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1
Liv A. WatsonDirector – Edgar Online, Inc
XBRL Liaison ChairE-Mail: [email protected]
Phone: 203.852.5703
The Next Technology RevolutionThe Next Technology RevolutionXML XBRLXML XBRL
2
EDGAR Online, Inc.EDGAR Online, Inc. isis 1. the leading business-to-
business and Web-based provider of business, financial and competitive information derived from U.S. Securities and Exchange Commission (SEC) data and a developer of Internet-based financial and business system solutions.
EDGAREDGAR ®®
NLINE NLINEOO SMSM
www.edgar-online.com
www.freeedgar.com
www.ipo-express.com
www.insidertrader.com
www.fd.express.com
3
• NASDAQ: EDGR Founded 1995• Offices: Norwalk, NYC, Seattle, Baltimore/Rockville• Employees: 120+• Channels: Retail, Internet, Corporate Sales• Worth Magazine’s #1 Online Research Site• Financial Insights, Inc. (FIS) Acquisition
– Increases base of corporate customers– High-end data and technology solutions in-house– Expands product lines to EOL’s corporate & web based
clients.
The Leader in Financial Information
4
Why Use EDGAR Online?Why Use EDGAR Online?
• EDGAR FocusEDGAR FocusSEC filings and data derived from them
• Internet FocusInternet FocusWe serve only Internet, intranet, and extranet delivery systems
• Flexible Data & Delivery SolutionsFlexible Data & Delivery SolutionsA full suite of information products & delivery options
• Prestigious PartnersPrestigious PartnersOther leading companies have recognized the value of our singular focus and
solutions
• Market LeadershipMarket Leadership75+ Corporate clients, 250,000+ Internet Clients
First to Market with an XBRL Repository
5
EOL Sells Public Company Information and EOL Sells Public Company Information and Internet-based Application ServicesInternet-based Application Services
6
Today’s ObjectivesToday’s Objectives
• Overview of XML & XBRL
• Show you how this technology makes doing E-Business:– Faster
– Cheaper
– Better
– XBRL Update
• Conclusion
7
Find the best solution to connect the nine points
together with no more than four straight lines
without lifting your writing instrument.
Whatassumptions
are you making?
If you do not assume that you cannot extend your
lines beyond the imaginary square formed by the
box the puzzle becomes easier to solve.
11
Don’t assume that the lines must pass
through the center of the dots.
12
Don’t assume that the line
must be thin.
13
Just to prove I can do it with two lines.
14
Don’t assume that the paper must be flat.
15
If you rip the paper into nine segments,
you can stack them
and poke your point through all at once.
16
Don’t assume that you cannot
crease the paper.
17
Don’t assume that
the lines cannot extend beyond
the edge of the paper.
18
Don’t assume that you Don’t assume that you
cannot cannot
riprip the paper. the paper.
19
Major Economic ChangesMajor Economic Changes
Source: Cisco
20 From Evansville Courier and Press
Is There A Problem?
21
Let’s move up the Value Let’s move up the Value ChainChain
Transactions Data Information Knowledge Decisions
Transactions Data Information Knowledge Decisions
Transactions Data Information Knowledge Decisions
Transactions Data Information Knowledge Decisions
23
Searching for the word “Mercury” on the Web can provide search results such as--
Hg
Content—without Context
24
Simple problem:4921 results in a typical search
(e.g. “IBM Fixed Assets”)
29
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
Text Files
30
New Standards Build on their Predecessors
1960’s Simple computer-to-computer interconnection
1970’s Email
1980’s File exchange and sharing
1990’s Graphics and Hyperlinks => the World Wide Web
2000’s Application standards
The Evolution of Internet StandardsThe Evolution of Internet Standards
31
XMLXMLXML stands for:
eXtensible
Markup
Language
Universally accepted method of exchanging information
32
XMLXML eXtensible Markup Language eXtensible Markup Language
XML - a computer markup language that is extensible (flexible … can be added to)– XML is actually a bare-bones set of syntax
rules to markup any kind of text and data– XML is used to supply the structure of the
text or data– XML is used to tell both a human &
computer software what the text or data is … not how to display it
38
eXtensible Markup LanguageeXtensible Markup Language
…is a meta markup language the World Wide Web Consortium (W3C) considers a universal standard for describing both structured data and the behavior of applications that process the language.
XML
39
What Is XML?What Is XML?
