1

Liv A. WatsonDirector – Edgar Online, Inc

XBRL Liaison ChairE-Mail: Lwatson@Edgar-Online.com

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: Lwatson@Edgar-Online.com

Phone: (812) 499-8149

EDGAREDGAR ®®

NLINE NLINEOO SMSM