XBRL International Conference
XBRL and Accounting Standards
Robert H. Herz
Chairman, FASB
December 5, 2006
The views expressed in this presentation are my own and do not
necessarily represent official positions of the Financial Accounting
Standards Board. Official positions of the FASB Board are arrived
at only after extensive due process and deliberations.
Impact of XBRL on Development of
Accounting and Disclosure Standards
• Today
• Tomorrow
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FASB Involvement in XBRL So Far
•
•
•
•
•
XBRL Fellow
Training
Taxonomy Development and Review
Codification Project
FAF/FASB leadership in current taxonomy
development push
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Examples of Impact on Recent
Standards/Current FASB Projects
• FAS 157 – Fair Value Measurement
• Derivatives Disclosures
• Financial Statement Presentation
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FAS 157 – Fair Value Measurement
• Project Objectives
• Sample Disclosures
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Example of Sample 157 Disclosures
Assets Measured at Fair Value on a Recurring
Basis
A34. For asset and liabilities measured at fair
value on a recurring basis during the period, this
Statement requires quantitative disclosures about
the fair value measurements separately for each
major category of assets and liabilities (paragraph
32(a) and (b)). For assets, that information might
be presented as follows:
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Example of Sample 157 Disclosures
($ in 000s)
Fair Value Measurements at Reporting Date Using
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable Unobservable
Assets
Inputs
Inputs
Description
12/31/XX
(Level 1)
(Level 2)
(Level 3)
Trading securities
$115
$105
$10
Available-for-sale
securities
75
75
Derivatives
60
25
15
$20
Venture capital
investments
10
10
Total
$260
$205
$25
$30
(Note: For liabilities, a similar table should be presented.)
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Example of Sample 157 Disclosures
Assets Measured at Fair Value on a Recurring Basis Using
Significant Unobservable Inputs (Level 3)
A35. For assets and liabilities measured at fair value on a recurring
basis using significant unobservable inputs (Level 3) during the period,
this Statement requires a reconciliation of the beginning and ending
balances, separately for each major category of assets and liabilities,
except for derivative assets and liabilities, which may be presented net
(paragraph 32(c) and (d)). For assets, the reconciliation might be
presented as follows:
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Example of Sample 157 Disclosures
($ in 000)
Beginning balance
Total gains or losses (realized/unrealized)
Included in earnings (or changes
in net assets)
Included in other comprehensive income
Purchases, issuances, and settlements
Transfers in and/or out of Level 3
Ending balance
The amount of total gains for losses for the
period included in earnings (or changes in
net assets) attributable to the change in
unrealized gains or losses relating to assets
still held at the reporting date
Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
Venture Capital
Derivatives Investments Total
$14
$11
$25
11
4
(7)
(2)
$20
2
0
$10
8
4
(5)
(2)
$30
$ 7
$ 2
$ 9
Note: For liabilities, a similar table should be presented.)
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(3)
BRIEF
XBRL DEMO
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Example of Sample 157 Disclosures
Gains and losses (realized and unrealized) included in earnings (or
changes in net assets) for the period (above) are reported in trading
revenues as follows:
Total gains or losses included in earnings
(or changes in net assets) for the period
(above)
Change in unrealized gains or losses relating
to assets still held at reporting date
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Trading
Revenues
Other
Revenues
$11
$(3)
$ 7
$2
Example of Sample 157 Disclosures
A36. For each major category of assets and liabilities measure at fair value on
a nonrecurring basis during the period, this Statement requires disclosures
about the fair value measurements (paragraph 33(a) and (b)). That information
might be presented as follows:
($ in 000s)
Description
Long-lived assets
held and used
Goodwill
Fair Value Measurements at Reporting Date Using
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Year
Identical
Observable Unobservable
Ended
Assets
Inputs
Inputs
12/31/XX
(Level 1)
(Level 2)
(Level3)
$75
30
$75
Total
Gains
(Losses)
$(25)
30
(35)
Long-lived assets
held for sale
26
26
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(15)
$(75)
Derivatives Disclosures
• Project Objectives
• Sample Disclosure
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The following table summarizes the Company’s use of derivative instruments with an interest rate underlying.
