The US Securities & Exchange Commission (SEC) mandated the use of XBRL for filing quarterly and annual statements (10-K, 10-Q, 20-F, and other forms). According to research by several organizations, around 80% of the XBRL filings was prepared by a third-party. Most of these firms are so-called ‘financial printers’. However, because of the stricter requirements in the second and third year, many organizations are expected to want more control over the filing process to increase quality and to reduce risks. In this session, Deloitte will share with the audience a detailed analysis result performed on XBRL filings submitted to the SEC. The research looks into the comparability of the concepts used (and not used), in terms of the approach taken (in-house, outsourced, and in-between) and tools used. To illustrate the impact, we will further present the comparability result on some important financial ratios. Then, this session will be concluded with recommendations specifically addressed for SEC, taxonomy owners, and filers (both in-house filers or outsourced filers).

1. Comparability of SEC data
Analysis and recommendation for improvement
Bas Groenveld & Paul Hulst
Deloitte Innovation, Netherlands
19 May 2011 14:00 – 14:30
22nd XBRL International Conference, Brussels

2.  Bas Groenveld  Paul Hulst
 Deloitte XBRL team  Deloitte XBRLteam
 Involved in XBRL  Involved in XBRL
since 2005 since 2007
 Projects:  Projects:
◦ Taxonomy creation ◦ Taxonomy creation
◦ SEC Filing ◦ e-reporting architectures and
◦ Disclosure management processes
◦ Deloitte annual report in XBRL ◦ Automating instance document
creation for statutory reporting
and credit reporting
◦ Design of formulas for
validation
2
© Deloitte Innovation B.V.

3.  XBRL claims to create transparency
xbrl.org: “...Consumers of financial data, including investors,
analysts, financial institutions and regulators, can receive, find,
compare and analyse data much more rapidly and efficiently if it is
in XBRL format. ...”
 Transparency relies on two aspects of XBRL
◦ Standardisation of data exchange format (instance)
◦ Standardisation of data definitions (taxonomy)
 Today we present the results of our analyses of SEC data to
investigate "transparency“
 The SEC data is the best source available today to investigate
this.
3 © Deloitte Innovation B.V.

4.  “The mission of the U.S. Securities and Exchange Commission
is to protect investors, maintain fair, orderly, and efficient
markets, and facilitate capital formation.” (1)
An efficient market requires that investors are able to
compare companies to find the best investment.
The investors also need that data to present a comprehensive
picture of the company.
 Value of financial reporting =
comparability * comprehensiveness
4 © Deloitte Innovation B.V.

5. Period:
4.500

2009 – May 2011 4.000
Forms:
POS AM
 3.500
N-Q
10-K, 10-Q, 20-F, 40-F 3.000
S-4
 Data: 40-F
N-CSR
> 7,500 filings
2.500
20-F
~ 1,700 companies 2.000 6-K
> 4,800,000 facts 1.500
Other
8-K
485BPOS
1.000
 We estimate that the 10-K
10-Q
number of facts will rise to 500
more then 80M per year. 0
2005 2006 2007 2008 2009 2010 2011
(YTD)
Number of filings
5 © Deloitte Innovation B.V.

6. US GAAP 2009 (core + investment +dei) Total
All concepts 13,651
-/- dimensional concepts 1,947
-/- abstracts 2,155
reportable concepts 9,549
used in filings 6,282
not used in filings 3,177
6 © Deloitte Innovation B.V.

7. Number of US GAAP taxonomy extension
120000
concepts and number of extension 6282
us-gaap
concepts
23%
us gaap
Facts for US GAAP taxonomy
extension
concepts and facts for extension
concepts 77%
7 © Deloitte Innovation B.V.

