Japan FSA's XBRL Project

- Launch of New Public Disclosure System with Mandatory XBRL -y

May 2008

Toshinori KobayashiToshinori Kobayashi

Financial Services Agency, The Japanese Government

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Outline of EDINET

Electronic Disclosure for Investors’ NETwork

•Electronic disclosure system under the Financial Instruments and Exchange ActFinancial Instruments and Exchange Act

–Used for Annual Reports, Semi-annual Reports, Q t l R t S iti R i t ti St t tQuarterly Reports, Securities Registration Statements, etc.

L h d i J 2001•Launched in June 2001

•Number of issuers (Annual Report):Number of issuers (Annual Report):–About 5,000 companies (mainly listed companies)

About 3 000 investment funds2

–About 3,000 investment funds

Issues of previous EDINET HTML format

• No function for downloading reusable data

• Investors can browse information on Web browsers but need to retype data when ypconducting analysis thereof.

EDINETRetype

HTML HTML

Browse Analysis

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EDINET Renovation Project XBRL format

• By introducing the XBRL download function, investors can analyze the financial informationinvestors can analyze the financial information efficiently.

N EDINETNew EDINET

Browse

XBRLHTML

AnalysisyXBRL

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EDINET Renovation Project– Timeline

J F b 2007 1st Pil t P

Aug 2006 Start System & Taxonomy development

Jan-Feb 2007 1st Pilot ProgramTaxonomy test (Offline test)50 companies participated

Jul-Aug 2007 2nd Pilot Program

50 companies participated

System & Taxonomy test (Online test)

Feb 8th 2008 Release Taxonomy (Final version)

System & Taxonomy test (Online test)1,200 companies participated

Feb 8th, 2008

Mar 17th 2008

Release Taxonomy (Final version)

Launch new EDINET system

http://www.fsa.go.jp/singi/edinet/20080208.html

Mar 17th, 2008 Launch new EDINET system

- XBRL filing will be mandated from the first quarterly report in FY 2008

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from the first quarterly report in FY 2008

EDINET Renovation Project– Scope of XBRLScope of XBRL

• Consolidated and Non-consolidated financial statementsstatements– contained in Annual report, Semi-annual report,

Quarterly report and Securities registration statementQuarterly report and Securities registration statement– excluding notes and non-financial information

• Japanese GAAP filers– excluding US GAAP filers, IFRS filers, etc.

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EDINET Renovation Project

• XBRL filing of financial statements is mandatedXBRL filing of financial statements is mandatedin principle.

• XBRL data is open to all investors and analysts.

• The financial information of 5,000 companies and 3,000 investment funds is XBRLized,

O f th t d d XBRL tOne of the most advanced XBRL systems in the world

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EDINET Renovation Project– Impact of XBRLImpact of XBRL

- From “Readable Information”To “Usable Information”To Usable Information

XBRL provides the strategic solution to Investors.

- Providing “Global infrastructure” with “Global Technical Standard”with Global Technical Standard

XBRL encourages companies and investors to active more globally.

Global, transparent and vibrant market

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Feedback from EDINET Renovation Project

Topics• Road to Mandatory XBRL

p

• Extraction of Account Items• Time & Difficult Point to Prepare• Time & Difficult Point to Prepare

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Feedback from EDINET Renovation Project– Road to Mandatory XBRLRoad to Mandatory XBRL

Hurdle for mandates Actions

Taxonomy Quality EDINET Advancement Council & Working Group

System Quality Taxonomy Review (Public, Expert, Industry)

User’s Guideline Quality Pilot Program

XBRL Tools Enhancement Communication with Tool Vendors

Filers Familiarity

Vendors

Seminar for Filers

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e s a a y Se a o e s

Feedback from EDINET Renovation Project– Road to Mandatory XBRLRoad to Mandatory XBRL

This council has been established to make collaborative EDINET Advancement efforts with EDINET stakeholders.Members: industry, analysts, CPA, stock exchanges and others

Council & WG

Taxonomy Review 1st review by industries & experts, 2nd review by public Several thousand comments were generated.To modify the taxonomy took 3 months per review

Pilot Program

To modify the taxonomy took 3 months per review

Two pilot programs were held in January and July 2007.

Communication with Tool Vendors

Many collaboration to enhance XBRL preparing environment.

Seminar for Filers30 seminars were held and attended by 4,000 companies.

