Financial Reporting in the XBRL Age:

A Step-by-Step XBRL Implementation

Executive Report October 2005


Financial Reporting in the XBRL Age:
A Step-by-Step XBRL Implementation


TABLE OF CONTENTS



Purpose and Introduction 2

XBRLs Adoption Evolution 3

External Reporting and XBRL 4

Internal Reporting and XBRL 7

Taking XBRL to the Next Level 8

Whats in a Number? The Specifics of XBRL 8
An XBRL Item 9
XBRL Financial Reporting Taxonomies Architecture 10

An XBRL Implementation; Step by Step Project Plan 12
Step 1-Identify a Team: Accountant and XML Developer 13
Step 2-Assess Scope of Reporting and Determine Taxonomy 13
Step 3-Compare and Map 10-K/10-Q to Taxonomies 14
Step 4-Extend the Taxonomy as Necessary 15
Step 5-Create an Instance Document and Validate Calculations 16
Step 6-Review and Validate Instance Document 16
Step 7-Publish the Instance Documents and Taxonomy 17

Conclusion 18

About the Authors, CFIT and FERF 19


2
Executive Report October 2005


Financial Reporting in the XBRL Age:
A Step-by-Step XBRL Implementation


Purpose
The purpose of this paper is to explain how the
eXtensible Business Reporting Language (XBRL) can be
used to improve internal and external financial reporting
and where XBRL is in its adoption evolution. To move
XBRL to broad adoption, participation and input from
finance executives in every part of the financial reporting
chain and every industry is required. For financial
statement preparers, one way to participate is through
the Securities and Exchange Commissions (SEC)
voluntary XBRL filing program. This report concludes
with a step-by-step approach for first-time
implementation of the SECs program.


Introduction

I used to think that cyberspace was 50 years away. What I thought was 50 years
away, was only 10 years away. And what I thought was 10 years away... it was
already here. I just wasn't aware of it yet.

Bruce Sterling, science fiction author


Just as cyberspace crept up on Mr. Sterling, eXtensible Business Reporting
Language (XBRL) is creeping up on the world of finance. It is not 10 years away.
Instead, it has arrived, unbeknownst to many financial executives, and it will
change the way financial information is reported in the U.S. and around the
world. Because XBRL is still in the early adoption phase, financial executives
have the chance to shape the future by participating in XBRLs development
now.

XBRL is not technology, but a set of standards, called taxonomies, built using the
eXtensible Markup Language (XML). Like accounting standards that direct
financial executives how to account for and report business transactions and
financial information, XBRL directs executives how to report financial information
in the electronic age so that all constituents accessing the data understand the
information they are getting. It does not replace or affect the system of
accounting standards, it enables computer translation of financial information that
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can be interpreted by any XBRL enabled user, essentially bar coding for
financial information.

Financial executives face constant pressure to build a finance function that adds
value by providing meaningful information to enable good business decisions. To
accomplish this goal, finance personnel must spend less time keying data and
more time analyzing it. Most financial analysis still uses spreadsheet programs
into which the relevant financial information must be keyed. XBRL has the
potential to make re-keying of data an activity of the past.

In addition to internal reporting pressures, external reporting pressures have
been at the top of the agenda over the last several years. Legislation like the
Sarbanes-Oxley Act of 2002 and other laws aimed at eliminating conflicts of
interest in the investment analyst industry, are forcing companies to change how
and what they report to investors.

With regulatory and internal pressures forcing changes to the existing financial
reporting models, XBRL is emerging as an answer in the U.S. and around the
globe. XBRL is a collaborative standard that requires input from industries and
users of financial statements. Participation in the SECs voluntary filing program
is a possible introduction for those not familiar with the standard and provides the
opportunity to use and improve the standards.

For those executives willing to commit time to XBRL, the impact to business
reporting improvements could be great. External and internal reporting with
XBRL allows for easier access by a wider range of stakeholders. Participation in
XBRL today affords the rare opportunity to shape the future by working with
software vendors, XBRL International, the consortium of approximately 300
companies and agencies worldwide that develop the standards, analysts and
other stakeholders who are actively involved in the next stage in XBRL
development.

