Steps for Filing Your First 10Q/10K

Michael OhataMichael OhataDirector Reporting Standards - MicrosoftWalter HamscherWalter HamscherPresident & CEO - Standard Advantage

What We Did & Why Started with 10Q, for

quarter ending December 31, 2004

Set out to complete financial information WITH notes and management discussion & analysis

Scenario: Tagged in Excel and Word

Ensured external reporting team provide quality assurance

Started prior to Voluntary Program to provide feedback to SEC, consortium, software vendors

Assess what it takes for other companies

Test the limits of the US GAAP taxonomies, tagging narrative parts

Test first-hand how desktop scenario really works

Identify solution / tool gaps Define business process

required

Extend the taxonomy if Extend the taxonomy if necessarynecessary

Steps in Producing 10Q / 10K

Create an instance document Create an instance document and validate calculationsand validate calculations

Publish Instance Document & TaxonomyPublish Instance Document & Taxonomy

Compare & map Compare & map 10K/10Q to GAAP 10K/10Q to GAAP

TaxonomyTaxonomy

Assess Scope of Assess Scope of Reporting & Download Reporting & Download

TaxonomyTaxonomy

Review & Review & Validate Instance Validate Instance

DocumentDocument

Identify a team: Accountant & Identify a team: Accountant & Developer (XML)Developer (XML)

A Few Numbers Developing taxonomy: 60 hours (iterative

process) Revving after US GAAP taxonomies

released: 20 hours Creating instance document: 60 hours Extensions for financial statements: 7 Extensions for MD&A: 200 Calculation linkbase edits: 300 QA review: 40 hours

And a Few Pain Points (Preparer’s Perspective) Working in Beta software 6 tools to complete 10Q and conduct QA Deconstructing tables in MD&A: Fluid presentation

in Word not readily structured into data Tools struggle with complexity of technology:

Either in your face or hidden Needing to write and edit XML… Asking external reporting team to read XML (not

kidding) – No simple tools to render the XBRL Extending taxonomy really does require XBRL

technologist

What We Learned & Observed (Preparer’s Perspective) Tagging data represents new task – need simple UI We need guidance or best practices (e.g. Context

definitions represent ONE-THIRD of the XML in 10Q) In near to mid-term the doc filed with SEC is an

XML doc Tools in the “v1” stage…they should only get

better Taxonomy extensions and validation process puts

XBRL in face of the user (preparer): Complex

A MilestoneThe Sourcefile://c:/dev/microsoft.com/raw/MSFT_2Q2005_10Q.doc

The Filing http://www.sec.gov/Archives/edgar/data/789019/000119312505020639/0001193125-05-020639-index.htm

The Instancefile://c:/temp/microsoft.com/msft/MSFT-10Q-2004-12-31/index.html

The Factsfile://c:/temp/microsoft.com/msft/MSFT-Facts.csv

Key Points Several people (roles) were involved, so it’s not

too surprising that several tools involved. Review requires a paradigm shift from

presentation view to data viewpoint. The MSFT 10Q was the first XBRL document ever

sent to the SEC that: Used XBRL 2.1; Used the 2004-08 US GAAP taxonomy; Had an extension that was compliant with FRTA CR4; Encompassed everything in the 10-Q, including Notes.

Mapping gets easier every quarter Pre-release software evolves rapidly

Mapping and extending a taxonomy:The crux of XBRL-ification 1st Pass: Match concepts from existing taxonomy

to items disclosed; note gaps and duplications

For example file://C:/dev/microsoft.com/fin/2004-12-

31/10Q%20Gap%20Analysis_MSFT+MO+WcH.xls

Mapping and extending a taxonomy:The crux of XBRL-ification 1st Pass: Match concepts from existing taxonomy

to items disclosed; note gaps and duplications 1st Decision: use the entire base taxonomy, or just

the element declarations?

In other words

Mapping and extending a taxonomy:The crux of XBRL-ification 1st Pass: Match concepts from existing taxonomy to

items disclosed; note gaps and duplications 1st Decision: use the entire base taxonomy, or just

the element declarations? 2nd Pass: Add elements (periods and credit/debit

flags), update element labels, and rearrange presentation nesting and order.

2nd Decision: Comprehensive or minimal calculations?

3rd Pass (calculations): Edit and add calculations. 3rd Decision: FRTA-compliant extension, or not? 4th Pass: Document the taxonomy extension.

Challenges Expectation management

Defining and agreeing disclosure goals 3rd party confidentiality (if prior to disclosure)

Mapping (extension) requires both accounting and technical understanding

Segment reporting MD&A Structure and consistency Reconciling GAAP vs. Management financial data for

consolidation

file://c:/temp/microsoft.com/msft/MSFT-10Q-2004-12-31/index.html

What We Learned (Wish List):One Technologist’s Perspective Tool support for modularization of base

taxonomies into smaller components Automate the correspondence of original

calculations to XBRL calculations Automate the generation of segments and

scenarios

Best Practices and Resources Thursday Tutorial: “Preparing for the SEC

Voluntary Filing Programme” Covers most technical and disclosure issues Addresses several key preparation process Uses multiple vendor tools Collaborative effort of Big 4 firm representatives

Future events are being planned http://www.XBRL.org/us http://www.XBRL.org/tools

Steps for Filing Your First 10Q/10K

Michael OhataMichael OhataDirector Reporting Standards - MicrosoftWalter HamscherWalter HamscherPresident & CEO - Standard Advantage