The Financial The Financial Accounting Accounting FoundationFoundation

Advancing Financial Reporting

Interactive Data and Interactive Data and XBRLXBRL

A Revolutionary A Revolutionary Opportunity for Opportunity for

Financial Reporting and Financial Reporting and the Capital the Capital

MarketsMarkets

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FAF Overview FAF Overview

Non-stock, Delaware corporationNon-stock, Delaware corporation Incorporated in 1972Incorporated in 1972 IRC Section 501(c)(3) Status IRC Section 501(c)(3) Status Operating exclusively for Operating exclusively for

educational purposes educational purposes Located in Norwalk, CTLocated in Norwalk, CT

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FAF PurposesFAF Purposes

Establish and improve financial Establish and improve financial accounting and reporting standardsaccounting and reporting standards

Educate constituents as to standardsEducate constituents as to standards Responsible for oversight, Responsible for oversight,

administration, and finances of administration, and finances of Standards Boards and Advisory Standards Boards and Advisory CouncilsCouncils

Protect independence and integrity of Protect independence and integrity of standard-setting processstandard-setting process

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FAF Organizational FAF Organizational Structure Structure

Comprised of four groupsComprised of four groups Two Standard-Setting Boards Two Standard-Setting Boards

The Governmental Accounting Standards The Governmental Accounting Standards BoardBoard

The Financial Accounting Standards The Financial Accounting Standards BoardBoard

Two Advisory Councils Two Advisory Councils Governmental Accounting Standards Governmental Accounting Standards

Advisory CouncilAdvisory Council Financial Accounting Standards Advisory Financial Accounting Standards Advisory

CouncilCouncil

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Standard-Setting BoardsStandard-Setting Boards FAFFAF has delegated all powers and authority has delegated all powers and authority

of the Foundation to set standards of of the Foundation to set standards of financial accounting and reporting to its financial accounting and reporting to its BoardsBoards GASBGASB

Established by FAF in 1984 Established by FAF in 1984 Sets standards for state and local Sets standards for state and local

governmental units governmental units FASBFASB

Established by FAF in 1973 Established by FAF in 1973 Sets standards for public, private, and Sets standards for public, private, and

not-for-profit enterprisesnot-for-profit enterprises

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Advisory CouncilsAdvisory Councils Comprised of Constituents Comprised of Constituents GASAC/FASAC interact with the Boards GASAC/FASAC interact with the Boards

onon Technical issues on the Boards Technical issues on the Boards

agendasagendas Project prioritiesProject priorities Matters likely to require attentionMatters likely to require attention Selection and organization of task Selection and organization of task

forcesforces

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Constituents Constituents InvestorsInvestors CreditorsCreditors PreparersPreparers Suppliers of financial informationSuppliers of financial information Reporting entitiesReporting entities CPAsCPAs Taxpayers Taxpayers DonorsDonors The public The public

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Constituent Involvement Constituent Involvement

FASACFASAC GASACGASAC User Advisory User Advisory

Council Council Small Business Small Business

Advisory CommitteeAdvisory Committee Emerging Issues Emerging Issues

Task Force Task Force Investor Task Force Investor Task Force Project Task ForcesProject Task Forces

IASBIASB SECSEC PCAOBPCAOB Bank RegulatorsBank Regulators Public Hearings, Public Hearings,

Roundtables Roundtables Liaison MeetingsLiaison Meetings Comment Letters Comment Letters Public Board Public Board

Meetings Meetings

Due Process Channels Include:Due Process Channels Include:

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IndependenceIndependence Constituents have many competing Constituents have many competing

interestsinterests FAF ensures independent environment that FAF ensures independent environment that

protect investors and enhances public trustprotect investors and enhances public trust Independence from political and Independence from political and

commercial influence is key to our mission commercial influence is key to our mission Since 1973, FAF has committed to protect Since 1973, FAF has committed to protect

the independence and integrity of our the independence and integrity of our financial reporting systemfinancial reporting system