XBRLs Adoption Evolution
In spite of attempts over the last several years to educate the financial
community, according to a 2005 survey by Computer Sciences Corporation and
Financial Executives Research Foundation, over 70% of financial executives
have little or no knowledge about the standard. Like any new standard or
technology, XBRL must pass through the various stages of an adoption curve.
The first stage is characterized by small groups of users defined as enthusiasts
and visionaries. Critical mass is achieved in the next stage, characterized by
users defined as pragmatists.
1


XBRL is still in the early stages of the adoption curve. XBRL International, the
consortium that develops the standards, began work in 1998 and continues today
to expand the standards and taxonomies to meet the needs of businesses

1
Crossing the Chasm by Geoffrey A. Moore 1991
4
worldwide. The U.S. jurisdiction of XBRL, with over 300 organization members,
including Financial Executives International (FEI) and the American Institute of
Certified Public Accountants (AICPA), has released approved standards that can
be used by over 90% of US companies. Software companies are developing
progressively better XBRL products and are integrating XBRL into existing
products, but many current programs lack the ease of use necessary to bring
XBRL into mainstream adoption. Several key events over the past few years
have provided the impetus to bring XBRL alongthe enactment of the Sarbanes-
Oxley Act of 2002 and the shakeup in the investment analyst industry that is
changing how and which companies are analyzed for investors.


External Reporting and XBRL
Many investors consider investment analyst coverage essential for making
informed decisions regarding their portfolio, but the analyst industry has
undergone significant changes in the past several years. In 2002, the SEC and
the New York Attorney General began separate proceedings to eliminate
conflicts of interest in the investment analyst industry. The results have created
significant changes in the way analysis is performed, and has added to the cost
of producing it. Two cost reduction measures taken by the industry were
expanded use of data aggregators for data collection and a reduction in the
number of companies covered.

Data aggregators, an industry developed around the re-keying of public company
financial information and making the data available to third party users, have a
significant impact on the financial reporting chain, which begins with the company
and ends with the investor. The company's financial executives prepare and
submit quarterly and annual financial reports, and other regulatory disclosures, to
the SEC. Once submitted, the SEC makes the information publicly available. The
available information is obtained by data aggregators that tag data according to
their own standards, and then sell the data to investment analysts. Investment
analysts prepare their reports with this data and then provide the reports to
investors.

Data aggregators use a software program called a parsing tool that automatically
tags financial information based upon parameters set up in the software. For
standard items, parsing tools provide efficient and effective information.
However, for non-standard items-- which are often critical to how investors view a
companys resultsthe data aggregator must decide on classification. Their
classifications may not represent what the company had originally intended by
providing the detail.

With XBRL, the role of data aggregators may be affected because information
received and stored by the SEC and provided to other sources is tagged by the
company. If the analyst is using an-XBRL enabled software program, they can
5
receive tagged data from the companys filings with the SEC and analyze as
needed.

Another key piece of the puzzle that is often missed using aggregator information
is the detailed footnote information." The average parsing tool used by
aggregators has about 300 standard elements, while the average set of financial
statements and notes has about 3,000," said Mike Willis, Partner with
PricewaterhouseCoopers LLC.

With XBRL, while one company may classify items differently than another
company, an analyst can easily compare the two based on common tagging. For
example, work in process inventory may be on the face of the balance sheet, or
disclosed in the footnotes, depending on the company. Using XBRL, it would be
tagged as work in process inventory, regardless of where it is reported. XBRL
creates more consistency among users of financial information, no matter where
they retrieve their data.

For financial executives at small and medium sized public entities (SMEs), the
current external reporting structure creates other problems. Instead of having a
message delivered to investors, coverage may currently be nonexistent. Cost
cutting measures in the industry have reduced the number of companies covered
by some Wall Street firms as much as 18% from 2000 to 2003. Small business
executives argue that no coverage, translates into a permanent discount on the
stock price. Many analysts agree with this negative outcome.

