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XBRLA New Era in the Delivery of Financial Information?

A Publication Prepared by Ernst & Youngs Professional Practice Group March 7, 2008

Overview .......................................................1 XBRL Background .......................................2 SEC Initiatives .............................................2 CIFiR Proposal .............................................2 Ernst & Young Insights ..............................3 Summary.......................................................4

Overview
For several years, momentum has been building for a single electronic financial reporting standard to allow efficient retrieval and analysis of financial information. The goal of electronic financial reporting is to provide better, faster, cheaper, and more consistent financial information that will support more informed business and investing decisions.

In December 2007, an SEC funded

XBRL taxonomy for US GAAP was released for public comment.

The February 14, 2008 Progress

Report of the SEC Advisory Committee on Improvements to Financial Reporting (CIFiR) includes a proposal that the SEC ultimately require XBRL formatted financial statements in SEC filings. The CIFiR Progress Report, on which the SEC has solicited public comment, also proposes a phase-in for SEC mandated XBRL tagging. Later this year, the SEC is expected to consider proposing a rule that would mandate the use of XBRL by certain large accelerated filers, perhaps by as early as the end of 2008.

Several recent developments have heightened awareness of Interactive Data (eXtensible Business Reporting Language XBRL) as the potential electronic financial reporting standard for SEC registrants:

These developments have led to increased interest about XBRL among public companies. In this publication, we review the history and current status of XBRL, as well as its potential future in financial reporting.

XBRLA NEW ERA IN THE DELIVERY OF FINANCIAL INFORMATION

XBRL Background
Eight years ago, XBRL International (a not-for-profit consortium) began developing the XBRL standard for the electronic communication of business and financial information. Its supporters envision XBRL as the successor to current paper-based and electronic financial reporting formats. XBRL is based on XML (Extensible Markup Language), which allows for the exchange of data by encoding information in a meaningful way. Computer applications can use XBRL data intelligently in that those applications can recognize the information in an XBRL document, select it, analyze it, store it, exchange it with other computers, and present it in a variety of ways for users. The idea behind XBRL is simple. Instead of treating financial information as a block of text - as in a standard internet page or a printed document, XBRL provides an identifying tag for each individual item of data, whether numeric or textual. This tag is computer readable. For example, cash, as reported on a companys balance sheet, has its own unique tag. XBRL uses these tags for the presentation and definition of information. Tags are defined and maintained in taxonomies which contain meta-data (data about data) such as labels, data types, balance and period type. In effect, taxonomies are the dictionaries that XBRL uses to identify information included in electronic documents. XBRL is extensible in that preparers are able to customize and extend the standard taxonomies. That is, a preparer can create, define and describe new tags

unique to its particular circumstances, while otherwise maintaining the comparability of its other information tagged using the standard taxonomy. XBRL was designed to be flexible and is intended to support all current aspects of financial reporting across countries and industries. Its extensible nature means that it can be adjusted to meet particular business requirements, including internal reporting needs within an organization. The worldwide use of XBRL has increased during the past few years. Government regulators in at least ten European countries have adopted, or are in process of adopting, XBRL as the standard for filing financial reports. Also, in Australia, Canada, Israel, Japan, and Korea, various projects are underway or in development to use XBRL to satisfy regulatory filing requirements.

member of XBRL International) to develop such a taxonomy. This effort took place over the following year with the help of various industry groups, public accounting firms and regulatory agencies. On December 5, 2007, the SEC announced that the US GAAP Taxonomy was available for public review and comment. The SEC encourages users and preparers of financial reports to review the taxonomy and provide comments. Those wishing to do so may access the taxonomy at http://usgaap.xbrl.us. Comments are due by April 4, 2008. Thus, companies now can familiarize themselves with the XBRL US GAAP Taxonomy that ultimately could be used for XBRL filings with the SEC. Companies can see how well the taxonomy supports their financial characteristics and terminology. Companies also can identify any gaps that otherwise might require them to develop their own extensions.

SEC Initiatives
The SEC has become very interested in the potential of XBRL. In April 2005, the SEC launched its Interactive Data voluntary filing program to evaluate potential benefits, including whether interactive data could make filings more accessible and understandable to the average investor. To date, participation in the SECs XBRL voluntary filing program has been limited to a relatively small number of registrants, and the general usefulness and consistency of their filings have varied. Variability in quality and consistency of voluntary XBRL filings has been due, at least in part, to the lack of a robust XBRL taxonomy for US GAAP financial reporting. Accordingly, in late 2006, the SEC contracted XBRL US (a not-for-profit
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CIFiR Proposal
The February 14, 2008 Progress Report of CIFiR, a federal advisory committee charged with examining the U.S. financial reporting system, includes a proposal that the SEC ultimately require XBRL in financial statements in SEC filings. CIFiR proposes that the SEC should, over the long-term, mandate use of XBRL, once certain preconditions are met. The preconditions relate to the successful testing of the XBRL US GAAP Taxonomy, the ability of the SECs EDGAR filing system to accept and accurately render XBRL tagged filings, and the readiness of SEC reporting companies to make XBRL filings.