• “XML is aplatform-independent,
self-describing,
expandable,
standard data exchange format
40
XML is Platform IndependentXML is Platform Independent
• Windows• Unix• Macintosh• Mainframe• Linux• DOS
41
XML is Self-DescribingXML is Self-Describing
• Example:– <DATE>July 26, 1998</DATE>
• Describes the information, not the presentation
• Format neutral
42
XML is ExpandableXML is Expandable
• Whereas HTML has a fixed set of tags– <H1>, <B>, <I>
• XML lets you create your own tags– <sugary-substance>– <Shakespearean-character>– <cash-equivalent>
43
How does it work?How does it work?• XML gives meaning to information through
the use of tags
<Customer> <Name>Liv A. Watson</Name> <Company>Edgar Online Inc.</Company> <Title>Director</Title> <Age>22</Age></Customer>
Caution.. …Just because something is <tagged>.. Does not mean it is accurate?
44
Enter XMLEnter XML<person ID="123" location="ny"> <first-name>Liv</name> <last-name>Watson</last-name> <comments>Liv is a good speaker but has an annoying habit of preparing her slides at the last minute.</comments></person>
<location ID="ny"> <name>New York Office</name> <address>945 West End Avenue</address></location>
45
XMLXML• Widely expected to reduce cost of
publishing to the Net by as much as 50%.
• And by next year …
Gartner Group prediction
70% of all B2B transactions executed on the Web will be done using XML.
46
Why is XML so Important?Why is XML so Important?
• Portable• Vendor neutral• Readable data format• More flexible and easier to use than EDI• All major software products are becoming
“XML” enabled• Defacto standards for data exchange• Enabling new levels of interoperability
51
How many How many ways can we ways can we describe a describe a
book?book?
52
Lesson: Authoring XML DocumentsLesson: Authoring XML Documents
• An XML Document is simply an XML element that can, but might not, include nested XML elements.
• For example, the XML <books> element is a valid XML document:
<Inventory><books> <book isbn="0345374827">
<title>XBRL Essentials</title> <author> Charlie Hoffman </author>
<author> Carolyn Strand </author></book>
</books>
</Inventory>
54
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
56
Defines TagsDefines Tags
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
59
Additionally…Additionally…• Confirmed New Members (as of 15 November
2000):– Deutche Bundesbank– U.S. Department of Defense (DFAS)– Dresdner Kleinwort Benson– Nikkei (Nihon Keizai Shimbun)– New River– Practitioners Publishing Company– National Center of Charitable Statistics– Seattle Pacific University, Center for Professional
Development– Global Filings– Business Wire– Hong Kong Society of Accountants– Innovision
60
XBRL International is gaining strengthXBRL International is gaining strength• XBRL activities occurring in—
– United States– Canada– Australia– China & Hong Kong– Japan– Malaysia– New Zealand– Singapore– Taiwan– Germany– India– Ireland– Netherlands– Nordic Federation (Denmark, Norway, Sweden)– Spain– Switzerland– United Kingdom
• And on a global level through the—– International Accounting Standards Council– International Press Telecommunications Council– International Standards Organization
61
XBRL ImpactXBRL Impact
"The explosive growth of the Internet is not only changing the way
companies conduct their business,
it also promises to forever alter the way they communicate business
performance.”
- CFO Magazine, February 2000
63
XBRL SupportXBRL Support
“I would like to see you develop valuation models that result in consistent, comparable and fair values of assets and liabilities. I would like to see you hone specific, but plain English definitions for the types of information you believe should be included in public disclosure. I would like to see you take your XBRL project a step further, providing account classifications for companies in common industries. In short, I challenge you to turn all of this data into meaningful information for investors.”
- Arthur Levitt, Chairman, U.S. Securities & Exchange CommissionOctober 24, 2000, at the Fall Council of the AICPA (Las Vegas, Nevada)
66
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
67
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
68
Any Electronic Data InterchangeAny Electronic Data Interchange
When different parties are willing to exchange well-defined administrative or commercial information by electronic means, they need to agree on:– the exact semantics of the messages
Available standards or new problem?
– a structured model of the informationThis is what matters from an IT point of view!
– a data formatWhich selection criteria?