The number of companies under (investment analyst) coverage shrunk as an
unintended consequence of the Global Research Settlement between the New
York Attorney General, the SEC, and some eleven investment banks.
2
The
smaller public companies with less liquidity were the worst hit in the almost
immediate reduction of coverage, a kind of investment class cleansing, creating
hundreds, if not thousands, of research orphans, writes Gayle Essary,
managing director of Investrend Research, in a 2005 comment letter to the SEC.

Dwindling coverage by Wall Street firms in 2003 versus 2000 is captured in
Figure 1:


2
On April 28, 2003, the Securities and Exchange Commission (SEC), the National Association of
Securities Dealers (NASD), the New York Stock Exchange (NYSE), New York State Attorney
General Eliot Spitzer and other state regulators announced a final $1.4 billion settlement
agreement reached with 10 Wall Street firms in their investigation into Wall Street conflicts of
interest. Along with the monetary settlement, the firms agreed to make significant structural
changes designed to insulate their research departments from their investment banking
departments.

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Figure 1. Coverage Shrinks on Wall Street

Public Companies Covered

Firm 2000 2003
Merrill Lynch 3,500 2,469
CSFB 3,077 2,373
Smith Barney 3,000 2,300
J.P. Morgan Chase 2,400 2,260
Goldman Sachs 2,315 1,950
Morgan Stanley 2,150 1,925
Lehman Brothers 1,650 1,605

Source: The Wall Street Journal

Such research orphans often believe that their stock price is undervalued
according to their financial executives. If you talk to CEOs at most small
companies, they invariably claim their companys stock price has a sort of
permanent discount due to lack of analyst coverage. Most small companies,
even more than they want a higher stock price, want more liquidity in their stock,
says David Harper, editor-in-chief of the monthly newsletter Investopedia Advisor
and investment analyst for Harbinger Research.

The process of research is expensive though. Prior to the Global Research
Settlement, the standard practice was investment banks, by far the largest
employer of investment analysts, bundled research with profitable services like
underwriting and trading. Now that the bundled model is no longer acceptable,
the business community is trying to figure out who will pay for pricey research
services, the company or the investor. The dilemma is lessened by XBRL
because the technology makes the process of analyzing financial information
more accurate, more efficient and less expensive.

Turning to the Small Market Enterprise space of inefficient exchanges like Over-
the-Counter (OTC) Bulletin Board (BB), I believe the (XBRL) cost savings for
analysts that venture into this arena would be immense. For example, the
Microsoft Office Tool for XBRL Prototype is a demonstration of how you can
easily create or analyze XBRL documents directly from within Microsoft Office
Excel 2003. For investment analysts, this prototype is a useful tool to quickly
analyze data without the need to reenter or manipulate data, explains Kipley J.
Lytel, Senior Partner with Montecito Capital Management, a Santa Barbara, CA
based financial management firm, and senior analyst for Investrend Research.

Mr. Harper explains, When I write-up a company report, crunching numbers and
generating graphs occupies at least 50% of my time. What is so compelling
about XBRL is that it can automate, in real-time, much of that number crunching.
Therefore, I expect to reduce the time it takes to analyze a company by about
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50% just by using XBRL-enabled tools. And that is before we talk about some of
the long-term potential to add value with the automatic error-checking and quasi-
intelligence.
Internal Reporting and XBRL
While external transparency of financial information is valuable to many, there is
also significant potential to use XBRL internally. XBRL can become a valuable
element in complying with the Sarbanes-Oxley Act-specifically, management
assessment of internal controls (Section 404) and real-time reporting
requirements of Section 409, says Mr. Lytel.

Companies are spending a large amount of money to certify the effectiveness of
their internal controls and have begun looking for efficiencies that will provide
increased assurance at a lower cost. The next generation of internal control tools
will easily connect through XBRL into the business and financial systems of a
company, creating an ability to monitor the effectiveness of internal controls
through tight linkage of the control system to the business/accounting systems.




