XBRL New approach to

financial reporting and analysis

Ilya Vadeiko, MBA Candidate in Finance, McGill UniversityVitaly Gritsenko, M.Sc. in Computer Science, Owner of F-Key Solutions

Agenda• Brief introduction to XBRL

1. What it is2. Why and how to use it

• Various perspectives on XBRL1. Corporations: advantages and challenges2. Investors: benefits and risks3. Universities: education and research

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Introduction to XBRL(high level overview)

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XBRL is:• eXtensible Business Reporting Language based on XML for

tagging financial statements

• International standard agreed upon by regulators, CFOs, CFAs, CPAs

• New computer format enabling automated processing and validation of business information

• Search-facilitating technology that improves the transparency of financial reporting and analysis

During his 2007 testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, SEC Chairman Christopher Cox stated, “XBRL would in fact give investors better access to the information because they could find it more easily.”Source: “Cox Defends XBRL to Senators,” 31 July 2007 www.cfo.com/article.cfm/9571612?f=msdynamics

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Why bother learning XBRL?1. Regulators enforce it across the globe – compliance

2. Like Web 2.0 to static HTML – Interactive Data

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Where XBRL saves you time

Source: Charles Hoffman, Liv Watson. XBRL for Dummies. Wiley Publishing, 2009, page 51

Source: http://xbrl.org/knowledge_centre/projects HOW?

Basics of XBRL

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Source: “Cheat Sheet from XBRL for Dummies” www.dummies.com/cheatsheet/xbrl

Taxonomy is like a dictionary

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Examples of US Taxonomies:• XBRL US GAAP Taxonomy • XBRL US Management's Discussion and Analysis Taxonomy • XBRL US Standardized Industrial Classification (SIC) TaxonomyExamples of UK Taxonomies:• UK GAAP (for Accounts)• UK IFRS (for Accounts)• HMRC Taxonomy (for Corporation Tax Computation)

SEC filing: Interactive Data

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1. XBRL instance (.xml)2. Taxonomy (.xsd)3. Calculations (_cal.xml)4. Definitions (_def.xml)5. Labels (_lab.xml)6. Presentation (_pre.xml)

Interactive data (XBRL)

Viewing XBRL in stand-alone app

91. Statements and notes

2. Selected statement: Balance Sheet

3. Export to Excel

Viewing online: XBRL cloud

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Corporates’ perspective on XBRL(creators of financial information)

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Corporate’s perspective on XBRL

12Legacy ERP CRM SCM…

Business Management Systems:

Disclose to:

Source: “IFRS, XBRL and Business Performance Management (BPM)” by Trevor Walker, for XBRL.org

Sources:

XBRL

Financial Publishers & Data Aggregators

Companies Trading Partners

Management Accountants Auditors Regulators

Investors Central Banks

Other Stakeholders

Enforcing XBRL by SEC in US

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Source: “SEC XBRL Mandate for Dummies” by Ed Tittel, IBM Limited Edition, Wiley Publishing Inc. 2011

Tier 1

Tier 2

Tier 3

Today

Tagging levels explained

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Source: “SEC XBRL Mandate for Dummies” by Ed Tittel, IBM Limited Edition, Wiley Publishing Inc. 2011

Most Challenging Aspects of XBRL

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Source: “SEC Reporting and the impact of XBRL: 2012 Survey” by William Sinnett, Financial Executives Research Foundation

Key providers of XBRL solutions

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Source: “SEC Reporting and the impact of XBRL: 2012 Survey” by William Sinnett, Financial Executives Research Foundation

• Large EDGAR filers/Financial printers (e.g. RR Donnelley, Bowne)• Independent Software Vendors (Rivet, WebFilings)

Market evolution

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Source: “XBRL Summit Presentation” by Natalie Zimmer, Ernst & Yong, May 2012

• Most XBRL exhibits are created by registrants’ EDGAR filers• However, significantly more non-EDGAR filer XBRL service providers and

software vendors appear on the market

Auditing and Consulting in XBRL

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Investors’ perspective on XBRL(users of financial information)

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What could XBRL be used for?

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Footnotes are very important

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How often do you use numerical data ONLY found in a company’s footnotes?

Source: “An Evaluation of the Current State and Future of XBRL and Interactive Data for Investors and Analysts”Columbia Business School, Centre for Excellence in Accounting and Security Analysis, December 2012

Timeliness of the financial data

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Sum = At least 50%

How quickly after its issuance do you require SEC-mandated financial info?

Source: “An Evaluation of the Current State and Future of XBRL and Interactive Data for Investors and Analysts”Columbia Business School, Centre for Excellence in Accounting and Security Analysis, December 2012

Broader analyst coverage

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Source: “Transforming business reporting”, Presentation by XBRL International Inc.

Awareness about XBRL (US)

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Source: “An Evaluation of the Current State and Future of XBRL and Interactive Data for Investors and Analysts”Columbia Business School, Centre for Excellence in Accounting and Security Analysis, December 2012

Awareness to XBRL (Global)

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Source: “CFA Institute Member Survey: XBRL”, CFA Institute Market Intelligence, December 2011

Use of XBRL (Global)

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Source: “CFA Institute Member Survey: XBRL”, CFA Institute Market Intelligence, December 2011

Reasons for not using XBRL yet

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Source: “An Evaluation of the Current State and Future of XBRL and Interactive Data for Investors and Analysts”Columbia Business School, Centre for Excellence in Accounting and Security Analysis, December 2012

Universities’ perspective on XBRL(Research and Education)

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Academic projects (globally)

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Last updated in 2010

XBRL in classroom: Kennesaw State University

XBRL at Waterloo

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Conclusion: this is the time!

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Source: “Review of 2013 US GAAP Financial Reporting Taxonomy (UGT)” by J. Louis Matherne,Financial Accounting Standards Board, January 16, 2013

Useful Resources• http://xbrl.squarespace.com/ – website of the father of XBRL

(Charles Hoffman) that contains learning materials

• http://xbrl.org/ – XBRL International (key resource for information, news, events, etc.)

• http://www.sec.gov/edgar/searchedgar/webusers.htm – new website of SEC for Interactive Data

• http://xbrlwiki.info – Wiki type of resource about XBRL

• http://www.eurofiling.info/ – XBRL in Europe

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