69
Improves the way companies -- and applications -- share business reporting information
How XBRL WorksHow XBRL Works
1. XBRL Specific Data1. XBRL Specific Data 3. XBRL information flows freely across the Internet or VPN, LAN and WAN
3. XBRL information flows freely across the Internet or VPN, LAN and WAN
5. XBRL data can be used in applications B or other comparable applications
5. XBRL data can be used in applications B or other comparable applications
Application - A Application - B - B
Common XBRL
Vocabulary
2. Application data is converted into a common XBRL vocabulary
2. Application data is converted into a common XBRL vocabulary
4. XBRL-tagged data is mapped into applications specific data
4. XBRL-tagged data is mapped into applications specific data
XML/XBRL
translator
XML/XBRL
translator
72
XBRL: XBRL: notnot an accounting standard an accounting standard
• Means of communicating– Current GAAP
– Current practice
• Flexible standard– Future standards
– Future general practice
73
XBRL ImpactXBRL Impact"Coming down the road are standards like
XML and XBRL that take data handling a major step forward from HTML, the current web standard. With these new
standards, plus those for accounting, it will be possible to scan a universe of
corporate data across the web and extract, say, the chairman's report for all
companies with a certain market cap, EBITDA, and gearing. …
79
80
XBRL-GLXBRL-GL
• Very new development to represent General Ledger transactions
• Joint venture with EDIFICAS
• Support– Consolidations within large and small
organizations– Inter-organizational transactions
81
XBRL-GLXBRL-GL
• Explicitly designed not to require a Chart of Accounts
• Explicitly designed to incorporate– Financial data– Non-financial data
82
XBRL in the ClassroomXBRL in the Classroom
83
Classroom IdeasClassroom Ideas
• A common language of business• The foundation language for sharing
financial information over a network (e-business)
• Better understanding the link between “accounting” & “IS”
• Creating audit schedules• Comparing financial information• Sharing data between apps.
93
Importance of ReportingImportance of Reporting
”John Chambers Cisco CEO
Year End Earnings Release Call August 10, 1999
“…[W]hat excites the CEO is the ability to know what the business is doing at any given point in time, react quickly
to market shifts and competitive threats and remain in tight control
while empowering employees to make informed decisions more quickly.
94
“
”
The Virtual Close … has, in my opinion, just as much impact
on a company’s future success or lack thereof as the well-
published e-commerce area.
John Chambers Cisco CEO
Year End Earnings Release Call August 10, 1999
Best PracticeBest Practice
95
XBRL ImpactXBRL Impact“ … If Europe moves quickly to take up
these standards, it could give them an attractive lead in the race to accessible and comparative key data that would stimulate investor interest. It would undoubtedly spawn a plethora of research tools that would be useful to both private and professional investors.”
- Investors Chronicle, August 9, 2000
96
BUSINESS
XBRL Adds Reporting to E-CommerceXBRL Adds Reporting to E-Commerce
Investors
Aggregators
Regulators Creditors LendersTax Website
ERP G/L Packages CRM
•Orders•A/P•Delivery
Customers•Orders•A/R•Delivery
Suppliers
2-way2-wayTransaction Creation
Oneway
Oneway
97
XBRL Adds Reporting to E-CommerceXBRL Adds Reporting to E-Commerce
BUSINESS
Investors
Aggregators
Regulators Creditors LendersTax Website
Transaction Creation
ERP G/L Packages CRM
•Orders•A/P•Delivery
Customers•Orders•A/R•Delivery
2-way2-way
Suppliers
Oneway
Oneway
XBRL
BUSINESS REPORTING
(e-)CommerceOTHER XML INITIATIVES
98
What is ebXMLWhat is ebXML
• Electronic business XML - ebXML
• Joint effort of the United Nation/CEFACT and OASIS
• “Create a Single Global XML Framework Solution”
• 18 month project
99
ebXMLebXML• A global electronic market place where
enterprises of any size, anywhere can:– Find each other electronically– Conduct business through the exchange of
XML based messages• Using standard message structures • According to standard business process sequences• With clear business semantics• According to standard or mutually agreed trading
partner agreements• Using off the shelf purchased business applications
100
Main ebXML conceptsMain ebXML concepts• Business Messages – Expressed in XML• Business Processes – Defined in UML, Expressed in XML• Business Service Interface – Handles one role in a
business process – Expressed in XML• Trading Partner Agreement – Specifies protocols
properties required for two specific business service interfaces to talk to each other – Expressed in XML
• Tansport and Routing Layer – Moves the actual XML data between business service interfaces
102
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.
103
The Internet Changes EverythingThe Internet Changes Everything• Preparers
– Get hold of your business and demonstrate your value.
• Auditors– Keep audited financial reporting relevant.
• Intermediaries– Play a role or get bypassed.
• Analysts– Add value or lose value.
• Creditors– Web-enable or lose customers.