Figure 2. The future of integration across business and accounting systems.

An example of how XBRL can seamlessly incorporate the control system with the
financial system is when a particular control is over-ridden. An approval or
notification can be routed to the appropriate manager or executive. If a control
activity has deficiencies that need correction or additional controls to mitigate
8
risk, the tracking and linkage of the issue from identification through resolution
can be easily reported. Companies can also tightly link policies and procedures
to their control activities.

With XBRL, software developers can build tools that can be installed into a wide
variety of systems, without the need to customize the interface to the company.
Installation may require custom configuration based on how a company will want
to deploy its internal control systems, however, that would likely be at a much
lower cost. Additionally, because XBRL is an external standard that supports
financial reporting based on U.S. generally accepted accounting principles
(GAAP) and International Financial Reporting Standards (IFRS), companies will
have the ability to respond to rapid changes in regulatory reporting requirements.

The ability to consolidate acquisitions and integrate business systems has
historically been challenging due to differences in data and account structures.
XBRL has the potential to significantly reduce the time and effort required to
integrate new acquisitions if both companies are using the standard. Integration
would simply be a matter of consistently classifying the already tagged
information. There would be little need for a large information gathering and
consolidation effort that exists with acquisitions today.

Taking XBRL to the Next Level
The benefits of XBRL for financial reporting, as have been described, are likely
the tip of the iceberg. The XBRL financial reporting structure will be more fluid
and have fewer opportunities for error, reduce the costs of preparation and
enable quicker reporting. To achieve the XBRL model requires participation by
financial executives from all areas including, preparers, analysts, auditors and
regulators.

New products using XBRL have been introduced that make the analysts and
auditors job much less labor intensive and less dependent on data aggregators.
Developing a spreadsheet to model financial information is as easy as inputting
the desired companys ticker symbol. For regulators who receive financial
information in an XBRL format, standards tests, like checking bank capital
requirements, can be performed in seconds upon receipt of the data from the
bank.

For preparers in public companies, one way to participate in using XBRL is
through the SECs voluntary XBRL filing program. The remainder of this report is
dedicated to educating the reader on the specifics of XBRL and providing an
implementation plan for participation in the SECs program.

Whats in a Number? The Specifics of XBRL
XBRL is a specific schema for financial reporting based on XML that enables
software to understand the content of financial reporting, the what (for example,
9
the rows line item description, number or value and columns, the period or
duration contexts) when a financial statement is submitted.

Today when analysts want to get at the data, they interpret the line items and re-
key the data. XBRL allows each of the line items, their values and the specific
columnar definitions to be represented as XML data so that software can easily
analyze. This is accomplished through the effort of tagging a document with
XBRL tags.

An XBRL Item-
For financial reporting, the atomic level of reporting is an element, whereby each
element has a single relationship to an accounting concept. In XBRL, that
element is represented by an XBRL item.



Labels For every concept within the XBRL taxonomy, there are unique
standard labels. An example of a standard label is Contingencies-Litigation.

References References are the link to authoritative literature supporting the
concept and related accounting reference where it is defined. For example, the
reference for Contingencies-Litigation is
FASB Statement of Financial Accounting Standard (FAS) 5,
http://www.fasb.org/pdf/fas5.pdf, 2004-08-01

Presentation

Presentation
Comptant et Comptant
Equivalents
Validation
Standardization
Calculation
Cash = Currency +
Deposits

Formulas
Cash 0
Contexts
US $
FY2004
Budgeted
Label
cashCashEquivalentsAn
dShortTermInvestments
References
GAAP I.2.(a)
Instructions
Ad Hoc disclosures
Presentation
Cash & Cash Equivalents
XBRL
Item
XBRL
Item
10
Presentation Presentation is the order of elements, which makes it easy for
users to find specific content within the XBRL taxonomy.

Calculation The calculation defines how an element relates to another element
in terms of calculations. (I.e. Net Revenue less Cost of Goods Sold equals Gross
Margin).

Context or Definition Indicates for each element whether it is a special case of
some other defined concept.

