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Steps for Filing Your First 10Q/10K Michael Ohata Director Reporting Standards - Microsoft Walter Hamscher President & CEO - Standard Advantage.

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Presentation on theme: "Steps for Filing Your First 10Q/10K Michael Ohata Director Reporting Standards - Microsoft Walter Hamscher President & CEO - Standard Advantage."— Presentation transcript:

1 Steps for Filing Your First 10Q/10K Michael Ohata Director Reporting Standards - Microsoft Walter Hamscher President & CEO - Standard Advantage

2 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

3 Extend the taxonomy if necessary Steps in Producing 10Q / 10K Create an instance document and validate calculations Publish Instance Document & Taxonomy Compare & map 10K/10Q to GAAP Taxonomy Assess Scope of Reporting & Download Taxonomy Review & Validate Instance Document Identify a team: Accountant & Developer (XML)

4 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

5 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

6 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

7 A Milestone The Source file://c:/dev/microsoft.com/raw/MSFT_2Q2005_10Q.doc The Filing / index.htm The Instance file://c:/temp/microsoft.com/msft/MSFT-10Q /index.html The Facts file://c:/temp/microsoft.com/msft/MSFT-Facts.csv

8 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 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

9 Mapping and extending a taxonomy: The crux of XBRL-ification  1 st Pass: Match concepts from existing taxonomy to items disclosed; note gaps and duplications

10 For example  file://C:/dev/microsoft.com/fin/ /10Q%20Gap%20Analysis_MSFT+MO+ WcH.xls file://C:/dev/microsoft.com/fin/ /10Q%20Gap%20Analysis_MSFT+MO+ WcH.xls

11 Mapping and extending a taxonomy: The crux of XBRL-ification  1 st Pass: Match concepts from existing taxonomy to items disclosed; note gaps and duplications  1 st Decision: use the entire base taxonomy, or just the element declarations?

12 In other words

13 Mapping and extending a taxonomy: The crux of XBRL-ification  1 st Pass: Match concepts from existing taxonomy to items disclosed; note gaps and duplications  1 st Decision: use the entire base taxonomy, or just the element declarations?  2 nd Pass: Add elements (periods and credit/debit flags), update element labels, and rearrange presentation nesting and order.  2 nd Decision: Comprehensive or minimal calculations?  3 rd Pass (calculations): Edit and add calculations.  3 rd Decision: FRTA-compliant extension, or not?  4 th Pass: Document the taxonomy extension.

14 Challenges  Expectation management  Defining and agreeing disclosure goals  3 rd 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 /index.html

15 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

16 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  

17 Steps for Filing Your First 10Q/10K Michael Ohata Director Reporting Standards - Microsoft Walter Hamscher President & CEO - Standard Advantage


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