Inventing the Wheel:The DisclosureManagementCycleA step-by-step overviewof disclosure management.
2Inventing the Wheel:The DisclosureManagement CycleAs public companies continue to encounter an increasing amount of regulatoryrequirements for disclosure reporting, the Disclosure Management Cycle isevolving into an extremely relevant and “hot” topic. Analysts in the space are beginningto produce research on Disclosure Management, with an emphasis on ﬁnancial compliance andXBRL. They’ve identiﬁed suppliers who offer products to public companies that meet the differentneeds of the Disclosure Management Cycle: controlled environments for transferring, reportingautomation platforms and document consolidation.But we must take a few steps back. When it comes to corporate disclosure, how well do we actuallyknow the Disclosure Management Cycle? Does every business follow a standard cycle? Moreimportantly, does a standard cycle exist?The reality is that the disclosure landscape is constantly changing, improving and then changingagain. When businesses try to keep on top of new regulations and trends, it can be easy to losesight of an effective Disclosure Management Cycle –particularly when there’s no standard cycle inplace.What’s more is that Software as a Service solution providers are popping up in the disclosuremanagement space, promising to make the disclosure cycle more efficient and accurate. Whiletheir promises may not be empty, how can businesses be sure which providers will truly help theirindividual disclosure process without a proper cycle identiﬁed internally?A Disclosure Management Cycle should deﬁne who a business’s solution providers are – and notthe other way around. In identifying the cycle steps, it’s become evident that there are twelvecomponents to Disclosure Management from start to end - to start again. Businesses can evaluatetheir Disclosure Management process – or create one – by considering the steps outlined below inthis Disclosure Management Cycle.DisclosureNet™ I The Disclosure Management Cycle
31. Set & Monitor Internal Control MeasuresCompanies must review all key risks and ensure their business has theappropriate actions established to address these risks. These refer to bothﬁnancial, accounting and non-accounting controls (ﬁnancial reporting with its ownset of internal controls and measures).2. Apply Reporting ProceduresWith internal control measures in place, businesses now take the time to applythe standards to their processes. Here, companies ensure that there is a smoothinternal reporting procedure to capture the information that must be made public.3. Research Reporting Best Practices & CreationBeing diligent with research - prior and during the creation process - allowsbusinesses to ensure ﬁlings are in line with best practices, while simultaneouslymitigating issues and containing costs that may arise in the disclosure process.In the disclosure management cycle, the most effective ﬁlers are those whosearch precedents and best practices in disclosures ﬁled past and adopt theseas best practices.4. Receive Advisory Inputs on ReportingBoard of Directors, consultants, lawyers and accountants shape step four of theDisclosure Management Cycle. During this step, stakeholders weigh-in and giveany value-added input.5. SubmissionNow, ﬁlings are sent to the country’s respective regulators by linking the ﬁling toa particular submission type. This is the time when companies are compliant withregulations beyond the document’s content, i.e.: timing of submission.6. DisseminationOnce the disclosure has been ﬁled, it’s available to everyone. Investors,regulators, shareholders, competitors and beyond subscribe to disseminationservices to be notiﬁed in real-time about a company’s updates. To ensure asmooth dissemination process, ﬁlers are active in the preliminary research stageand carry the research out through the creation process to mitigate the possibilityof further action.DisclosureNet™ I The Disclosure Management Cycle
47. StorageWhere does the document go once ﬁled? Sure, it’s available on regulator sites,but these documents are now public – meaning they can be stored by anyone.Consider how many people have stored a company’s document after accessing itthrough the dissemination phase. This means that businesses should also storetheir documents for an effective audit trail and for future reference.8. ConsumptionConsumption is by far the biggest reason behind why companies need a solidDisclosure Management Cycle. There’s no way of monitoring the amount ofpeople consuming a company’s ﬁlings – or who they are. The efforts of aneffective Disclosure Management Cycle pay dividends right here. Potentialshareholders and investors, irate or disgruntled stakeholders, regulatory scrutiny,institutional investors, lawyers, accountants, competitors, business partners - evenmedia looking for a company to prop up or tear down. The clarity and defensibilityof corporate information is put to the test right here. The result of that scrutiny canhave a very material impact on an organization.9. Monitoring & Oversight by Regulatory AuthoritiesDespite enforcing internal procedures, receiving advisory input and complyingwith submission regulations, there may be improvements that need to be madewith a document. Recent studies show that over half of ﬁnancial reports – with theintroduction to IFRS – have been sent back for enhancement.110. Regulatory ReformThe Disclosure Landscape is a moving target – constantly evolving. Regulatoryagencies and key industry participants are continually working to createdialogues designed to improve disclosures and enhance the stability, reliabilityand conﬁdence in the investor marketplace. Ongoing reviews lead to structureddialogue among all participants in the disclosure landscape. This open discussionsets the foundation for further change in reporting practices.11. Compliance EnhancementOnce the discussions have been tabled and weighed by all interested parties,the decisions that are reached are worked into new rules and regulations. Whileaimed at strengthening the investor marketplace and increasing its integrity, the1Langton, James. “CSA disclosure reviews focused on IFRS.” July 19, 2012. http://www.investmentexecutive.com/-/csa-disclosure-reviews-focused-on-ifrsDisclosureNet™ I The Disclosure Management Cycle
5continual evolution of these regulations lead to a constant requirement for ﬁlers toremain educated and informed.12. Internal Self Evaluation & ChangeWith new rules and regulations applied, businesses must reﬂect on their internalprocesses and adapt as required. From here, the cycle continues – providing asystematic framework for the Disclosure Management Cycle.With a sufficient Disclosure Management Cycle in place, businesses can not only be sure that theircompany is completely compliant, but they’re also able to pinpoint where manual processes canbecome automatic. This allows companies to make informed decisions about the solutions theypartner with and capture return on investment.DisclosureNet™ I The Disclosure Management Cycle
DisclosureNet™ is an online solution that helpsbusiness professionals unlock intelligence in globalcorporate disclosure ﬁlings. Founded in 2002,DisclosureNet™ uses innovative technology to make iteasy to ﬁnd, store, and share global public disclosureinformation, while providing a secure platform forknowledge collaboration. To learn more aboutDisclosureNet™, please visit www.DisclosureNet.com.Phone: 1.866.974.3638Email: firstname.lastname@example.orgWebsite: www.DisclosureNet.com