Formulas Formula supports company-specific calculations or business rules.

XBRL Financial Reporting Taxonomies Architecture-
In order for XBRL to span the breadth of industries and financial reporting needs
of U.S. business, a working group in the U.S. jurisdiction of XBRL International,
called the Domain Working Group, has focused on representing U.S. GAAP in
XBRL taxonomies. To provide guidance to users for building valid taxonomies
and extensions, that group also authored the Financial Reporting Taxonomies
Architecture (FRTA). The result of these combined efforts was a categorized set
of taxonomies that, used in combination, express complete financial reports of
both public and private companies across many industry sectors.

There are three categorizations of taxonomies in the framework:
Stand Alone Add-ons. The stand alone add-ons are optional taxonomies
that can be used by preparers to include in tagged financial statement
filings. Common terms are foundational building blocks that enable
industry specific taxonomies. These taxonomies include elements that are
common, which ease maintenance and enable comparability across
similar industries.
Industry-specific. Industry specific taxonomies include the specialized
concepts associated with a specific industry. Companies filing their
financial statements in XBRL will select an industry specific taxonomy as a
starting point, prior to any company specific extensions.
Company Extensions. These are elements specific to a company not
found in the stand alone or industry specific taxonomies.


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Common
Taxonomies for
Financial
Reporting
Industry Specific
Taxonomies
Company
Specific
Taxonomies
Industry
Specific
Management
Report
(usfr-ar)
SEC Certification
(usfr-sec-cert)
Accountants
Report
(usfr-ar)
MD&A
(usfr-mda)
Company
Extensions
Commercial &
Industrial
(us-gaap-ci)
Primary Terms
(usfr pt)
Instance
Document
Global Common
Document
(int-gcd)
Stand Alone
Add-ons
Common Terms

Figure 3. XBRL taxonomies: A collection of extensible, modularized taxonomies.

The output of tagging a companys financial statements in XBRL is an instance
document, an XML file type. An instance document is readable by software
programs; they require access to the taxonomies used above. In fact, the
instance document declares the Internet or Web locations (references) where the
program can access the specific taxonomies used in the instance document.
Therefore, a company filing in XBRL will need to make available their specific
taxonomies if modified or extended.

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An XBRL Implementation; Step-by- Step Project Plan

The SECs final rule XBRL Voluntary Financial Reporting Program on the
EDGAR System (http://www.sec.gov/rules/final/33-8529.htm) was effective on
March 16, 2005. For those who decide to begin working with XBRL, participation
in the SECs Voluntary Filing Program is a natural starting point. Below is a
flowchart that outlines all of the steps necessary for an initial implementation.

13


Step 1- Identify a team: Accountant and XML Developer
Two functional skill sets are required to begin the project:
An accountant who is proficient in supporting technical accounting
requirements to:
o Match GAAP concepts used in the financial statements to
supporting elements in the XBRL taxonomy,
o Identify gaps in financial statements and define new elements if
necessary,
o Assist in quality assurance process to ensure correct tags are
applied to financial statement data.
A developer with a good working understanding of XML to:
o Evaluate, install and test appropriate XBRL tools, to tag the
financial statements and to produce a file called the instance
document,
o Create company-specific taxonomy extensions,
o Ensure that valid XML and XBRL are created, including
identification of predictable errors. An example of a predictable
error is a calculation error based on differences in a companys
financial statements and those expected in the XBRL taxonomy.
Step 2- Assess Scope of Reporting and Determine Taxonomy
The SECs final rule allows for latitude in the level of detail a company can decide
to provide in XBRL. The first decision a project team must make is which SEC
form to initiate their participation in the filing program (10-Q, 10-K, etc.).
Obviously, the form must coincide with project timing. Once the form is decided,
the team must assess and determine the level of detail to tag and furnish with
filed financial statements. With the recent specification, there are taxonomies
available for filing the financial statements, the SEC certification, the
management report, the accountants report and the Management Discussion
and Analysis.