XBRLA NEW ERA IN THE DELIVERY OF FINANCIAL INFORMATION

The CIFiR Progress Report also proposes a phase-in for SEC mandated XBRL tagging. As proposed, in Phase I, the 500 largest domestic public companies would be required to furnish, through the SECs EDGAR filing system, XBRL tagged financial statements, with the financial statement notes each tagged only as block text (e.g., one tag per note). In Phase II, after one year, all domestic large accelerated filers would join the mandatory XBRL tagging group. Then, CIFiR proposes that the SEC evaluate whether and when to (1) require the XBRL tagged financial information to be filed rather than furnished, and (2) extend XBRL tagging to all SEC reporting companies. The CIFiR Progress Report also notes that an important issue related to tagging public company financial statements using XBRL involves whether assurance should be provided by a third party. While independent assurance could increase public confidence in XBRL documents, CIFiR is concerned that the cost and time incurred to obtain such assurance might outweigh the benefits to preparers and users. Therefore, CIFiR has not proposed that the SEC mandate assurance during the initial two XBRL phase-in periods discussed above. Instead, CIFiR suggests that the SEC and PCAOB seek input from companies, investors, and other market participants as to the type, timing, and extent of assurance, if any, during the phase-in periods and thereafter. The SEC has requested public comment on the CIFiR Progress Report by March 31, 2008. The CIFiR Progress Report is available on the SEC website and in the February 28, 2008 edition of the Federal Register.

Ernst & Young Insights

Considering recent developments, including CIFiRs proposal, we believe the likely next step will be SEC proposed rulemaking in the spring or summer of 2008 to mandate the use of XBRL by a select group of the largest public companies. It is possible that the SEC could adopt a final rule this year that might require the largest public companies to furnish XBRL formatted financial statements as soon as December 31, 2008.

Although there are benefits, there also will be costs associated with the implementation of XBRL. Preparing filings using XBRL likely will require additional efforts on the part of registrants. This could be particularly true with respect to tagging the various elements of information included in notes to the financial statements. However, the incremental effort associated with XBRL might decline over time based on the learning curve. Other potential costs could relate to auditor involvement with XBRL filings, although it seems unlikely that the SEC will mandate auditor reporting, at least initially. Nevertheless, some issuers still might engage their auditor to provide assurance in order to enhance confidence in the quality of their XBRL submissions.

Benefits and Costs of XBRL

Those that stand to benefit the most from XBRL are the users of financial data, including governments, regulators, economic agencies, stock exchanges, financial information companies, company managers, financial analysts, investors and creditors. Supporters believe XBRL offers major benefits at all stages of business reporting and analysis. The benefits might be seen in the form of increased automation; cost saving; and faster, more reliable and more accurate handling of data. XBRL might enable consumers of financial data to reallocate resources from costly manual processes, often involving timeconsuming comparison, assembly and reentry of data. Those users will be able to concentrate their efforts on analysis, aided by software that can validate and compare XBRL information. This could result in improved analysis and better quality information for decision-making.

Maturity of XBRL Tools

Consistent with the implementation of other new technologies and standards, there will be certain challenges associated with implementing and using XBRL for financial reporting. In developing the XBRL US GAAP Taxonomy, XBRL US is trying to address many, if not all, of the issues and unique features of US GAAP financial reporting; as a result, the extent and content of the taxonomy have become complex. Although XBRL applications and support for XBRL will likely develop and improve in the coming years, they are relatively immature today. Accordingly, the initial implementation and use of XBRL for financial reporting might not be as effective and efficient as it will likely become in the future.

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XBRLA NEW ERA IN THE DELIVERY OF FINANCIAL INFORMATION

Quality
As mentioned above, the quality of the information provided in XBRL filings has varied to date. Inconsistent quality could involve a misunderstanding of how best to apply the XBRL US GAAP Taxonomy, or a lack of clarity about the respective roles and responsibilities of preparers, service providers and software vendors. In addition, factors contributing to diverse quality could include:

Test available XBRL tagging tools and

understand how the XBRL US GAAP Taxonomy maps to its financial statements.

Participate in the SECs XBRL

Voluntary Filing Program.

Plan to comment to the SEC on its

expected XBRL rule proposal.

Summary
The release of the US GAAP Taxonomy and the CIFiR proposals are important milestones toward widespread acceptance of XBRL as the standard for electronic financial reporting, and could signal the dawn of a new era in the delivery of financial information in the United States. CIFiR is expected to issue its final report this summer with recommendations for a mandatory phase-in of XBRL. It appears likely that the SEC will propose a rule in 2008 that would begin to mandate the use of XBRL financial reporting. XBRL filings could be required as soon as December 31, 2008 for certain large accelerated filers, with its use by other companies being phased in over time. We urge companies to monitor these developments, and to begin to prepare to use XBRL. Additional information on XBRL and its use can be found at www.ey.com/xbrl and www.sec.gov/spotlight/xbrl.htm.

The fact that XBRL creation tools are

relatively immature, and the market has been relatively small.

XBRL rendering tools also are

immature (i.e., it is hard to see the content of an XBRL file in a familiar way).

The XBRL US GAAP Taxonomy is

evolving and voluminous.

There is a lack of clear and succinct

preparer guidance, and preparers cannot refer to practical examples to address implementation questions.

The XBRL standard is technically

complex.

Steps to Consider
There are several immediate steps that a company could currently undertake to begin its preparation for XBRL filings, including:

Review the draft of the XBRL U.S.

GAAP Taxonomy, and comment by April 4, 2008.

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