Reporting Processes Practice Working Group (RPPWG) April 20, 2010 Rome, Italy. Richard M. Plotka Chair Reporting Processes Practice Working Group

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1 Reporting Processes Practice Working Group (RPPWG) April 20, 2010 Rome, Italy Richard M. Plotka Chair Reporting Processes Practice Working Group

2 RPPWG Overview What is the problem? What is XBRL? Why is XBRL the solution? Examples

3 Reporting Processes span the scope of the entire Business Reporting Supply Chain (BRSC) Processes Business Operations Internal Business Reporting External Business Reporting Investment, Lending, Regulation Economic Policymaking Participants Companies Business Publishers and Data Aggregators Investors Central Banks Trading Partners Management Accountants Internal Auditors External Auditors Regulators and Administrators Software Vendors and Service Providers

4 The Reporting Process Practice Working Group (RPPWG) assists the marketplace with understanding the reporting processes related to the use of taxonomies, instances (XBRL documents), and practices Examples are: Identification of the parties sharing and consuming XBRL information Tracking of official and extension taxonomies, instances, and other files Security, authentication and integrity, transport and handling, validation, etc.

5 2009: Project Listing Database Listing of world wide XBRL projects Database is housed and maintained in XBRL format Current initiative at Rensselaer Polytechnic Institute to create a management tool for the database Viewable in MS-Excel at:

6 Project Listing Database

7 2010: Goals Communicate value proposition of XBRL as it applies to the BRSC Target new providers of XBRL with information on introductory XBRL concepts and principles

8 The need for standardized business reporting Current business reporting process: Slow Costly Unreliable Isolated Reports are Visual (HTML/PDF) Not application friendly Data is unstructured Inflexible

9 What's the Global Problem? The need for normalized data Source data is not structured Excel Spreadsheets Data is not organized Disparate, disconnected Isolated, often proprietary, systems Repetitive costs as each provider solves the same problem over and over again Administrators/Governments dictate adoption of non-standard standards Non standardization results in an explosion of e-filing formats (e.g. Excel, PDF, Word, HTML, ASCII) Enormous burden on preparers and software vendors and filers

10 What's the Global Problem? The need for consistency Result is disparate systems that are not interoperable and increase costs associated in dealing with data Leads to data and systems which are stove-piped Without a common data format, Systems cannot communicate with one another Data must be converted Manual re-keying of data Customized programming Etc Which forces consumers of information to use multiple systems

11 What s the RP Problem? Practices Needed Data needs to be structured identifiable Systems need to be able to interact more easily Processes need to be streamlined Best practices needed Common approach to data authentication is needed First and Last mile issues require standardization Definition of consistent data transport Identification of methods for storing and accessing XBRL filings

12 What if a piece of business information, once entered into a computer anywhere, never needed to be retyped as it moved through the business supply chain? From XBRL: The Story of Our New Language

13 XBRL is an XML standard that allows systems to interact together through the BRSC XBRL is an agreement on the use of the XML family of recommendations for business reporting XBRL allows applications in the business world to participate together in the supply chain (3 examples) XBRL is governed by local jurisdictions and an International consortium (XII)

14 Use of XBRL provides structure and facilitates the identification of all data points data normalization Use of XBRL normalized data between activities leads to interoperability of applications Normalization of data between government agencies delivers greater efficiencies to information consumers Companies/Filers get benefit of internal efficiencies Leads to cost savings of the lifecycle of the data

15 Types of Reporting Extensible Taxonomies (Open Reporting) Taxonomy extensions are allowed SEC s EDGAR is an example Non-Extensible Taxonomies (Closed Reporting) Taxonomy extensions are not allowed US FDIC system s CDR (Central Data Repository) is an example Public XBRL data is available to the public Non-public XBRL is not made available

16 Types of Reporting Extensible Taxonomy (open reporting) Non- Extensible Taxonomy (closed reporting) Public Data No Public Data SEC X X FDIC X X SBR X X

17 SEC Extensible Public SEC Securities & Exchange Commission Contracted with XBRL.US to develop taxonomy which is now maintained by the Financial Accounting Foundation (FAF) Has been required for a year for the 500 largest US companies submitting XBRL business reports remainder to be mandated by 2011 Filing Program designed to achieve promise of interactive data as a means of vastly improving transparency, data quality and efficiency for investors, both institutional and individual Used to control data provided to securities regulator

18 SEC Extensible Public US Securities and Exchange Commission (SEC) allows taxonomy extensions and instances are made public

19 FDIC Not Extensible Public FDIC - Federal Deposit Insurance Corporation Banking regulator Developed XBRL taxonomy Process uses XBRL to transmit normalized data to collect financial information in the form of a balance sheet, an income statement, and supporting schedules, i.e. Call Reports* from central banks to regulators * A Call Report is a primary source of financial data used for the supervision and regulation of banks and is relied on as an editing benchmark for many other reports.

20 FDIC Not Extensible Public US Federal Deposit and Insurance Commission (FDIC) does not allow taxonomy extensions and instances are made public

21 SBR Not Extensible Not Public SBR Stands for Standard Business Reporting (SBR) - one national taxonomy for reporting of companies to different agencies Originally started in Holland with the NTP, then renamed to SBR following the Australian SBR project. SBR Initiative is global in scope with local manifestations Initiative focuses on reducing the burden for businesses Australia SBR:

22 SBR Not Extensible Not Public Standard Business Reporting (SBR) does not allow taxonomy extensions and instances are not made public

23 Processes Business Operations Internal Business Reportin g External Business Reporting Investment, Lending, Regulation Economic Policymaking Participants Companies Business Publishers and Data Aggregators Investors Central Banks Trading Partners Management Accountants Internal Auditors External Auditors Regulators and Administrators Software Vendors and Service Providers FDIC SBR US SEC

24 Wacoal Hitachi system Real world example of XBRL-GL being used internally to connect disparate systems together, facilitating a seamless workflow The Japanese government (METI) has chosen XBRL's Global Ledger Framework (via J-SaaS) to provide normalized, detailed accounting information that will be shared between small and medium enterprises, banks and the National Tax Agency -SaaS pdf

25 Processes Business Operations Internal Business Reporting External Business Reporting Investment, Lending, Regulation Economic Policymaking Participants Companies Business Publishers and Data Aggregators Investors Central Banks Trading Partners Management Accountants Internal Auditors External Auditors Regulators and Administrators Software Vendors and Service Providers

26 We have illustrated 3 different implementations of external reporting in the Business Reporting Supply Chain XBRL enables data interoperability across the supply chain This results in lower costs and real time consumption of data Imagine the benefit of utilizing this common data format to have all types of different systems/processes interoperate with each other Finance Legal Marketing Consumers at any level could participate with relative ease

27 How can the RPPWG expand collaboration between countries? How do we remove information friction from the BRSC? RPPWG is looking for new ideas and collaborators? How does the RPPWG help get companies excited about moving towards a common reporting structure using XBRL

28 Richard M. Plotka RPPWG Chair CIO/CTO Data Communiqué, Inc. Develop CCM and Publishing solutions for the financial industry Worked on Multiple Standardized data formats See XBRL International, Inc. Global consortium to cooperatively create a common business reporting language based on XML Non-profit consortium of over 600 member organizations See