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Feedback from EDINET Renovation Project– Extraction of Account ItemsExtraction of Account Items

Cover all account items used in the

1.Concept of account items coverage

practiceCoverage - 90%Num. Items – 4,700

over

age

Co

Cover only account

Less itemsLess items

items based on accounting standards

Numberof Items

More coverage,- Less onerous for preparerMore coverage,- Less onerous for preparer

Less items,- More operable for preparer- Better performance for all users

Less items,- More operable for preparer- Better performance for all users

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Feedback from EDINET Renovation Project– Extraction of Account ItemsExtraction of Account Items

Accounting laws and standards Common practice 50,000 items 2.EDINET Taxonomy Development Process

Extrac

(extracting based on laws) (extracting based on historical data)

s <Step 1> ・Standardize account items ct accoun

(grouping same concept)

30,000 items nt items

s <Step 2> ・Select major account items (frequency of use)

Group A(Account items based on laws)

Group B(Account items based on CP) S

2,500 items 2,200 items

・Set Concept layer (Japanese/English Label, Reference) ・Set Relationship layer (Presentation, Calculation, Definition)

Set inform

13EDINET Taxonomy 4,700 items

mation

Feedback from EDINET Renovation Project– Time & Difficult Point to PrepareTime & Difficult Point to Prepare• Estimated time spent on preparing XBRL compared to

previous EDINETprevious EDINET – Analysis of questionnaire data (2nd Pilot Program)

Initial year Subsequent yearInitial year Subsequent year

Increase >100%[22%]

Decrease[0%]

Unclear[5%]

Increase >100%[6%]

D

Unclear[6%]

[22%]Same as before[14%]

[ ]Increase50%-100%[28%]

Decrease[4%]

Increase <50%[9%]

[ ]

Increase <50%[6%]

Same as before[50%]

14Increase 50%-100%[50%]

[6%]

Feedback from EDINET Renovation Project– Time & Difficult Point to PrepareTime & Difficult Point to Prepare• Difficult point to submit

A l i f ti i d t (2 d Pil t P )– Analysis of questionnaire data (2nd Pilot Program)

Difficult PointTaxonomy Quality

•No major issue is found that disturbs b i i

Difficult Point

System Qualitysubmissions.

XBRL Creation Tools

User’s Guideline Quality •Obtaining XBRL report creation tools•Understanding how to use the tools•Understanding how to create the XBRL

Filers Familiarity

Enhancementg

report and how to submit to EDINET•Much work beyond the expectations•Cost

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y

Feedback from EDINET Renovation Project– Time & Difficult Point to PrepareTime & Difficult Point to Prepare• Other Difficult point to submit

A l i f ti i d t (2 d Pil t P )– Analysis of questionnaire data (2nd Pilot Program)

•Identifying the cause of error

•Setting of the English labelg g

•Choice of the proper items from the taxonomy

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Feedback from EDINET Renovation Project– Time & Difficult Point to PrepareTime & Difficult Point to Prepare• Preparation for Mandatory Filing

A l i f ti i d t (2 d Pil t P )– Analysis of questionnaire data (2nd Pilot Program)

<Technical Issues>•Selecting and familiarizing with an XBRL tool•Early commencement of creating XBRL reporty g p

<Accounting Issues>•Selection of items from EDINET Taxonomy•Selection of items from EDINET Taxonomy•Consensus-building with auditor

<Oth I ><Other Issue>•Securing human resources and budget

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Future Issues

Filers Domestic Issues

N t N fi i lInvestors

Filers

Scope of XBRL-Requirements-Familiarity

– Notes, Non-financialsAnalysts

Global MarketsNew technology adoptionBest

Practice

– Dimensions, Versioning, Rendering, Formula

Accounting Rules

Global Markets

ChangesJFSA

Accounting Rules

XIIInternational IssuesNew

TechnologyXII

Technology Providers

Multinational InteroperabilitySoftware

18Technology Providers So a e

Future Issues- Multinational InteroperabilityMultinational Interoperability

• To establish a global market, corporate financial information in all countries should be used in a crossinformation in all countries should be used in a cross-border fashion

• Differences in data formats for financial information among countries may interfere with global usage.

To maximize the benefits of XBRL as global o a e e be e s o as g obainfrastructure, It is necessary to ensure multinational interoperability y p yand comparability of XBRL through global cooperation.

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Future Issues- Multinational InteroperabilityMultinational Interoperability

Policy & Rules Cooperation among

R d i &

y Cooperation among Regulators

Rendering & Viewing

Consistent Instance Creation rules

Consistent adoption and implementation

of taxonomies

Technical alignment of

Cooperation among Taxonomy Ownersalignment of

XBRL components

Taxonomy Owners

JFSA, IASCF, EC and SEC has been discussing towards

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, , g”Multinational Interoperable Architecture”.

Future Issues- Multinational Interoperability

<Process Overview>

Multinational Interoperability

Identify comparison pointsCompare 3 taxonomiesEvaluate differences and their impactsPrioritize the points to be “interoperable”Decide action items for each point

Identify Compare Evaluate Recommend

Feedback loop

We are here!!

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Th k Y ！Thank You！

toshinori.kobayashi@fsa.go.jp

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