The SEC requires filers to use the appropriate version of a standard taxonomy,
supplemented with extension taxonomies as specified by the EDGAR Filer
Manual. Currently, there are four extension taxonomies in the EDGAR Filer
Manual including,
Commercial and Industrial
Banking and Savings Institutions
Insurance
Investment Companies.

However, the Commercial and Industrial Taxonomy (GAAP C&I) will cover a
majority of U.S. public companies. Some companies may not be able to
participate in the voluntary filing program due to lack of specialized taxonomies
required for their respective industries (Oil & Gas, for example).
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Registrants choosing to file in XBRL are still required to submit their filing in
ASCII or HTML. The XBRL filing does not replace the current filing method.
Volunteers can choose to file only a portion of their filing in XBRL according to
the SEC rules on Mandatory Content and Optional Content. The following is an
excerpt from the SEC ruling:

Mandatory Content consists of a complete set of information for all periods presented
in the corresponding official EDGAR filing from one or more of the following
categories (as filed in the corresponding official EDGAR filing):
the complete set of financial statements (the only exceptions are that notes to
the financial statements and schedules related to the financial statements
may be omitted unless the volunteer is a registered management investment
company, in which case it must include Schedule I Investments in
Securities of Unaffiliated Issuers);
earnings information set forth in Form 6-K or Items 2.02 or 8.01 of Form 8-K
(whether contained in the body of the Form 8-K or Form 6-K or in an exhibit,
and whether filed or furnished); or
financial highlights or condensed financial information (if the volunteer is a
registered management investment company).

Optional Content can consist only of a complete set of information that is:
for all periods presented in the corresponding official EDGAR filing;
related to financial information in the corresponding official EDGAR filing that
is simultaneously submitted as Mandatory Content; and
from one or more of the following categories (as filed in the corresponding
official EDGAR filing):
o audit opinions;
o interim review reports;
o reports of management on the financial statements;
o certifications; or
o Managements Discussion and Analysis of Financial Condition and
Results of Operations (MD&A), Managements Discussion and
Analysis or Plan of Operation, Operating and Financial Review and
Prospects or Managements Discussion of Fund Performance
(MDFP).
Step 3- Compare and Map 10-K/10-Q to Taxonomies
The project team will review the original filing item-by-item, starting with the
financial statements and then working through notes and managements
discussion and analysis. The project team can use the presentation taxonomy
in the industry taxonomy most closely aligned with their company. The
organization of the presentation taxonomy is most familiar to financial executives
because it is organized by financial statement line. The presentation taxonomy
for commercial and industrial business is located at: www.xbrl.org/. A taxonomy
editing tool or an instance document authoring tool are both appropriate for
completing this step.

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Carefully document which XBRL elements refer to which line items, noting
exceptions, gaps, and questions. Assessing the content of the XBRL taxonomy,
such as US GAAP C&I requires reviewing all elements in the taxonomy, how the
presentation language reads, calculations, and definitions, including the
authoritative references. Assessing, mapping and identifying gaps are
prerequisite activities to extending the primary taxonomies.
Step 4- Extend the Taxonomy As Necessary
Once you have compared your 10-K or 10-Q to the presentation taxonomy and
have determined that the taxonomy does need to be extended, a software
program to extend the taxonomies is required. While the taxonomy can be edited
and extended using a number of XML editing tools, we recommend using an
evaluation copy of an available XBRL-specific tool to determine which are most
usable and best fit your needs. Currently, there are a number of software choices
that have varying degrees of functionality and ability to extend taxonomies.

Some questions to consider:
Does the presentation of the XBRL element match what my company calls
the item?
If not, does this require just a modification of the label or is this a new
item? Here is where the technical accountant must recognize how the
company reports and map to XBRL element.
Do my notes and MD&A require extensions to the taxonomies?
What parts of my financial reporting require additional context definitions
(see Creating an Instance Document below)? For example, using
segments as part of contexts requires creating the specific extensions to
describe your companies segments (business units, products, and so
forth).
To what extent does a new element require calculation modifications?

