Q&A: Microsoft Helps Federal Agency Pilot Program to Promote Innovation in Reporting Financial Information

REDMOND, Wash., Feb. 7, 2005 — On February 3, the U.S. Securities & Exchange Commission (SEC) announced a voluntary program for registrants to furnish filings in eXtensible Business Reporting Language (XBRL). This program begins with the 2004 calendar year-end reporting season. Microsoft is the first company to submit its quarterly report for period ending December 31, 2004, in XBRL in anticipation of this program.

Scott Di Valerio, Corporate Vice President and Corporate Controller, Microsoft Corporation

The SECs program focuses on assessing XBRL technology, including both the ability of registrants to tag their financial information using XBRL and the benefits of using tagged data for analysis. In March 2002 Microsoft became the first technology company to report its financial results in XBRL and has been a strong supporter of this open standard from its inception.

PressPass caught up with Scott Di Valerio, Corporate Vice President and Corporate Controller of Microsoft, to talk about XBRL, its importance and Microsofts involvement in supporting the standard.

PressPass: First, exactly what is XBRL?

Scott Di Valerio: Extensible Business Reporting Language (XBRL) consists of publicly available specifications that use Extensible Markup Language (XML) to describe financial statements and business reporting information for both public and private companies. For example, when a companys quarterly or annual report is released in XBRL, the information can be quickly published, consumed and analyzed without the need for re-keying.

PressPass: Why is the SEC voluntary program, allowing companies to report financial data using XBRL tags, important?

Di Valerio: The SEC and other agencies that consume financial statements, such as the FDIC (Federal Deposit Insurance Corporation), have adopted XBRL. Their aim is focused on gaining greater efficiencies and enabling more thorough analysis. XBRL International, a not-for-profit consortium of some 250 companies and agencies worldwide working together to build and promote the language, has also partnered with the American Institute of Certified Public Accountants and the International Accounting Standards Board in developing public taxonomies, or data dictionaries, for U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standard). With XBRL, companies can better control the meaning and presentation of data through the use of these standard dictionaries.

PressPass: What is Microsoft announcing today?

Di Valerio: For the quarter ending December 31, 2004, Microsoft is the first company to submit its 10-Q in XBRL, based on the latest version of the XBRL specification (version 2.1) and the US GAAP Commercial and Industrial taxonomy. In anticipation of the SECs voluntary program, we wanted to take an active role in providing best practices and leadership.

PressPass: Why did Microsoft decide to begin XBRL-izing its Qs and Ks?

Di Valerio: We believe investors will have better access to our financial results because XBRL facilitates effective and timely analysis of that information. As a leader in financial reporting and in technology, making our SEC filings available in XBRL is one way of demonstrating our financial reporting transparency and our support and belief that XML-based standards, like XBRL, will play an important role in changing how companies share and leverage financial information.

PressPass: How does XBRL help companies meet the new, more stringent standards for financial transparency and openness?

Di Valerio: Financial reporting in XBRL will significantly improve the quality of disclosure in filings. We view XBRL as a technology that enhances the transfer of financial information, not as a process for improving the content of financial reports.

PressPass: What role has Microsoft played in developing XBRL?

Di Valerio: Microsoft was a charter member of XBRL International since its inception in 1999, and we have actively participated in promoting the standard. Today, Microsoft sits on the Executive and International Steering Committees, and chairs a Solutions Working Group focused on market enablement.

PressPass: What are the long-term benefits for companies of using XBRL?

Di Valerio: We view XBRL as a significant XML schema and technology that has long-term benefits for companies to improve the efficiency of their internal reporting systems and enhancing internal controls. XBRL has the ability to transform financial systems and processes and doesnt require companies to replace existing applications.

PressPass: Does XBRL work with Microsoft products? What do Microsoft customers need to do to use XBRL?

Di Valerio: Microsoft provides technology that supports XBRL, such as XML support in Microsoft Excel and Word. In addition, Microsoft is working with partners to help jump-start solutions based on XBRL. And we have several products in our Microsoft Business Solutions line that support XBRL.

Microsoft is working with a number of partners that collectively plan to offer customers many possible solutions from a wide range of geographic regions. These partners include Business Wire, EDGAR Online Inc., eReport and Semansys Technologies B.V. The partner solutions encompass a range of functionality, from creating to consuming XBRL financial data, and all are planning to enable customers to create or work with XBRL documents from directly within the familiar environment of the Microsoft Office System.

PressPass: Is XBRL going to be a worldwide standard or will it be unique to the U.S.?

Di Valerio: XBRL is used around the world as a method to exchange financial information through a common standard. XBRL is developed and maintained by XBRL International, which is made up of 250 companies and organizations representing the international business-reporting supply chain.

PressPass: Are there other benefits/applications of XBRL beyond financial reporting?

Di Valerio: Microsoft is also a strong supporter of the Enhanced Business Reporting Consortium and we believe this initiative can have a significant impact on the usefulness of disclosures in the future. The Enhanced Business Reporting Consortium is an independent, market-driven organization whose mission is to improve the quality, integrity, and transparency of information used for decision-making in a cost effective, time efficient manner. XBRL International is collaborating with the Enhanced Business Reporting Consortium so that the XML technology in XBRL enables the improvements in business reporting content over time.

PressPass: What is Microsofts strategy regarding XBRL going forward?

Di Valerio: Microsoft will continue to provide strong support of the XBRL standard, demonstrate its leadership in financial reporting, and share its best practices in leading with this technology as a strategic tool.

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