3 STEPS TO NIRVANA

Business, Technical & Political StepsTo XBRL Financial Statement Exchange in Europe

John Turner Chairman XBRL International Domain Working Group

Member XBRL International Steering Committee

KPMG LLP – john.turner@kpmg.co.uk

Overview A starting proposition Where are we?

Building the XBRL airport

Three steps Business Technical Political

What you should do

Fundamentally: Transparency is the main tool that securities regulators rely on….

The dissemination method must be capable of providing investors with regulated information without delay. This is especially the case where regulated information is, or may be, of a price sensitive nature,

CESR/04-511: CESR’s Advice on Possible Implementing Measures of the Transparency Directive. (Consultation Paper)

… but too much information in Europe is on paper.

IFRS financial statements can’t help inform the capital markets if no-one reads them!

PLANNING: Resources ¦ Framework ¦ Components ¦ Test Plans ¦ ReviewPLANNING: Resources ¦ Framework ¦ Components ¦ Test Plans ¦ Review

“Across Europe, the number of stocks researched has fallen by nearly 15 per cent to 2,599 from the peak in 2002 and the number of European analysts following stocks is down by nearly 20 per cent from the 1999 peak.”Starmine Research, quoted in Financial Times, 8 November 2004

A federated reporting framework

Dear CESR, Our Answers: Yes, No Making European dissemination and

storage more accessible will take time but is essential

Different member states will necessarily move at different speeds

The standard is the key

Lets step back… The XBRL Financial Reporting Airport We must have

A stable specification Comprehensive, reliable taxonomies Wise custodians Tools and knowledge to build instance documents Preparers and Analysts that “get it” Assurance that works Less visible technology, more visible business

processes.

PLANNING: PLANNING: Resources ¦ Framework ¦ Components ¦ Test Plans ¦ Review ¦ Framework ¦ Components ¦ Test Plans ¦ Review

A stable specification - the runway XBRL 2.1 - 12 months old, but here to stay Arguments about complexity are fading Solid conformance suite Multiple APIs Greatly improved consortia processes and

controls Increasing recognition within wider

technical community that accounting is complex and that XBRL is therefore a meta-standard

FRTA – the ILS of XBRL? Recent addition to the XBRL family Extremely strong set of suggestions Incentives set by way of approval process Three validators already, more on the way

Public Working Draft this week Constrains instance documents Vendors also delivering, on cue

FRIS – A Three Point Seatbelt?

Reliable Taxonomies: Flight Paths Pass the weight test Pass the validation tests! Modularity and versioning – an ongoing

puzzle Review processes – poorly formed, poorly

resourced and still too hard

Wise custodians – Air traffic controllers? Incredible growth in jurisdictions XBRL in Europe Initial steps – the market, modelling Later steps – accounting authorities for

GAAPs/IFRS(?) Later steps – industry collaboration for

performance reporting measures The jurisdiction life-cycle

Tools and Knowledge around instance document production - flight plans A long way down the road Next releases of tagging/mapping/export

tools are likely to include FRIS compliance Vendors realise that extension taxonomies

are here to stay, and are starting to accommodate them

SEC Pilot likely to launch the next round of efforts from ERP and GL vendors

Area of intense business innovation

Preparers and Analysts that “get it”: Frequent Flyers Preparer community is very, very poorly

educated about both the promise and the reality of XBRL filing Outreach is limited and somewhat incoherent Public Relations effort by the community tends to be

inconsistent. Analyst community (with one notable

exception) is exceedingly poorly educated, change resistant, and under pressure Difficult group to convince. Very poor outreach effort.

Warning! Angels fear to tread.

A workable assurance framework – airworthiness certificates In the current climate, innovation in assurance is,

to be clear, the very last thing that the audit profession wants.

The audit profession understands at a conceptual level the need for assurance over XBRL materials.

The process of getting assurance standards created, through IFAC, is ongoing. XBRL validity Accuracy of mapping and element attributes Appropriate use of extensions

Confident Preparers are also part of the picture Leadership of audit profession are not yet aware of

some of the positive implications of instance documents as primary reporting formats

Less visible technology! Doors on the cockpit Accountants and corporate decision-makers

are interested in their businesses. Not our technology.

Very positive recent releases Innovation is essential One of the hardest, but most interesting

challenges in IT today – making complex rule and data layers work quietly.

To summarize? Technical framework that allows true

interoperability for XBRL based financial reporting of financial statements.

Amazing achievement – 400 years to create the complexity of modern accounting, 5 to model it.

Tools and operators still needed, but level of acceleration is stunning

An aside The XBRL community works because we

have a shared vision and a shared passion As much as resources allow, XII and

jurisdictions are seeking to professionalize and focus on measurable, sensible goals

This is essential But there is plenty of room for your passion Innovation will always be rewarded

Step 1: Business Involvement Collaborate on taxonomy construction and

review Lose the angle brackets Gain new communities

Build Special Interest Groups to exchange knowledge, provide support and build momentum

Evolve into certification and training

Step 2: Technical Simplify the user experience Simpliy the user experience Simplify the user experience And:

XBRL versioning XBRL formulae XBRL dimensions

And Provide referencable implementations

Project Shanghai and the PDT

Step 3: Political Careful, credible outreach now required The standard enhances economic co-

operation, cross-border capital flows The standard substantially enhances

regulatory knowledge The network effect makes it real Federated financial filing in Europe is that

network effect.

3 STEPS TO NIRVANA

Business, Technical & Political StepsTo XBRL Financial Statement Exchange in Europe

John Turner Chairman XBRL International Domain Working Group

Member XBRL International Steering Committee

KPMG LLP – john.turner@kpmg.co.uk