The Role of XBRL in Internal Reporting XBRL

The Role of XBRL in Internal Reporting: XBRL GL/XBRL FR Conceptual Overview Eric E. Cohen eric. e. cohen@us. pwc. com 11 th XBRL International Conference Boston April 27 th, 2005

XBRL GL & FR for Internal Reporting XBRL is well known as a tool to standardize financial statements, tax returns, and other publicly available or external facing documents. XBRL is also an important tool for more efficient, effective and accelerated internal reporting. From XBRL GL, the generic representation of transactional information that bridges the gap between transactions and reporting, to the use of XBRL for Financial Statements to represent common internal reports that involve summarizations and calculations not found in accounting systems, XBRL is a powerful tool for internal use as well. From transaction to summaries, XBRL meets the need.

Agenda § § § Internal reporting XBRL for internal reporting Data in internal reporting Information concepts in internal reporting Working together

Internal Reporting: Three Tracks Primarily for internal use only Edit reports Ad hoc reports Posting reports Daily cash/AR/AP Performance Preparation for external use More detailed versions of external reports * Personally identifiable information Financial Tax Segment PII*

In General § Internal Reporting is § More detailed § More frequent § More varied (less standardized) § Fewer “EDI or Die” vendor demands § Change/up-front costs of standardization without pressure from third party § But: more pressures now § Internal controls - SOx 404 § PCAOB 3, Section 5. c

Types of Internal Reporting § Operational and administrative § Management § Planning § Control § Decision making § Internal reporting drives § Procurement § Staffing and scheduling § Management and direction § Cash management § Preparation for external reporting …

Types of Internal Reporting § Preparation for § § § Financial Statutory Legal Social Environmental reporting

What Makes it Worse? § Systems are Changing § New sources § Online accounting § Disparate systems § Traditional non-integrated § Point of sale § Job cost § Branch systems § Outsourced § Payroll systems and providers § New technologies § Web services § Requirements are changing § SARBANES-OXLEY, PCAOB We have seen a return to third-party processing. From ADP in the seventies to ASPs in 2005, one business’s data is being captured on another businesses’ computer.

Old World of Electronic Data Exchange NEW WORLD

Old World BLT ASB AFT TGI FRY ECP HDL SWG DRW MFP WCP QYD SKD DLY XPS WIU XOI ZIS CUI WKD KYF WHR ASB RMO BST JIA HCO VUH KFC AJT FQA DKE GEX

New World Ser vic e Ser vice Bu s Ser vic e

XBRL for Internal Reporting § Benefits of XBRL for external purposes is obvious § § § Shared meaning, different vocabulary Standards and definitions Global consumption Machine to machine consistency Public: From A to B to C § Is internal different?

Proprietary Formats: XML Alone qbxml smbxml Intacct xml SAP Peoplesoft xml Oracle

Enter Extensible Business Reporting Language qbxml smbxml SAP Peoplesoft xml XBRL Intacct xml smbxml Intacct xml SAP Peoplesoft xml Tax Reporting § XBRL is § An international consortium of the business reporting supply chain § An agreement on the use of technology to build common user dictionaries and express business information § Dictionaries § Summarized reports § Detailed information § MORE THAN DICTIONARIES

Standards-based Data Interchange qbxml smbxml XBRL GL • XBRL FR – Views of Data qbxml • A fact • At a time or for a duration • In a unit of measure smbxml • For an entity • Under a scenario • XBRL GL – Data Intacct xml • A framework • Based on journal history SAP • Standardizing representations • Documents • Entries Peoplesoft • Parties xml • Resources • Links • Tax • and more Industry transactional XML Intacct xml SAP Peoplesoft xml Oracle

Fills the GAPS between GAAPS On e wa y Tax Regulators Investors Creditors Lende Website rs Aggregators Intra system 2 way XBRL BUSINESS REPORTING ERP Detail Suppliers X 12, G/L Packages Detail to summary CRM XBRL GL Journal Taxonomy Transaction Creation Accounting recognition/ (e-)Business • Orders classification Customers • A/P • A/R UBL, CEFACT FORUM, • Delivery XML INITIATIVES On e wa y Other 2 -way

Scope and role of XBRL Processes Business Operations XBRL GL, the External Internal Journal Financi. Taxonomy Financia al Reporti ng l Reportin g Trading Partners Management Accountants Economic Policymaki ng Financial Statements Financial Publishers and Data Aggregators Companies Participants Investme nt, Lending, Regulatio XBRL n Auditors Software Vendors Investors Regulators Central Banks

Data in Internal Reporting § § § Consolidations Data migration Archival Data transfer Audit Trail

Basic Challenge: Similar Data, But … XBRL GL provides platform for agreedupon and well defined list of concepts – Similar Data make sure my “Account” and your “Account” means the same thing (not bank Account, Amount, Date account or customer account but GL account. ) Based on XML, XBRL GL is order Different Data Dictionaries: Field names, field order independent; sharing element names for import/export means that System 1: Account. No, Amount, Date Account. Numberm Account. No, Account# and Account will all be System 2: Monetary. Amount, express Post. Date, as one. Account. Number common name; Different applications will know what to expect System 3: Posting. Date, Account#, Value inpublishing and consuming data files. Data Formats System 4: Date, Journal, Account, Amount So many external data formats; XML provides a popular and increasing supported / demanded Representations for thedata format. Different same concepts in common data field Journal: PJ, Payroll Journal, Payroll Date: 12 -31 -03, 20031231, 12/31/03 CSV ASCII WKS Once you have agreed on data field standardization, software applications require agreement on content in many cases. XBRL GL provides enumerated values to supplement XML data standards to help in this area.

