PARADISE POSTPONED

LESSONS AND OPPORTUNITIES FROM LESSONS AND OPPORTUNITIES FROM

XBRL ADOPTION IN AUSTRALIAXBRL ADOPTION IN AUSTRALIA

Paul Phenix

Senior Adviser

OverviewOverview1. The Regulatory Framework

- Who does what

2. Financial Reporting in Au

- Continuous vs. Periodic

3. Stepping Stones

4. Adoption Progress

5. Lessons

6. New Dawn?

THE REGULATORY FRAMEWORKTHE REGULATORY FRAMEWORK [[XBRL-Au focus has been on regulatory adoption]

Organizational EquivalentsUSA AuSEC ASICFIDC APRAFASB AASBNYSE/NASD et al ASXDTC (securities clearing) ASXEDGAR ASX (“CAP”)AICPA ICAA;CPAA;NIA

THE REGULATORY FRAMEWORK THE REGULATORY FRAMEWORK 22

1. Enforcement: Corps Act and Accounting Standards- Australian Securities & Investments Commission [ASIC][Stds are issued by Au. Accounting Stds. Board; part of Fin. Rep. Council. “AASBs” is generic name for all Au standards]

THE REGULATORY FRAMEWORK THE REGULATORY FRAMEWORK 33

2. Prudential Regulation- Financial Institutions : APRA- Other Corps : ASIC

3. Market Provider : ASX - ASX Supervises its Rules: Listing; Market; Clearing

THE REGULATORY FRAMEWORK THE REGULATORY FRAMEWORK 44

1. Stock brokers; traders etc- licensed and regulated by ASIC

2. Prudential Regulation“participants” in ASX marketsupervised by ASX re. Capital

Adequacy (risk to market); internal controls; fair dealing

CONTINUOUS CONTINUOUS DISCLOSUREDISCLOSURE

ASX Supervision:

Primary Driver

- Supplemented by Periodic

Reports

CONTINUOUS CONTINUOUS DISCLOSUREDISCLOSURE

Provides what the market

wants: i.e.

- the full story;

- immediately.

Financial Reporting in Financial Reporting in AuAu

1. Informed Market :Give all announcements to ASX as Proxy for the Market;

2. Informed When?- ImmediatelyImmediately : Continuous Disclosure

“Becomes Aware”:Listing Rules 3.1 & 19.2

- PeriodicallyPeriodically : Chap.4: But LR 3.1 principles still apply: “immediately...becomes available”

3. Inform What?- LR 3.1 & 19.2 again

CD: Listing Rule 3.1CD: Listing Rule 3.1 Once an entity is or becomes +aware

of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s +securities, the entity must immediately tell ASX that information.

CD: Listing Rule 19.2CD: Listing Rule 19.2 Entity must comply with spirit, intention and

purpose etc of rules19.2 An entity must comply with the listing rules as

interpreted:

• in accordance with their spirit, intention and purpose;• by looking beyond form to substance; and• in a way that best promotes the principles on which the

listing rules are based

  Introduced 1/7/96. Origin: Foreword. Note: The principles on which the listing rules are based embody their intention and purpose. See the Introduction.

 

Financial Reporting in Financial Reporting in AuAu

ASX ELECTRONICALLY PROCESSES AND PUBLISHES OVER 100,000 COMPANY ANNOUNCEMENTS EACH YEAR

GROWING AT>12% pa

PEAK DAYS RUN AT >1000 ANNOUNCEMENTS

SEE WHY WE LIKE XBRL?

PERIODIC REPORTS TO ASXPERIODIC REPORTS TO ASX

1.Half Year :Appendix 4D

- Highlights- Embedded S.320

Statutory Accounts (auditor reviewed)

- Supplementary ASX Info.- 2 months deadline

PERIODIC REPORTS TO ASXPERIODIC REPORTS TO ASX

2.Full Year :Appendix 4E: - Preliminary Final

Report- Highlights- Condensed Accounts- Commentary on Results- Supplementary ASX Info.- Un-audited but normally reviewed- 2 months deadline

PERIODIC REPORTS TO ASXPERIODIC REPORTS TO ASX

Full year: continued: 1.

- Section 319 : 3 months deadline- Full set of accounts- Full compliance with Corps Act &

AASBs- Audited

PERIODIC REPORTS TO ASXPERIODIC REPORTS TO ASX

Full Year: continued: 2.

