XBRL: A Language of the Government 2.0 World

24th Annual ICGFM International ConferenceMay 16-21, 2010 (Miami, Florida, USA)

Public Financial Management in the Era of "The New Normal"

www.icgfm.org

Presented by: Liv Apneseth WatsonXBRL International Vice Chair & Founder Board of Director , IRIS Business Services LimitedBoard of Director, MediaTenorBoard of Director, Institute of Management Accountants E: watson.liv@irisbusiness.com

P: +1 203 856 8986 Skype: livwatson

XBRL a 2007 Breakthrough Idea!

“If you think about demographic changes and about climate change, none of these issues can be mastered without functioning capital markets. Demographic changes and the results on ageing societies and the funding of the old age pensions, which have to be paid out, by larger and increasing older generations is not feasible if it is not based on a well founded mechanism backed by papers generated by the capital markets.”

Joachim Faber, CEO of Allianz Global Investors

“More transparency is one key to restoring trust and executives have a fiduciary responsibility to their stake holders to learn more about XBRL and how this powerful open source royalty free information standard can help bring transparency and trust back to markets.”

Liv Watson, Founding Member of XBRL, Board of Director IRIS Business Services

Leo Fuller, CEO Monitor Group during the Trust Meltdown launch in Davos, 2010

Davos - 2010

Today Objectives

• Discover how Governments are using XBRL • Discover how XBRL will be instrumental in

enhanced transparency of the public sector• Discover how XBRL will help bridge the

information gap between diverse information systems

Is there a problem with Electronic Data Today?

Current accounting processes include largely manual , significant ‘cut and paste’ and manual data-entry that degrade the completeness, accuracy, and validity of information.

XBRL for Dummies !

• XBRL is, fundamentally, an electronic language that helps both the private and public sector effectively and efficiently bridge the current gap between business systems by crossing artificial boundaries.

Our governments, Your business operates on

information, so you need to know the

fundamentals of XBRL.

Compelling Reasons to Consider XBRL– Making financial and business information

exchange better, faster, and cheaper– Making financial reporting more transparent

and discoverable– Explicitly articulating business meaning and

thus enabling the exchange of that meaning between humans or between business systems

– Improving data integrity– Integrating business systems– Saving government agencies money and

making them more efficient

The following slides will

highlight what XBRL can do for

you.

Better yet, the book fills in the details.

What is XBRL?

✔ XBRL (eXtensible Business Reporting Language)1: The XBRL Specification (Technical stuff) 2: Taxonomies (UPC Codes with linked data attributes)

✔ XBRL is Tagged Data (Meta-Data - Machine Readable)– Standard way to communicate business and financial

information– Defined by meta-data set out in taxonomies which capture the

definition of individual reporting concepts and the relationships between them.

– XBRL - The “Bar Code” of the Business Reporting World.

✔ XBRL International– Not-for-profit consortium of approximately 600 companies and

agencies worldwide working together to build the XBRL language and promote and support its adoption.

BusinessOperations

ProcessesInternal Financial Reporting

ParticipantsAuditors

TradingPartners

InvestorsFinancialPublishers and DataAggregators

Regulators

Software Vendors

ManagementAccountants

Entities(Pubic Companies, SMEs, Public Sector)

CentralBanks

ExternalFinancialReporting

Economic Policymaking

Investment,Lending,Regulation

Global Business Reporting Supply Chain

XBRL Taxonomies and Extension Taxonomies(statistics, central banks, tax, others)

XBRL GLJournal Taxonomies

XBRLGAAP Taxonomies,IFRS-GP, US-GAAP, etc.

Validation

Standardization

Adding Meaning to Electronic Data

CalculationCash = Currency +

DepositsFormulas

Cash ≥ 0Contexts

US $FY2004

Budgeted

LabelcashCashEquivalentsAndS

hortTermInvestments

ReferencesGAAP I.2.(a)Instructions

Ad Hoc disclosures

PresentationCash & Cash Equivalents

XBRLItemXBRLItem

PresentationComptant et Comptant

Equivalents

PresentationGeld & Geld nahe Mittel

PresentationKas en Geldmiddelen

Presentation现金与现金等价物

Presentation現金及び現金等価物

PresentationДеньги и их эквиваленты

PresentationГроші та їх еквіваленти

XBRL – The Language of Financial and Business Reporting

Global XBRL Adoption

Source: http://www.xbrlplanet.org/

Discover how Governments are using XBRL

Standard Business Reporting (SBR)Government 2.0

• Government requirements to report financial information create administrative burdens for businesses throughout the world.

• The lack of a common reporting standard/language makes these burdens onerous, as businesses have to tailor, duplicate and individually supply information to meet the many and varied requirements imposed by domestic and international government agencies and regulators.

Australian business will save around $800 million per year when SBR is fully operational.

XBRL at the IASB

Legislative approach

Source: http://xbrl.sec.gov

H.R. 2392, The Government Information Transparency Act, and its companion bill, S. 303 passed by the US Senate, will require federal agencies to collect their data in a uniform, searchable format using XBRL thereby simplifying mandatory financial reporting for companies that receive federal funds.