XBRL GL Challenges Local Concepts of “General Ledger, ” Holds More

Internal Data Exchange AP Outsourced Travel and Expense AR GL Non-integrated point of sale IM External payroll provider Subsidiary with separate system PR

From Initial Transaction Invoice #: 10037 INVOICE May 2, 2003 Item Description Qty Extension 1078 1083 Blue Widget Cyan Widget 200 100 2, 803. 78 1, 402. 93 Sub-total: Freight: Total: 47, 592. 33 <document. Type>invoice</document. Type> <document. Number>10037</document Number> <document. Date>2003 -05 -02</document. Date>

Through ERP System Actual/Virtual t n me re u c o r dp O rce u so ut Out sou purchase orders PO sales orders AP, IM IM T d hir y art ro ay bomp employees customers PR Of f-s ite ing ful lfil lm e nt AR vendors AP GENERAL LEDGER REPORTING der AR, IM p p e-or OE items ll rced assets FA

Facilitating Web Services, Assurance Mapping 1 Spell Check Shipping Rate Check Credit Check Logistics Check Rules and Journalization Audit and monitoring tool Mapping 2

Every System as XBRL System 1 XBRL GL System 2 XBRL GL System 3 XBRL GL Account# account. Main. ID Account Number account. Main. ID Identificador de la Cuenta account. Main. ID Description account. Main. Description Account Description account. Main. Description Amount amount Entry Amount amount Post. Date posting. Date Posting Date posting. Date Descripción Principal de la Cuenta account. Main. Description Monto Monetario amount Fecha de Asignación/Ingreso posting. Date

Data and Views Report Writer Select information from database(s), including joins Acc ta a d g n ounti Report Formulas create new data fields Filter the record set Concentration: Data Fields Add headers/footers, conditionals with record groupings, derived totals based on sorts Provide visual formatting rules, like cross-tab Concentration: Information Concepts

Scope and role of XBRL Consolidation Transactional Representations Processes Business Operations Internal Financi al Reporti ng. XBRL GL External Financia l Reportin g Trading Partners Management Accountants Economic Policymaki ng FR Financial Publishers and Data Aggregators Companies Participants Investme nt, Lending, Regulatio XBRL n Auditors Software Vendors Investors Regulators Central Banks

Information Concepts in Internal Reporting § When you are working on internal versions of external reports § When your internal report rely on derived fields, totals § Aged receivables § 30, 60, 90+, other “buckets” § Combination of XBRL FR for agreed upon derived fields and totals and XBRL GL for necessary detail

Broad Spectrum of XBRL Uses External recipients Views of data Concepts Related recipients Bank, accountant, regulators Fields of data Internal recipients Data fields

XBRL GL Works With XBRL FR US IAS XBRL GL Internal Tax

Benefits of XBRL for Internal Reporting § Improves internal management § § Speed Detail Cost of abilities of applications Learn from mistakes, evaluate changes from plans early § Taxonomy - better communication from on top

Benefits of XBRL for Internal Reporting § Improves assurance § Details agreeing or reconciling to reporting § Internal auditing § External auditing

Benefits of XBRL for External Users of Internal Reporting § Improves sharing data with banks § Asset based lending § Listing of open accounts from customers § Listing of inventory § Improves sharing data with acquirers § Improves sharing data with partners

Today’s Internal … Tomorrow’s External? § How about § The same information from its source in greater detail which may be tomorrow's external reporting? § Bringing together internal groups to speak the same language? § Drill down support from external today § Possible (partial or total) replacement forms tomorrow

Tomorrow’s Control Environment “in plain English, which may include trend and qualitative information and graphic presentations” Deliver real-time XML data stream; On demand Webservices available data using secure and not-so-secure links Bring together information from various sources with all version control, security, etc.

Beyond Tomorrow: Entering New Dimensions with XBRL Triggers Documents After-the-fact Processes Promises Prospects Projections Predictive Periodic Real-time X: When assurance is delivered Y: When tests are performed Z: “Hardness” of data – later reassurance? Newer assurance on this item is available: click here

Questions? § Eric E. Cohen § Pricewaterhouse. Coopers § eric. e. cohen@us. pwc. com § (585) 271 -4070 § Find out more § www. xbrl. org § www. pwc. com/xbrl <xbrl> Eric E. Cohen eric. e. cohen@us. pwc. com

Now’s the Time for Real-time “[W]e need to move toward a dynamic model of current disclosure of unquestionably material information. ” Harvey Pitt, Pre-”E” http: //www. sec. gov/news/speech/spch 523. htm § SEC. 409. REAL TIME ISSUER DISCLOSURES § Section 13 of the Securities Exchange Act of 1934 (15 U. S. C. 78 m), as amended by this Act, is amended by adding at the end the following: § ‘‘(l) REAL TIME ISSUER DISCLOSURES. —Each issuer reporting under section 13(a) or 15(d) shall disclose to the public on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer, in plain English, which may include trend and qualitative information and graphic presentations, as the Commission determines, by rule, is necessary or useful for the protection of investors and in the public interest. ’’

Do You Remember? § From “Highlights” of Initial XFRML Steering Committee, 10/14/99 § [We] should have an initial calibration on the initial picture framework – getting different products (financial statements, etc. others along the supply chain) working together. We need to develop a schematic of the value streams and use cases along with objectives and a timeline and a concept statement. § [XFRML] should have its roots in the "Audit Supply Chain. " XFRML as technical standard for seamless process of exchange across all audit processes. § Our opportunity is to address things internationally at the level below the financial reporting level since there is more commonality at that level.