8. Group Ratio %
 Current Ratio
Liquidity Current ratio 80.3
= Current assets / Current liabilities
Quick ratio 54.3
can be calculated for 80% of the Net working capital ratio 79.8
filings Current liabilities to inventory ratio 54.3
Cash ratio 79.1
 Using multiple ratio’s limits this Operating ratio 14.3
Advertising Expense to Sales Ratio 1.4
further
Marketing Expense to Sales Ratio 4.7
+ Current ratio Assets Inventory Turnover Ratio 19.9
+ Net working capital ratio Fixed Assets Turnover Ratio 2.6
+ Return on Equity Ratio Total Assets Ratio 45.8
Assets to Equity Ratio 82.4
+ Earnings per Share
Profitability Return on Assets Ratio 85.8
can be calculated for 60%. Return on Equity Ratio 78.7
Profit Margin Ratio 39.8
 Only 8%: Basic Earnings Power Ratio 23.6
Earnings per Share Ratio (1) 90.5
+ Quick ratio
Debt Total Debt Ratio 62.7
+ Total Assets Ratio Interest Coverage Ratio (2) 1.2
+ Return on Assets Ratio Debt/Equity Ratio 53.5
+ Return on Equity Ratio Market Payout Ratio 29.3
+ Debt/Equity Ratio (1) EPS is a single definition
(2) EBIT calculation
8 © Deloitte Innovation B.V.

9.  The taxonomy contains very narrowly described concepts.
Resulting in the need for additional concepts if they don’t fit
completely.
CertainLoansAcquiredInTransferAccountedForAsAvailableForSaleDebtSecuritiesAcquired
DuringPeriodContractuallyRequiredPaymentsReceivableAtAcquisition
 Allowance to define individual measures for the company.
◦ Helps the company to describe very precisely
◦ Limits comparability
AccuredLiabilityForPayoutEstimateAndOtherCostsRelatingToPreferredShareholdersWho
ExercisedTheirDissenterSRights
 Errors and misconceptions about extensions
9 © Deloitte Innovation B.V.

10. Extending a taxonomy
 Means that a filing gives a comprehensive description of a
company,
 but also means that it is more difficult to compare
companies.
 Interesting difference US – EU:
US: extensions
most European countries use a closed taxonomy with special
concepts for disclosure
10 © Deloitte Innovation B.V.

11. Higher value with
standardised digital
reporting
Maximum value
with paper-
based reporting
Increased value
Value of through comparability
Semantic
business standardisation
information
for multiple
reports Loss of
detail
Company specific Standardised
11 © Deloitte Innovation B.V.

12.  Align taxonomy design with legislation design.
 Prescribe the use of top level concepts
making the most important information comparable for all filings. Only allow extension
at lower levels.
 Model recurring extension patterns in the taxonomy
Analyse filing behaviour
 Build industry extensions
with representative bodies creating authoritative structures .
 Provide additional guidance on extensions
12 © Deloitte Innovation B.V.

13.  Preparation
◦ Understand the idea behind XBRL and extensions
◦ Look for and learn from best practices.
 Creation of filing
◦ Use tools
 that support XBRL extension and instance creation
 check for EDGAR Filer Manual rules
◦ look up official US GAAP taxonomy concepts before creating extensions.
◦ Match extensions with frequently used extensions from other companies.
 Quality control
◦ Make sure the service provider understands your business and accounting,
so the right reporting concepts are chosen and appropriate extensions
created.
◦ Gain trust on your filing by getting an assurance report.
13 © Deloitte Innovation B.V.

14.  SEC provides a unique source of data for analysis.
 The value of the XBRL financial reports can be maximised by
carefully choosing the level of extension.
 The regulator and the filer both play an important role in this.
Questions?
14 © Deloitte Innovation B.V.

15. We invite you to our booth in the exhibition hall.
 Contact us directly:
◦ Bas Groenveld, bgroenveld@deloitte.com
◦ Paul Hulst, phulst@deloitte.com
 or visit www.xbrlplus.com
 Follow us on Twitter: @xbrlplus
15 © Deloitte Innovation B.V.

16.  (1): http://www.sec.gov/about/whatwedo.shtml
16 © Deloitte Innovation B.V.