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Implementation of XBRL at the Implementation of XBRL at the Israel Securities AuthorityIsrael Securities Authority
December 3-6, 2007
Vancouver, British Columbia,
Canada
Reasons for adopting XBRLHarmonization with international standardsAdoption of IFRS in Israel (January 2008)Exposure to foreign capital markets
Two PhasesCollaboration with XBRL International to
receive acknowledgment Changes related to MAGNA (the ISA’s (the ISA’s
electronic filing system) electronic filing system)
Implementation of XBRL into the ISA’s Implementation of XBRL into the ISA’s existing IT systemsexisting IT systems
The IT systems support the ISA’s goals of:Full and fair disclosure
Tight supervision
Efficient enforcement (including Intelligence and investigation)
The IT tools are integrated to support the initiated processes, achieve highest efficiency
Introduction – the ISA’s IT systems
The ISA’s Information Systems serve a variety of entities:Entities and individuals supervised by ISA
General public
ISA employees
Tel Aviv Stock Exchange
Commercial information distributors
Other public agencies: Ministry of Finance, Bank of Israel, Ministry of Justice
Introduction – the ISA’s IT systems (cont.)
MAGNA: A computerized system receiving and distributing, via theInternet, all filings required from the entities supervised by the ISA(operational since November 2003)
E-filing of reports (using electronic signature) on MAGNA is mandatory!
The filed electronic report is the only legally binding document!
Predefined identical data fields
Real-time, authentic report publication and fair disclosure: information is immediately accessible to the general public
Extensive use of XML to store and transfer data and electronic signature (PKI technology)
Archive system that stores documents indefinitely
Electronic Filing System - MAGNA
Advanced search system enabling complete document retrieval according to a large variety of criteria including free text search
Ability to receive non-public reports for internal use (by the ISA)
Fully automatic distribution to the Tel-Aviv Stock Exchange and various commercial information distributors
Uniform and standardized reporting
Most significant cost reduction for companies
Downloadable for further end-user processing and analysis
Free-of-charge for non-commercial users
Over 300,000 reports have been filed, processed and disseminated to date
Electronic Filing System - MAGNA(cont.)
An enormous amount of data:
MAGNA - General characteristics
financial reports
immediate reports
transactions with
controlling shareholders
private placements
acquisitions
Forms for companies, mutual funds, investment advisors and portfolio managers
In total, hundreds of thousands of report pages per year
prospectuses
change of holdings
tender offers
Thousands of reporting entities throughout Israel, while only a few persons in each entity are approved to e-file reports
Short schedule: approximately one year to set up the system from kickoff to full production – developed by Taldor Group as a “turn key” project in which all aspects of the project were included
Extensive integration and tutoring
Service centers for assistance in reporting
Help desk provides telephone support to users
MAGNA - General characteristics (cont.)
One of the most advanced technologies in the world(Excellence Awards), MAGNA leads in:Complex interfaces vis-a-vis internal and external
systems
Advanced procedures:Individually tailored report forms:
reporting entity identification and data downloads
Report type identificationReport fields IdentificationSent reports are encoded and signedValidity and completeness testingService centers
MAGNA’s Characteristics (Software Development Aspects)
Availability and reliability:99.95% up timeNo single point of failure
Computer room organization
DRP: Disaster Recovery PlanAlternative site in case of crash or
disaster, located in another city
Unique control & management system for hardware, software and business process control
MAGNA’s Characteristics (Hardware and Communications)
System must provide:IdentificationAuthenticationNon-repudiationNon-disclosureProtection against intrusionProtection from viruses and vandalsProtection of internal ISA information
systemsInterface protection
MAGNA - Data Security Requirements
Solutions used to meet the above requirements:
PKI (Public Key Infrastructure) technologiesUse of external and independent certification
authority, approved by lawUse of USB token as a cryptographic deviceUse of GAP technology for physical
separation as part of the PKI authentication process, including content inspection
Software securityFirewalls by various vendors Intrusion detection packagesAnti-virus softwareSecurity control and management system
MAGNA - Data Security Solutions
Architecture
Reporting PersonPublic
Stock Exchange
Reporting Sitee -filing system
(MAGNA)Distribution Site
The ISA’s Operational Information System
Document Management
SystemGroupWare
FormsFiles
DocsData DocsQuery
Data
Docs
Receive
Docs
Docs Data
Data Security
Red FlagsMarket
data
Data
Alerts
Control and Management system
Mandatory reporting using XBRL – pros/cons Pros:
Better comparison amongst companies and amongst different periods of time
Maintaining continuity of reporting that began in the HTM era
Lower costs to the reporting entities (fewer fields)
Simpler implementation of reporting (no need to consider which fields to fill)
Choosing numeric fields due to the difficulty of converting verbal fields from Hebrew to English
Preventing "cherry picking" and other manipulations
Adaptations of MAGNA to XBRL
Adaptations of MAGNA to XBRL (cont.)