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FAF Board of Trustees FAF Board of Trustees 16 Trustees with business, professional, and 16 Trustees with business, professional, and

government experience government experience 3 Government Officials3 Government Officials 3 Certified Public Accountants 3 Certified Public Accountants 2 Financial Executives2 Financial Executives 1 Investment Professional 1 Investment Professional 1 Investment Banker 1 Investment Banker 1 Accounting Educator1 Accounting Educator 5 At-Large 5 At-Large 3-year term, eligible for reappointment 3-year term, eligible for reappointment

to a second 3-year termto a second 3-year term

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FAF Nominating FAF Nominating Organizations Organizations

6 6 Financial OrganizationsFinancial Organizations nominate 8 trustees: nominate 8 trustees: American Accounting Association (1)American Accounting Association (1) AICPA (3)AICPA (3) CFA Institute (1)CFA Institute (1) Financial Executives International (1) Financial Executives International (1) Institute of Management Accountants (1)Institute of Management Accountants (1) Securities Industry Association (1)Securities Industry Association (1)

2 2 Governmental OrganizationsGovernmental Organizations elect 3 trustees elect 3 trustees Government Finance Officers AssociationGovernment Finance Officers Association National Association of State Auditors, Controllers, National Association of State Auditors, Controllers,

and Treasurersand Treasurers 5 5 At-LargeAt-Large Trustees Trustees

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FASB Codification FASB Codification

Major multi-year project Major multi-year project Purpose is to develop a Purpose is to develop a

comprehensive codification of all comprehensive codification of all existing accounting literature existing accounting literature

Easily retrievable database will be Easily retrievable database will be maintainedmaintained

Codification will be immediately Codification will be immediately updated upon issuance of new updated upon issuance of new standardsstandards

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FAF/XBRL ConnectionFAF/XBRL Connection

Mission includes the advancement of financial Mission includes the advancement of financial reportingreporting

Accurate, transparent and accessible financial Accurate, transparent and accessible financial reporting information protects investors reporting information protects investors

Oversee the FASB and GASB Oversee the FASB and GASB Established constituent relationships and Established constituent relationships and

processes processes Experience with sophisticated initiatives Experience with sophisticated initiatives

balancing timeliness and constituent input balancing timeliness and constituent input Proven leadership, capabilities, and Proven leadership, capabilities, and

organizational structure organizational structure Funding to advance financial reportingFunding to advance financial reporting

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FAF View of XBRL FAF View of XBRL Interactive data platform is essential for Interactive data platform is essential for

financial reportingfinancial reporting XBRL is the technology to enable this platform XBRL is the technology to enable this platform Financial reporting taxonomy development Financial reporting taxonomy development

will be the catalyst:will be the catalyst: Preparers do not have all the toolsPreparers do not have all the tools Software developers do not have clarity Software developers do not have clarity Investors do not know what they are missing Investors do not know what they are missing

XBRL – based financial reporting will:XBRL – based financial reporting will: Favorably impact the capital marketsFavorably impact the capital markets Become an integral part of the standard Become an integral part of the standard

setting process setting process

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FAF Role To DateFAF Role To Date

Partnered with SEC and XBRL-US to Partnered with SEC and XBRL-US to move initiative forward move initiative forward

Leveraged FAF constituency to: Leveraged FAF constituency to: Assess development efforts and directionAssess development efforts and direction Identify reasons for lack of progress Identify reasons for lack of progress

Proposed a Taxonomy Development Proposed a Taxonomy Development Model to advance financial community Model to advance financial community dialogue and commitment dialogue and commitment

Undertook a comprehensive feasibility Undertook a comprehensive feasibility study study

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FAF Taxonomy FAF Taxonomy Development ModelDevelopment Model

Financial reporting taxonomies developed Financial reporting taxonomies developed and maintained by the FAF and maintained by the FAF

Taxonomies to be financial reporting Taxonomies to be financial reporting centric and efficiently leveraged for centric and efficiently leveraged for broader application broader application