Derivatives in Fair Value Hedges
related to:
B/S Classification
of Derivative
Notional Amt
Fair Value
Investments
Derivatives in an asset position
Investments
$XX,XXX
$XX,XXX
Derivatives in a liability position
Investments
XX,XXX
(XX,XXX)
Positions no longer open at period end
Derivatives in Cash Flow Hedges
related to Existing Assets and
Liabilities:
Interest on floating rate debt
I/S Classification of Gain or
(Loss) on Derivative
I/S Classification of
Gain or (Loss) Related
Amt of G/(L) Recognized to Mark to Market of
in Income on Derivative
Hedged Item
2005
2004
Interest income
XX,XXX
X,XXX
Interest income/(expense)
(X,XXX)
X,XXX
Interest income/(expense)
X,XXX
X,XXX
B/S Classification
of Derivative
Notional Amt
Fair Value
I/S Classification of Gain or
(Loss) on Derivative
Derivatives in an asset position
Other assets
XX,XXX
XX,XXX
Interest income/(expense)
XX,XXX
XX,XXX
Derivatives in a liability position
Other liabilities
XX,XXX
(XX,XXX)
Interest income/(expense)
(XX,XXX)
XX,XXX
Interest income/(expense)
XX,XXX
X,XXX
Positions no longer open at period end
Amt of G/(L) Recognized
in Income on Derivative
Investment expense
Investment
income/(expense)
Investment
income/(expense)
Amt of G/(L) on Hedged Item
Recognized in Income
Attributable to the Risk Being
Hedged
2005
2004
(XX,XXX)
X,XXX
X,XXX
X,XXX
X,XXX
X,XXX
I/S Classification
of Gain or (Loss)
Amt of Gain or (Loss)
Amt of Gain or (Loss) Recognized in Reclassed from Reclassed from OCI into
OCI on Derivative
OCI into Income
Income
2005
2004
2005
2004
Other
X,XXX
X,XXX
income/(expense)
X,XXX
X,XXX
Other
X,XXX
X,XXX
income/(expense)
X,XXX
X,XXX
Other
XX,XXX
X,XXX
income/(expense)
XX,XXX
X,XXX
Derivatives in Cash Flow Hedges
related to Forecasted Transactions:
Issuance of Long-Term Debt
Derivatives in an asset position
Other assets
$XX,XXX
$XX,XXX
Other income/(expense)
XX,XXX
XX,XXX
$XX,XXX
X,XXX
Derivatives in a liability position
Other liabilities
XX,XXX
(XX,XXX)
Other income/(expense)
(XX,XXX)
XX,XXX
X,XXX
X,XXX
Other income/(expense)
X,XXX
X,XXX
X,XXX
X,XXX
Positions no longer open at period end
Derivatives Not Designated as
Hedging Instruments under FASB
Statement 133
Derivatives used to offset:
Changes in 30-year treasury rates
Derivatives in an asset position
Derivatives in a liability position
Positions no longer open at period end
Other:
Profit from changes in interest rates
Derivatives in an asset position
Derivatives in a liability position
Positions no longer open at period end
B/S Classification
of Derivative
Notional Amt (2)
Fair Value
I/S Classification of Gain or
(Loss) on Derivative
Amt of G/(L) Recognized
in Income on Derivative
Investments
Investments
XX,XXX
XX,XXX
XX,XXX
(XX,XXX)
Investment income/ (expense)
Investment income/ (expense)
Investment income/ (expense)
X,XXX
(X,XXX)
X,XXX
X,XXX
X,XXX
X,XXX
Investments
Investments
XX,XXX
XX,XXX
XX,XXX
(XX,XXX)
Investment income/ (expense)
Investment income/ (expense)
Investment income/ (expense)
X,XXX
(X,XXX)
X,XXX
X,XXX
X,XXX
X,XXX
Other
income/(expense)
Other
income/(expense)
Other
income/(expense)
X,XXX
X,XXX
X,XXX
X,XXX
X,XXX
X,XXX
Financial Statement Presentation
• Project with IASB, UK, Japan – global
impact
• Project Objectives
• Will change/improve format, content,
look and feel of basic financial
statements
• Sample formats
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STATEMENT OF FINANCIAL POSITION
2006
BUSINESS
Operating assets and liabilities
Short-term:
Accounts receivable
Inventory
Accounts payable
Net short-term operating assets
Long-term:
PP&E
Pension liabilities
Net long-term operating assets
Net operating assets
Investing assets and liabilities
Long-term:
Equity method investment
Net investing assets
Net business assets
DISCONTINUED OPERATIONS
Net discontinued operation (liabilities)
INCOME TAXES
Short-term:
Income tax payable
Net short-term deferred tax asset
Net short-term income tax assets
Long-term:
Net long-term deferred tax (liabilities)
Net long-term income tax (liabilities)
Net income tax assets (liabilities)
FINANCING
Financing liabilities
Short-term:
Commercial paper payable
Long-term:
Bank loan payable
Total financing (liabilities)
Financing assets
Cash and cash equivalents
Total financing assets
Equity
Total (equity)
Net financing (liabilities and equity)
2005
2004
140
70
(120)
90
120
60
(80)
100
125
60
(100)
85
650
(170)
480
570
620
(130)
490
590
545
(86)
459
544
100
100
670
85
85
675
100
100
644
-
-
(40)
(25)
85
60
(20)
60
40
(15)
95
80
(20)
(20)
40
(30)
(30)
10
(95)