Mandatory reporting using XBRL – cons.
Reporting entities are under mandatory requirements to fill in certain fields, thus discretionary decision is restricted
Restrictions on data provided to investors
No legislation changes are requirede-Filing of reports on MAGNA remains
mandatoryPredefined fields remain obligatory
Transition process invisible to the reporting entityThe HTML fields remain in HebrewPDF file attached in the same manner as
beforeThe only changes needed: adoption of
IFRS requires changes in the fields
Adaptations of MAGNA to XBRL (cont.)
MAGNA Software ChangesAbout 200 fields were chosen from
about 4000 that exist in the IFRS taxonomy
The fields were incorporated into the HTML file
In addition to creating an XML file, MAGNA will also automatically create an XBRL file, according to the taxonomy acknowledged by XBRL International
A new webpage created to display and enable download of financial reports in XBRL format
Adaptations of MAGNA to XBRL (cont.)
Joining as a direct member of XII and participation at the XBRL 2006 annual conference
Developing the Israeli taxonomy (in a nutshell):Based on the IFRS-GP taxonomy,
prepared by IASBA number of fields added (due to
local legislation)Translation of all IFRS terms into
Hebrew
Steps taken to receive acknowledgement from XBRL International Inc. (XII)
Use of online automatic tool (IFRS-GP Taxonomy Modules Manager) for base Schema creation
The base schema inherits from IFRS-GP including the relevant linkbases: Balance Sheet and two Income Statements (by nature, by function)
Using UBmatrix and Fujitsu tools to import the base Schema into the main Schema
Developing the Israeli taxonomy (Cont.)
Creating presentation links for relevant elements from Cash Flow
Adding two label Linkbases (one in English and one in Hebrew) for translation purposes
Adding extensions and creating presentation Linkbase for these extensions
Adding Reference Linkbase for translated legislation to English
Composing the summary document
Developing the Israeli taxonomy (Cont.)
Development process (Cont.)Finally: Creating an XBRL instance
document out of the MAGNA’s XML
Acknowledgmentthe ISA recently received
acknowledgement recognition from XII
Assistance from an XBRL expertMr. George Farkas from XBI Software
Inc.
Acknowledgment from XBRL International
e-Filing on MAGNA:http://tofes.magna.isa.gov.il/tofes/general/page
s/frmMain.asp?Type=303030303030303030303031
MAGNA today: Hebrew Distribution Sitehttp://www.magna.isa.gov.il/
MAGNA today: English Distribution Sitehttp://www.magna.isa.gov.il/Default.aspx?lang
=en
MAGNA as of January 1st 2008: English Distribution Site containing XBRLhttp://www.isa.gov.il/xbrl/
Demonstrations – e-filing using
XBRL/MAGNA
Expanding XBRL implementation in IsraelRunning a pilot among 61 reporting
entities that had implemented the IFRS standards by way of early adoption
Forming an Israeli XBRL jurisdictionExpanding the usage of XBRL standards
to additional sectors (governmental as well as the private sector)
Steps to be taken in the near future