Software development approach with Software development approach with Alpha, Beta and Release PhasesAlpha, Beta and Release Phases

Constituent involvement through Advisory Constituent involvement through Advisory Council and Beta phaseCouncil and Beta phase

Secure access to Intellectual Property Secure access to Intellectual Property Secure commitments for full fundingSecure commitments for full funding

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FAF Feasibility Study FAF Feasibility Study Authorized by FAF Trustees in May Authorized by FAF Trustees in May Detailed study conducted June-OctoberDetailed study conducted June-October Collaborative effort with XBRL and other Collaborative effort with XBRL and other

constituentsconstituents Focus of study: Focus of study:

Strategic considerations Strategic considerations Organizational structure Organizational structure Operating plan Operating plan Budget and funding Budget and funding IP and other legal matters IP and other legal matters Risks and opportunities Risks and opportunities

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FAF Commitment FAF Commitment Assume leadership role in financial Assume leadership role in financial

reporting taxonomy development and reporting taxonomy development and maintenance maintenance Contracts with XBRL-USContracts with XBRL-US

$3 million in funding $3 million in funding Supplements SEC’s $5.5 million Supplements SEC’s $5.5 million

commitment commitment Fully funds financial reporting taxonomy Fully funds financial reporting taxonomy

development project development project Access to FASB financial accounting and Access to FASB financial accounting and

reporting expertise reporting expertise

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XBRL Project PhasesXBRL Project Phases Project documentationProject documentation Alpha Phase Alpha Phase

XBRL technology and accounting subject matter XBRL technology and accounting subject matter experts create and internally test Alpha taxonomiesexperts create and internally test Alpha taxonomies

Advisory Council, XBRL-US, XBRL International and Advisory Council, XBRL-US, XBRL International and SEC collaborationSEC collaboration

Completion of preliminary financial reporting Completion of preliminary financial reporting taxonomiestaxonomies

Beta PhaseBeta Phase Field TestingField Testing Investor, preparer, SEC, software developers, data Investor, preparer, SEC, software developers, data

service provider and other interested party service provider and other interested party involvement involvement

Release Phase Release Phase Taxonomies issued for public useTaxonomies issued for public use

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FAF Short Term FAF Short Term ObjectivesObjectives

Finalize definitive agreements with Finalize definitive agreements with XBRL-US XBRL-US

Identify and hire project Identify and hire project management and technical staffmanagement and technical staff

Recruit XBRL technology and Recruit XBRL technology and accounting subject matter experts accounting subject matter experts

Secure rights to and safeguard Secure rights to and safeguard existing Intellectual Property existing Intellectual Property

Implement FAF facility and Implement FAF facility and administrative supportadministrative support

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Your Role Your Role Commit XBRL technology and accounting Commit XBRL technology and accounting

subject matter expertise to the project subject matter expertise to the project Commit existing financial reporting Commit existing financial reporting

intellectual property that you control to the intellectual property that you control to the projectproject

Continue to promote XBRL-based financial Continue to promote XBRL-based financial reporting with capital market participants reporting with capital market participants

Commit to the objective of implementing Commit to the objective of implementing XBRL based financial reporting on a timely XBRL based financial reporting on a timely basis with the opportunity for continuous basis with the opportunity for continuous improvementimprovement

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Summary Summary FAF has a leadership role and responsibility FAF has a leadership role and responsibility

in financial accounting and reportingin financial accounting and reporting Protecting investors and advancing the Protecting investors and advancing the

capital markets capital markets XBRL-based financial reporting will be a XBRL-based financial reporting will be a

significant breakthrough for capital market significant breakthrough for capital market participants participants

Successful XBRL financial reporting Successful XBRL financial reporting taxonomy implementation will be a milestone taxonomy implementation will be a milestone for broader XBRL applicationfor broader XBRL application

FAF is committed to leading this FAF is committed to leading this advancement in financial reporting advancement in financial reporting