• Investors– Sort through the ocean of information to make good
decisions
104
The The 2121stst Century Century Annual Report (ICAEW Annual Report (ICAEW
1998)1998) Reporting in a period of change
The “old” system The ”new” system
Shareholder focus Stakeholder focus
Paper based Web based
Standardized information Customized information
Company controlled information on performance and
prospects
Information available from a variety of sources
Periodic reporting Continuous reporting
Distribution of information Dialogue
Financial statements Broader range of performance measures
Past performance Greater emphasis on future prospects
Historical cost Substantial value-based information
Audit of accounts Assurance of underlying system
Nationally orientated Globally based
Essentially static system Continuously changing model
Preparer-led regulations Satisfying market-place demands
Who Who Benefits?Benefits?
106
Benefits to Today's UsersBenefits to Today's Users
• 1. Reduce cost of analyzing and reporting financial information
• 2. Increase speed and efficiency of business decisions
3. Enhance the distribution and access of existing financial statement information
4. More readily exchanged5. Increase and enhance analysis
107
Financial Institutions—and their UsersFinancial Institutions—and their Users • SMALL BUSINESS provides FINANCIAL INSTITUTION
with their information in XBRL and receives loan approval in less than a day instead of two days—or two weeks.
With XBRL?Mechanics More Time for Analysis => Better Analysis => Less Risk
Value-added Analysis and Decision-making? <10%
Average Time for Loan Processing—1.75 days
90% + time spent on Mechanics
Mechanics Analysis Mechanics Analysis Mechanics Analysis Mechanics Analysis
Or
Process more loans in the same amount of time
108
BenefitsBenefits• 1. Reduce cost of analyzing and
reporting financial information• 2. Increase the speed and efficiency of
business decisions
• 3. Enhance the distribution and usability of existing financial statement information
109
Example: Cost ReductionExample: Cost Reduction
• International Subsidiaries:• Large multi-national corporation uses
XBRL to quickly roll–up, analyze and publish the financial statements of numerous subsidiaries—
• in different countries• with different languages• using different GAAP• on different computer systems
110
BenefitsBenefits• 1. Reduce cost of analyzing and
reporting financial information
• 2. Increase the speed and efficiency of business decisions
• 3. Enhance the distribution and usability of existing financial statement information
111
Example: Efficient DecisionsExample: Efficient Decisions
• Major mutual fund company feeds XBRL-ized information to customers to differentiate their funds as more objective and reliable investments
• An investor uses XBRL to compare the financials for a range of companies—– Belonging to different revenue levels– Located within an industry sector– Along multiple analytical criteria
112
BenefitsBenefits• 1. Reduce cost of analyzing and
reporting financial information
• 2. Increase the speed and efficiency of business decisions
• 3. Enhance the distribution and usability of existing financial statement information
113
Example: CreditExample: Credit • Loan Approval:
– Small Business provides Bank with their financial information in XBRL and receives loan approval in 1 minute instead of 2 days
• Credit Approval:– Company approves customer credit request
with automated assessment processes facilitated by XBRL
• Line of Credit:– Company provides capital markets with
financial information in XBRL and receives expedited line of credit
114
Service Service OpportunitiesOpportunities
Enabling Technologies
Applications
Business Issues
PCs
FinancialApplications
Internal Control
IS Consulting
Client & Consumer
Producer & Creator
Assurer & Advisor
Technology enables changeTechnology enables change
Business Opportunities
Enabling Technologies
Applications
Business Issues
XBRLXML
New Reporting Systems
Data Centric
????
Client & Consumer
Producer & Creator
Assurer & Advisor
Technology enables changeTechnology enables change
Business Opportunities
117
ProgressProgress• Morgan Stanley filed a 10K EDGAR filings to the
SEC with XBRL tags. • All banks in Australia will report to the Australian
Prudential Regulation Authority in XBRL this year, and all insurance companies next year.
• Tax pilots in the U.S. with the States of New York and California scheduled this summer and fall.
• University of Kansas XBRL Repository project – 80 financial statements
118
ProgressProgress• Membership Continues to
grow:–XBRL Germany and XBRL
Japan have formally launched chapters this month
119
XBRL Germany EstablishedXBRL Germany Established• AUDICON GmbH
• DATEV eG
• Deutsche Bank AG
• Deutsche Bundesbank
• Deutsches Rechnungslegungs Standard Committee e.V.
• Ernst & Young Deutsche Allgemeine Treuhand Aktiengesellschaft
• Haarmann, Hemmelrath • InnoData GmbH • Institut der Wirtschaftsprüfer• KPMG Deutsche Treuhand AG• MIS AG• PPA Gesellschaft für Finanzanalyse
und Benchmarks mbH• PWC Deutsche Revision AG• SAP AG• Software AG
120
XBRL Japan EstablishedXBRL Japan Established• Asahi&Co.