- Section 314 “Glossy”: 17 weeks deadline

- “Annual Report” and “Concise Annual”

- ASX LR 4.10 Info (inc. Corp Gov)- Audited

PERIODIC REPORTS TO PERIODIC REPORTS TO ASXASX

Quarterly ReportsQuarterly Reports: Cash Flow Statements

- Appendix 4CAppendix 4C: “CTEs”; “start ups”; or if ASX requires

- Appendix 5BAppendix 5B: mining explorers

Monthly reportsMonthly reports- Mining explorers- Investment entities

ACCOUNTING STANDARDSACCOUNTING STANDARDS1. ASX Listing Rules:Presumption:

All Financial Info. and reports:- comply with Accounting Standards; and - show TTrue and FFair VView

2. Aussie Companies- Must use AASB (CA Ss. 296 &304)

- No TFV over-rideNo TFV over-ride- Can now use other $$ (AASB 121)

ACCOUNTING ACCOUNTING STANDARDSSTANDARDS

3.Foreign Companies (GN4)- Can use AASB or one of 7 Acceptable Stds.

- IAS : UK : NZ : CAN : SG : HK : USA

- If use other Stds. must provide: -reconciliation to AASB or IAS.

- can use any currency.

PERIODIC REPORTS AND PERIODIC REPORTS AND ASXASX

• Review all Offer Docs

• Review all Fin Reports under LRs• ASX Appendices 4C;4D;4E;4F;5B• Stat Accounts: S319; 314 (full and concise)

PERIODIC REPORTS AND ASXPERIODIC REPORTS AND ASX

What do we do with Reviews?• Looking for compliance with LRs; esp. 3.1• Report AASB/Corps Act issues to ASIC• Report all “non-std” Audit Reports to ASIC

(diced and sliced by auditor and office)• Report all odd Auditor Independence

Declarations to ASIC; generic report to FRC.

See why we like XBRL?

THE 13 STEPSTHE 13 STEPSOrganize• Form Jurisdiction• Join XBRL-International3. Get fundsInvolve; get buy-in; membership from/by:4. Professional Bodies5. Stock Exchanges6. Securities Regulator7. Banks (promise of credit control)8. Banking Regulator9. Tax Authority10. Govt. IT Agency/authority11 Other Listeds (if you can)

12. Get more Funds13. Use IASB Extension approach (if possible)

AU ADOPTION PROGRESS 1AU ADOPTION PROGRESS 1

- First meetings 2000- Jurisdiction formed 2001- 3rd XBRL International Meeting: Sydney 2001- Promoted IASB based approach- First draft Au taxonomy 2003

Au ADOPTION PROGRESS 2Au ADOPTION PROGRESS 2

Early Supporters and Members-Prof Accounting Bodies;- ¾ Big Four- ASX- APRA -- BANKS- Few LISTED COMPANIES

Government: indirectly with funds only

Au ADOPTION PROGRESS 2Au ADOPTION PROGRESS 2

Later Supporters and Members

- ATO (tax)- ASIC- AASB- Main Local SOFTWARE (Listed) COMPANIES (>75% write-up mkt.)

TICK THE BOXESTICK THE BOXES

We hit all the Stepping Stones and roughly in the right order.

So we should not have got our feet wet.

S0, WHAT WENT WRONG?S0, WHAT WENT WRONG?

Nothing really.

Conclusion:Milestones are;

-- NECESSARY:-- NOT SUFFICIENT.

S0, WHAT DID NOT GO RIGHT?S0, WHAT DID NOT GO RIGHT?

ALSO NEED:

-- LUCK

-- TIMING

-- A GUN TO THE HEAD

S0, WHAT DID NOT GO RIGHT? S0, WHAT DID NOT GO RIGHT? LUCKLUCK

-- SHD BE A NON-ENGLISH SPEAKING JURISDICTION; SO THAT

--NO OTHER JURSIDICTION WILL POACH EXPERTS.

--NOT RUN OUT OF RESIDENT EXPERTS(XBRL-Au experts too busy on XBRL projects

to spare time for XBRL-Au)

-- THAT TIMING IS RIGHT

S0, WHAT DID NOT GO RIGHT? S0, WHAT DID NOT GO RIGHT? TIMINGTIMING

-- IFRS 2005ADOPTION - (swamping accounting and IT

resources for 2-3 years )

-- ASX CAP RE-ENGINEERING: URGENT

-- Consolidation of domestic Software Vendors

-- BASEL II - (major distraction for banks: which are

the natural XBRL champions)

S0, WHAT DID NOT GO RIGHT? S0, WHAT DID NOT GO RIGHT? GUNGUN

Late active involvement of:

-- Tax Authority;

-- Securities/Companies Regulator

-- Accounting Standards Board.

Early but passive involvement is not sufficient.

Compulsion from one or more is necessary.

A NEW DAWN?A NEW DAWN?

-- More funds soon?:-- so 2nd Au-Extension TAXONOMY and

training

-- Active support from Regulators [esp. ATO]

-- Task Force formed inc. users

-- Software vendors active