Step 5- Create an Instance Document and Validate Calculations
Creating an instance document requires authoring software, a tool that allows
the user to either associate relevant data to the specific taxonomy elements used
in the companys financial statements, or one that allows you to mark-up or tag
another file format (such as Microsoft Word or Excel) with XBRL taxonomy
elements. The latter focuses on the user scenario in which the primary financial
statements are authored or assembled in Word or Excel.

For many companies, working in Word and Excel likely matches the business
process of internal and external reporting. Both application types should include
the feature of exporting the financial reporting data to XML the specific
organization and structure to the XML document is the instance document.

Other considerations on software selection include:
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Does the software have adequate, good or superb documentation? Does
the documentation describe not only the functionality but also how to
create an instance document step-by-step?
What kinds of support does the software vendor have? Can you easily find
a list of known issues? Has the vendor documented common
troubleshooting steps?
Software integration: Does the software install and uninstall seamlessly?
Does the application cause any other performance issues or other
degrading effects on your computer or with other software?
What kind of pre-installation components or other software does the
application require? Are these publicly available, and allowed in your
desktop environment?
Step 6-Review and Validate Instance Document
A few software vendors specializing in XBRL have developed instance document
validation tools which are useful in conjunction with your instance document to
validate the XML and XBRL structure. As part of the project of authoring an
instance document for your companys 10-Q or 10-K, identify several milestones
to validate the tagging process and output, such as testing a few items, finishing
the income statements, or combining two or more statements. After completing
the instance document you should conduct a process of validation, followed by
quality assurance review prior to publishing.

Validation ensures that taxonomies are accessible and that software can find
them. Validation tools also perform other routines to check that:
Elements are fully defined, including calculations, definitions, and so forth,
GAAP expected calculations resolve or ensure: the balance sheet
balances, the income statement ties to the balance sheet and the cash
flow agree for each specific item that can be reconciled to the balance
sheet,
Any company-specific extensions that involve calculations are also
resolved,
The XBRL instance document is well formed. For example, the instance
document specification does not allow an element + context combination
more than once: each must be unique. (In the example above, this forces
the design of various contexts to describe revenue.)

XBRL International created the Financial Reporting Instance Specification (FRIS)
so that software application vendors can implement validation routines for
authoring instance documents. As a user, you do not need to review the FRIS,
however, the accountant working along side the IT resource will potentially need
to address validation errors.

A few things to consider:
The SEC has modified the EDGAR system to accept native XML and XSD
(XML schema) files; however these must contain only ASCII text.
17
If you work with a financial publisher, they will likely use a Uuencode tool
to transform the files and its characters.
Because instance document authoring applications are relatively new, in
the scenario of tagging Word files, rich text must be converted to ASCII
text, and sometimes the XML output will convert seemingly simple
characters to HTML. For example, & becomes & and may look like
gibberish.
Because the industry lacks tools to easily render the XML in an instance
doc back into a Microsoft Word document, you may want to edit the XBRL
body text in notes and MD&A, removing the HTML.
XML editors still recognize non-ASCII characters such as non-breaking
white spaces, em-dashes (the longer form of a dash) and these will be
rejected by the EDGAR system.
These considerations apply to XBRL taxonomy editing tools as well, as
the submission process includes company-specific taxonomies.

After technical validation of the instance document, a quality assurance review is
necessary to ensure that the XBRL element, the context definitions, and the
tagging correctly describe the financial data. The quality assurance process
today will require reading through the instance document in XML. Once
completed and all parties have signed off on the document, publication is the
next and final step.