• Asia Securities Printing Co.,Ltd
• Beacon IT Inc.
• Century Ota Showa & Co.
• Chuo Aoyama Audit Corporation
• Digital Notarization Authority
• DIVA Corporation
• Fujitsu Ltd.
• Hitachi System & Services,Ltd.
• Hitachi, Ltd.
• Japan Information Service Industry Association
• Nihon Keizai Shimbun, Inc.• Nikkei• PCA Corporation• Takara Printing Co., Ltd.• Teikoku Databank, Ltd.• The Japanese Institute of Certified
Public Accountants• Tohmatsu & Co.• Tokyo Shoko Research, Ltd.• Toyo Keizai Inc.
121
ProgressProgress• The IASB is leading the development of XBRL for
IAS – a working version is expected by October. • The Second International XBRL Meeting was held
on June 11-15 in New Orleans, Louisiana, with more than 80 participants from more than 10 countries attending.
• The Third International XBRL Meeting will be held in Sydney, Australia during the month of October. A tentative date has been set for October 22 – 25.
122
Recent AnnouncementsRecent Announcements• Released for public comment enhanced version of
specification for XBRL for Financial Statements. – harmonizes with the W3C XML Schema to
better align with initiatives of the W3C and other XML organizations for global interoperability.
• Released for public comment XBRL for General Ledger
123
XBRL in Print XBRL in Print • XBRL Essentials by Charles
Hoffman, CPA and Carolyn Strand, CPA, Ph.D
• Introducing XBRL: Decision Making in a Digital Economy by Neal Hannon and Zachary Coffin
• XBRL – Financial Reporting in the 21st Century – by Liv A. Watson
124
Software Publisher UpdateSoftware Publisher Update • ACCPAC Advantage Series(TM) • CaseWare Working Papers • CPA2Biz – CPA Dashboard will
produce XBRL reports• eKeeper CFO Virtual Desktop
System (Q3) • eNumerate Solutions – Taxonomy
Developer, Analyst Tools • FRx Forecaster• Hyperion Hyperion Reports (Q3-4)
125
Software Publisher UpdateSoftware Publisher Update • KPMG's Columbus – ASP for continuous
business performance improvement (Q4)• KPMG Consulting Inc. developing the
XBRLearning Channel. • Navision Financials• Newtec's MultiMart(TM) Web Financials • SAP will deliver XBRL functionality as part of its
mySAP Financials e-business solution (Q4) • XBRL Solutions - Taxonomy Builder, XBRL Tools,
Training
126
XBRL Taxonomies Under DevelopmentXBRL Taxonomies Under Development
Commercial and Industrial Companies, US GAAP - Published
Federal Departments, US Mutual Funds, US Financial Institutions, US Commercial and Industrial, IASC Commercial and Industrial, German GAAP Bank Call Reports - FDIC
App to fin rep
127
How Do You Get There?How Do You Get There?
Needs AssessmentNeeds Assessment
Design Solution/Business PlanDesign Solution/Business Plan
Training & EducationTraining & Education
ImplementationImplementation
128
Does XML Shortcomings?Does XML Shortcomings?
Lots of Hype, not a solution Lots of Hype, not a solution for everythingfor everything
Not a replacement for integrationNot a replacement for integration and middleware toolsand middleware tools
There are many different standards There are many different standards among industriesamong industries
Standards still evolovingStandards still evolovingBut, you can’t wait while the But, you can’t wait while the
standards evolve….standards evolve….
129
So when will this happen??So when will this happen??A.Never.B. After I retire.C.Before I retire but too late for me to have
to worry about it.D.Sooner than I want to admit, but I still
have enough time to procrastinate.E. Next five years.F. Next two to three years.
quiz
XBRL Development & AdoptionXBRL Development & Adoption
Adoption
Tool Development
Taxonomy Development
131
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)
• “640k ought to be enough for anyone” - (Bill Gates, 1981)
132
When Applications Talk to Each Other…
133
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
134
Additional Education SourcesAdditional Education Sources• www.xbrl.org - Student Competition• www.xml.org• www.ebxml.org• www.w3.org• www.rosettanet.org• www.ibm.com/developer/xml• www.microsoft.com/industry/biztalk
135
SummarySummary
• FASTER
– BETTER
• CHEAPER
• Our profession will have to follow technology and record business activity in an real-time mode.
136
Concluding Remarks…..Concluding Remarks…..
138
Questions ?Questions ?Liv A. Watson
Edgar-Online IncE-Mail: [email protected]
Phone: (812) 499-8149
EDGAREDGAR ®®
NLINE NLINEOO SMSM