The bill calls on the White House to issue rules within 18 months that direct every agency to use XBRL. It would also require companies to file activity reports to agencies in XBRL and require agencies to make the reported financial information viewable by the public. H.R. 2393 and S. 303 are currently in Conference Committee, and once reconciled, will be passed to the President for his signature to become law. This would be the first approval of XBRL anywhere in the world by a legislative body.

H.R. 4173, known as the Wall Street Reform and Consumer Protection Act, also encourages the use of the XBRL business reporting standard.

The Act requires financial market regulators to make annual reports to Congress for each of the next five years on how they are “encouraging the use and acceptance of interactive data” to increase transparency in financial reporting. H.R. 4173 makes it easier to analyze and review complex financial statements filed by public companies with government regulators such as the US Securities and Exchange Commission (SEC), FDIC and others.

Legislative approach

Source: http://techinsider.nextgov.com/2009/12/house_oks_biz_filing_transparency_bill.php?oref=latest_posts

“The bipartisan measure, introduced by bailout-opponent Rep. Darrell Issa, R-Calif, calls on the White House to issue rules within 18 months for using, government wide, the same financial data format, called eXtensible Business Reporting Language (XBRL). The Securities and Exchange Commission and the Federal Deposit Insurance Corp. already use the standard to simplify the process of analyzing financial filings.

But most agencies collect financial reports in many different data formats, making it hard to access and compare the data. The process is generally frustrating, time-consuming and largely manual, increasing the likelihood of human error, said Liv A. Watson, a co-founder of XBRL who serves on the board of director of financial information management firm IRIS India. “

Source: http://www.cesr.eu/index.php?page=responses&id=154

The European Parliament's Resolution of 21 May 2008 on a simplified business environment for companies in the areas of company law, accounting and auditing3, notes the advantages of XBRL and urges the Commission to actively promote the use of electronic means in relations between undertakings and public administrations. Also the European Parliament Resolution of 9 October 2008 on Lamfalussy follow-up: future structure of supervision4 called on the Level 3 Committees to design common reporting standards, preferably in a multipurpose format such as XBRL and calls upon the Commission to submit adequate legislative proposals.

CESR call for evidence

Additional Resources

“The adoption of eXtensible Business Reporting Language (XBRL) for financial reporting

holds great promise as a source of efficiency, transparency, and comparability in the delivery

of financial information.”

Getting better access to company information: Commission consults on the interconnection of business registers

http://ec.europa.eu/internal_market/consultations/2009/interconnection_of_business_registers_en.htm

XBRL Europe Europe

XBRL Europe Business Registers Working GroupAnswers on the Green Paper onThe Interconnection of Business Registers

A common semantic and shared business rules • A standard (and not a physical network) for the exchange of electronic structured

data between Business Registers, which can be used on various kinds of networks• Global compatibility with Internet technologies and electronic platforms• Direct access to individual data in XBRL registered information, which in turn allows

easy comparison of figures or characteristics from different companies• The use of multilingual labels, to facilitate the understanding of reported data

throughout Europe• The ability to implement a common structure (described in an XBRL taxonomy),

adjusted by local extensions, which is relevant to managing a dual approach combining global/European shared rules with local/national specificities

• The possibility to add an optional legal validity to each XBRL file (digitally signing the reports), which is important for guaranteeing the origin of the data supplied by the Business Registers.

XBRL Europe Europe

A multi-agency initiative involving 12 federal, state and territory government authorities, SBR is simplifying business-to-government reporting by:

Removing unnecessary or duplicated information from government forms using business software to automatically pre-fill forms adopting a common reporting language, based on international standards and best practice making financial reporting a by-product of natural business processes providing an electronic interface to agencies directly from accounting software, which will also provide validation and confirm receipt of reports providing a single secure online sign-on for users to all agencies involved.

SBR is expected to save Australian business an estimated $800 million per year once fully implemented from July 2010.

http://xbrl.us/i2i/Pages/default.aspx

What’s the Problem?Approximately 200,000 corporate actions such as dividends, bond redemptions, rights offerings and mergers are announced each year by publicly traded companies and other issuers or offerors in the U.S. alone.

Most of these announcements still require many manual steps, making the process error-prone, time-consuming and costly. Over the years, these issues have a negative impact on investors across the financial community.

What’s the Solution?The resulting initiative builds on the work undertaken globally to promote existing ISO (International Organization for Standardization) standards for corporate actions and integrates the benefits of XBRL electronic data tagging technology. The collaboration promotes straight-through-processing by electronically capturing data directly from issuers at the point that a corporate action is announced and in standardized format.