Step 7-Publish the Instance Documents & Taxonomy
In the SECs voluntary program, instance documents are furnished along with the
taxonomies and necessary files to complete a schema. The same effort will be
required to publish on a company Website to ensure that all information furnished
to the SEC is also available to shareholders. Submitting XBRL versions of a 10-K
or 10-Q does not need to take place simultaneously with the financial statement
filings. The final rule establishing the voluntary program states:

The XBRL-Related Documents may be submitted at the same time as the
official EDGAR filing to which they relate, either as an exhibit to the official
filing or, for operating companies, as an exhibit to a Form 8-K or Form 6-
K47 filed simultaneously. Alternatively, the XBRL-Related Documents may
be filed subsequent to the official EDGAR filing to which they relate, either
in a later amendment to the official filing or, for operating companies, as
an exhibit on Form 8-K or Form 6-K. Volunteers will not be permitted to
submit the XBRL-Related Documents before they file the related official
document. Although the amendments do not establish a deadline for
submitting or amending XBRL data, volunteers are encouraged to submit
the XBRL-Related Documents with the official document or shortly after
the official document are filed. Volunteers will be free to submit their XBRL
exhibits regularly or from time to time and can stop or start as they
choose. If a volunteer amends the XBRL-Related Documents it submitted
18
earlier, it should amend the filing to which the XBRL-Related Documents
are attached as an exhibit.

For more details on the XBRL submission process, you should refer to the
EDGAR filing manual, Appendix L
(http://www.sec.gov/info/edgar/edmanuals810.htm). If you work with a financial
publisher, then they will need this reference.

Conclusion
Support for XBRL continues to grow nationally and internationally. Projects like
the SECs Voluntary Filing program and the Federal Deposit Insurance
Corporations (FDIC) project to use XBRL for bank call report filings, due for
launch on October 1, 2005, have led U.S. financial executives to take notice and
get involved. Executives abroad face the same pressure as government
agencies jump onto the bandwagon. In the United Kingdom, plans were
announced to enable filing of Corporation Tax using XBRL in 2006. Japan's
Financial Services Agency also said it will introduce the use of XBRL for financial
statements by fiscal 2008.
3


A unique opportunity is available for financial executives who want to take part in
shaping XBRL. By understanding and implementing XBRL today, participants
provide valuable feedback to XBRL International for building the standards, as
well as to software vendors for developing products that make implementation
more efficient. Today we are on the verge of a new era in financial reporting that
will make the process more efficient.


3
Latest News About XBRL, XBRL.org
19
About the Authors
This report was authored by Taylor Hawes and Tiffany McCann. Mr. Hawes is chair of
FEIs Committee on Finance and Information Technology (CFIT), and Controller-Global
Platforms & Operations at Microsoft Corporation. Ms. McCann is a freelance writer who
follows emerging technologies in finance and accounting.
The authors would like to thank CFIT & Michael Ohata, Director of Reporting Standards
at Microsoft Corporation, for their review and input.

About FEIs Committee on Finance and Information Technology
FEIs Committee on Finance and Information Technology (CFIT) addresses the
needs and interests of financial executives in the area of e-business technology and
information management. This includes, but is not limited to, the development and
application of information technology, systems and other methodologies affecting the
management of business functions and interactions with customers, suppliers, and
investors. The general function of CFIT encompasses research, studies or surveys, the
annual FEI Technology Forum and the dissemination of knowledge.
CFIT monitors information, trends, and developments from the perspective of the
financial executive as: a member of management interested in the use of information for
performance analysis and decision support and for e-business; the provider auditor for
controls, security and reliability of information; and the administrator responsible for
providing, processing and disseminating information.
CFIT has the responsibility to: represent the views, attitudes and opinions of the
FEI membership; maintain high standards of professional integrity and technical
competence; and inform and stimulate the membership interests in the use and
management of technology in finance and business functions.

About Financial Executives Research Foundation, Inc.
Financial Executives Research Foundation, Inc. (FERF) is the non-profit 501(c)(3)
research affiliate of FEI. FERF researchers identify key financial issues and develop impartial,
timely research reports for FEI members and non- members alike, in a variety of publication
formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and
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The views set forth in this publication are those of the author and do not necessarily
represent those of the FERF Board as a whole, individual trustees, employees, or the members
of the Research Advisory Council. FERF shall be held harmless against any claims, demands,
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liabilities as may result solely from misconduct or improper performance by the FERF or any of its
representatives.
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