commercial use”

- (Thomas Edison, 1880)

• “Everything that has been invented has been invented” - ( Charles Duel, Director US Patent Office, 1899)

• Who the hell wants to hear actors talking?”- (Harvey Warner, 1927)

• “I think there is a world market for about five computers” - (Thomas J Watson, Chairman, IBM, 1943)

• There is no reason for any individual to have a computer in their home” - (Ken Oloson, President of Digital Equipment Corp., 1977)

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Ask YourselfAsk Yourself……• What will your digital industry look like?

• What will be your business model?

• How will your business process support this business model?

• What people skills will you need to manage those new business processes?

• How should you organize to use those people skills to best effect?

• What will your infrastructure need to look like to support those digital processes?

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Products Imbued with Services Delivered Over the Internet

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Final Thought……..Final Thought……..

Change is not what it used to be…..Change has become a process; it’s become a permanent part of the external environment

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Concluding Remarks…..Concluding Remarks…..

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Questions ?Questions ?

EDGAREDGAR ®®

NLINE NLINEOO SMSM

• Liv A. Watson• E-Mail: [email protected]

• Phone: (812) 499-8149