XBRL USA Issuer to Investor : Corporate Actions

Corporate Action – XBRL TaxonomiesThe Depository Trust & Clearing Corporation (DTCC) along with SWIFT and XBRL US

XBRL USA

US Corporate Actions Announcements FlowXBRL USA

Source: http://www.globalreporting.org/ReportingFramework/G3Guidelines/XBRL/

GRI

SEC Investor Advisory Committee

“The FASB team assigned to taxonomy maintenance will work closely with the SEC, investors, issuers, accounting firms, and other stakeholders to develop updates that are of the highest quality,”

-- Jack Brennan, FAF Chairman

NORWALK, Conn., Feb. 5, 2010

FAFFAF to maintain XBRL Taxonomy for US GAAP

System Features

• Based on the XBRL Standard• XBRL Complexity hidden behind a simple user-friendly

Spreadsheet, State Agencies need not know the XBRL standard

• Data encrypted and stored or transferred in the system• Automated Debt Assigning• Email alerts for every debt/payment update• Capable of integrating with any State Agency’s internal

system (DMV)• Alerts for a extensive yet easy to use monitoring

State Controller of NevadaKim Wallin, CMA, CFM, CPA

Debt Management System – State Controller’s Office, Nevada

MS Office Spreadsheet

Secured .Net Framework 3.5 server

State Controller of Nevada Kim Wallin, CMA, CFM, CPA

The mortgage-backed securities (MBS) market is frozen.

There are perfectly good cash flows to be found in these investment vehicles, but the entire re-securitization market lacks the information and reporting standards necessary to untangle the good loans from the bad.

As a result, investors will not buy what they cannot understand, the value of these assets is being marked to zero and the entire market has seemingly turned toxic.

Source: http://xbrl.us/documents/RMBSwhitepaper.pdf

TaxonomiesAsset back Securities

Source: www.oecd.org/dataoecd/36/52/43384923.pdf

The new data needs to be analyzed and thought through for what it says: 1. How big are revenues? 2. How big are profits? 3. How big are profit margins?

The new data must be compared to earlier data to answer these questions: 1. How fast are revenues growing? 2. How fast are profits growing? 3. How are margins changing? 4. How are growth rates changing?

The company’s results must be related to other companies’ results:1. How is this company doing relative to its

competitors? 2. How is this company doing relative to other places

the investor can place his or her money?

How do they do that today?

XBRL & Investor Relation Tools

AS A RESULT

24th Annual ICGFM International ConferenceMay 16-21, 2010 (Miami, Florida, USA)

Public Financial Management in the Era of "The New Normal"

Questions ?

Liv Apneseth Watson

Liv A. Watson heads Global Business Development for IRIS Business Services Private Limited.She is one of the founders of the XBRL Intentional Consortium. She has over 20 years of experience, in finding innovative ways to bring together technology, accounting and financial and business reporting.Working globally with leading market regulators, accounting associations and institutions, Ms. Watson has traveled to over 80 countries presented XBRL to a wide range of audiences from international standards bodies to Fortune 1000 companies and speaks with authority about its benefits, potential applications, and broad adoption.Liv authored one of IMA's most successful CPE courses "Accounting System Technology for the 21st Century".She has also published several articles on for international publications and journals including Harvard Business Review, Strategic Finance. She also writes a monthly column of financial and business reporting trends for CPA2Biz.She is the co author and contributor author to several ‐of books including “XBRL for Dummies” and Governance, Risk, and Compliance Handbook published by Wiley.

Member of the Board of Directors, IRIS Business ServicesMember of the Board of Directors, MediaTenorMember of the Board of Directors, Institute of Management Accountants (IMA)Member of IASC Foundation XBRL Advisory CouncilVice Chair of the Institute of Management Accountants XBRL Working GroupXBRL International Steering Committee MemberVice Chair of XBRL International Membership Working GroupPast Vice Chair of XBRL International, IncPast Chair of the XBRL US Adoption CommitteePast Vice Chair of the XBRL US JurisdictionAdvisory Board Member – University of Southern IndianaAdvisory Board Member – University of Albany, New YorkInternational Journal of Disclosure and Governance Editorial Advisory Board Member

Member of the Board of Directors, IRIS Business Services

Additional Resources

XBRL International: www.xbrl.org

US Securities Exchange Commission:www.sec.gov/spotlight/xbrl.shtml

XBRL EU: www.xbrl.org/eu/

XBRL at IASB:www.iasb.org/xbrl/xbrl.htm

Source: http://techinsider.nextgov.com/2009/12/house_oks_biz_filing_transparency_bill.php?oref=latest_posts

“The bipartisan measure, introduced by bailout-opponent Rep. Darrell Issa, R-Calif, calls on the White House to issue rules within 18 months for using, government wide, the same financial data format, called eXtensible Business Reporting Language (XBRL). The Securities and Exchange Commission and the Federal Deposit Insurance Corp. already use the standard to simplify the process of analyzing financial filings.

But most agencies collect financial reports in many different data formats, making it hard to access and compare the data. The process is generally frustrating, time-consuming and largely manual, increasing the likelihood of human error, said Liv A. Watson, a co-founder of XBRL who serves on the board of director of financial information management firm IRIS India. “