(95)
(15)
(80)
(60)
(74)
(240)
(320)
(300)
(360)
(360)
(434)
180
180
100
100
110
110
(530)
(670)
(425)
(685)
(305)
(629)
STATEMENT OF COMPREHENSIVE INCOME
2006
BUSINESS
Operating Income
Sales
Cost of goods sold
Gross margin
Marketing and advertising expense
Research and development expense
Gains on sale of PP&E
Pension expense
Operating income
Investment Income
Earnings (loss) share equity method invest
Investment income
Business income
DISCONTINUED OPERATIONS
Net gain (loss) on discontinued operations
INCOME TAXES
Provision for income taxes
FINANCING
Financing Expense
Interest expense
Financing expenses
Financing Income
Interest income
Financing income
Net financing income (expense)
Comprehensive income
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2005
450
(210)
240
(50)
(45)
10
(10)
145
490
(213)
277
(68)
(50)
(8)
151
5
5
150
(5)
(5)
146
(5)
40
(30)
(25)
(20)
(20)
(21)
(21)
10
10
(10)
105
10
10
(11)
150
STATEMENT OF CASH FLOWS
2006
Cash flows from business activities
Operating cash flows
Cash received from customers
Cash paid to material suppliers
Cash paid to employees
Capital expenditure
Acquisition of intangibles
Proceeds from sale of PP&E
Total operating cash flows
Investing cash flows
Acquisition of equity method investment
Proceeds from sale of equity method investment
Dividends received from equity method investment
Total investing cash flows
Total cash flows from business activities
Cash flows from discontinued operations
Total cash flows from discontinued operations
Cash flows from income taxes
Cash paid on income taxes due
Total cash flows from income taxes
Cash flows from financing activities
Financing liabilities cash flows
Interest paid
Proceeds from short-term debt, net
Proceeds from long-term debt
Repayments of long-term debt
Total financing liabilities cash flows
Financing assets cash flows
Interest received
Total financing assets cash flows
Equity cash flows
Issuance of common stock
Dividends paid
Total equity cash flows
Total cash flows from financing activities
Change in cash and cash equivalents
Beginning cash and cash equivalents
Ending cash and cash equivalents
430
(90)
(55)
(80)
(10)
20
215
455
(205)
(100)
(20)
(10)
120
(15)
5
(10)
205
15
5
20
140
5
40
(20)
(20)
(15)
(15)
(20)
(40)
60
(120)
(120)
(21)
(74)
(60)
(155)
10
10
10
10
20
(20)
(110)
80
100
180
(30)
(30)
(175)
(10)
110
100
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2005
NOTE X1: REMEASUREMENT
2006
NonRemeasurements
(a)
BUSINESS
Operating Income
Sales
Cost of goods sold
Gross margin
Marketing and advertising expense
Research and development expense
Gains on sale of PP&E
Pension expense
Operating income
Investing Income
Earnings (loss) equity method invest
Investing income
Business income
DISCONTINUED OPERATIONS
Net gain (loss) discontinued op
INCOME TAXES
Provision for income taxes
FINANCING
Financing Expense
Interest expense
2005
Remeasurements
(b)
Total
(c)=(a)+(b)
NonRemeasurements
(a)
Remeasurements
(b)
Total
(c)=(a)+(b)
450
(210)
240
(50)
(45)
10
(10)
145
-
450
(210)
240
(50)
(45)
10
(10)
145
490
(213)
277
(68)
(50)
(8)
151
-
490
(213)
277
(68)
(50)
(8)
151
145
5
5
5
5
5
150
151
(5)
(5)
(5)
(5)
(5)
146
-
40
(10)
Financing expenses
(20)
(20)
Financing income
Net financing income (expense)
Comprehensive income
10
(10)
125
(5)
(5)
40
(20)
(30)
(5)
(20)
(20)
(21)
(21)
10
(10)
105
10
10
(11)
175
-
Financing Income
Interest income
(20)
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(20)
-
(25)
(25)
(21)
(21)
10
10
(11)
150
What About the Future?
• Other major projects with IASB
• Process matters
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Other Current Major Projects with IASB
•
•
•
•
•
•
•
Business Combinations
Conceptual Framework
Insurance
Leases
Liabilities and Equity
Pensions and OPEBs
Revenue Recognition
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Process Matters Relating to
XBRL and Future Accounting Standards
• Impact on development of requirements –
balancing the possible with relevance,
usefulness, and cost/benefit
• Making new standards and requirements
“XBRL ready” upon issuance
• Future of General Purpose Financial
Statements?
• Update Codification
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Concluding Thoughts
• XBRL International and Accounting
Standard Setters share Common
Objectives
– Improvement of content, quality, delivery, and
usability of Financial Information
– Global Reach
• By working together, it’s now happening!
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