Quality and Control


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Quality and Control

  1. 1. Quality vs. and Control:You Don’t Have to Choose Mike Willis, PwC Raul Varela, Rivet Software Wednesday, December 5, 2012 3:00 – 4:00 pm EST
  2. 2. DISCUSSION AGENDA  Intro  Quality  Consequences of poor quality  Taking control / streamlining last mile‘  Differentiating features of Disclosure Management  Q&A
  3. 3. POLL QUESTION To ensure the quality of my XBRL filing, I: (check all that apply) • Work with an auditing firm • Use an automated review tool • Will review hard copies by hand • Trust my vendor
  4. 4. Common Errors & Risks XBRL Common errors that create liability: Incorrect accounting values (amounts are ‘backwards’) Missing disclosures Incorrect or inaccurate accounting concepts Inconsistent or inaccurate descriptions Missing or untimely filing Incorrect or missing calculations Regulatory and Litigation Risks: Investor Liability Regulatory Actions: - Delayed registration statements - Loss of short form eligibility - Amended filings - Comment Letters - Noncompliance with regulatory requirements ReputationalNOTE:Common observations outlined by the Staff at the SEC which can be foundon their webpage located here, http://www.sec.gov/spotlight/xbrl/staff-review-observations.shtml. PwC 4
  5. 5. Penalties for Inaccuracies (India)"A random scrutiny of XBRL filing…reveals significant variations indisclosures in published results…”"Such XBRL filings, apart frombeing misleading, also dilute theeffectiveness of XBRL forstakeholders usage relating to thecompanies," it said."It is unfortunate thatprofessionals have certified theauthenticity of such incorrect data,for which they are liable to bepenalised.”PwC 5
  6. 6. SIFMA AMF Letter to SEC Requesting Expansionof XBRL Mandate 6PwC
  7. 7. SIFMA Corporate Actions ForumDecember 10th, 2012SIFMA SponsoredUS SECBlueMatrixUnited TechnologiesPwC 7
  8. 8. XBRL – NOT just the US SEC Adoption accelerating around the World PwC© Gilles Maguet
  9. 9. Standard Business Reporting (‘SBR’)Redefining “Convergence”• Process vs. Principles Convergence• 25%+ regulatory burden reduction via convergence of disparate territory agencies compliance processes• SBR Program burden reduction occurring in countries around the world• Harmonisation/reduction of reported disclosures using IFRS Taxonomy• Relevant to both public and private companies• Regulators & business sharing a common language• Significant implications for territory compliance processesPwC 9
  10. 10. General Benefits of Disclosure Management• Disclosure Management benefits include: - Effectiveness and efficiency in the financial close last mile of report assembly and review processes via reduction of manual effort through automation ◦ Report assembly ◦ Report review ◦ Spreadsheet aggregation and analysis - Enhanced controls ◦ Over edit process and related turn-around time ◦ Automating manual controls - Enhanced ability to benchmark, analyze and access dataPwC 10
  11. 11. POLL QUESTION How big of a concern is loss of control, with regards to turnaround times, publishing information, etc., to you? • A great concern • A concern, but not a priority • Not really a concern • Not a concern at all
  12. 12. Typical Reporting Process Last Mile (Manual) Stat Board Stat Report ReportReports are created via XBRL Press Proxy Report Form Release 10K Exhibita series of access and Reportsrekeying effortsmanually replicatinginformation contained in Accounting Recordsthe company accountingrecords. Consolidation ProcessesIn a typical companyprocess, there are ‘no’ to Spreadsheet‘very limited’ explicit Aggregationconnections betweenreported disclosures andcompany accountingrecords. Business Segment Systems Feeding Consolidation PwC 12
  13. 13. Disclosure Management – Streamlining the Last Mile New Relationships Stat Board Stat Report ReportMapping relationships between XBRL Press Proxy Report Formcompany report writer systems Exhibit Release 10K Reportsand the company report areexplicit and access, reuse and Accounting Recordssome validation processes areautomated within the built-in Disclosure Managementapplication. These explicit Report Writerrelationships exist betweensource system accountingrecords and company report. Consolidation ProcessesReport Writer process controls Spreadsheetare critical and may include: Aggregationapplication access controls;control over mappings (bothincoming and outgoing); log of Business Segmentchanges; report versioning Systems Feedingcontrols and audit trail; others. Consolidation PwC
  14. 14. A REAL LIFE EXAMPLE $1.85B market cap Oil and Gas Equipment and Services company  Use Crossfire Disclosure Management solution to file XBRL and EDGAR HTML from a single source.  They utilize an Oracle Financials Data Adapter which pulls data from their General Ledger system directly into Crossfire.  They have gained a great deal of efficiency in streamlining their reporting process.
  15. 15. Common Process & Control Enhancements • Automated Spreadsheet Assembly • Automated Report Assembly • Automated Report Validation • 25% to 50% • Automated Narrative Text Generation cost and time • Contextual Review Process enhancements • Automated XBRL Reports • Control • Automated Benchmarking • Explicit References • Collaborative Review Processes • Virtual Service Center Disclosure Management: Streamlining the Last MilePwC 15
  16. 16. Implementation Considerations• Social process vs. ‘webmaster’• Assembly automation enabling ‘flow through’ of source content updates• Automation of analysis and validation rules• Automation of content development• Contextual review of disclosures• Collaborative review of draft reports• Multiple report presentation alternatives• Transparency of supporting transaction level information• Comparative analysis of peer disclosures• Automated reference links• Range of reports and professionals impactedPwC 16
  17. 17. POLL QUESTION Do you believe there is value in XBRL? • Yes, I currently utilize XBRL for business intelligence • Yes, I currently utilize XBRL to improve my own filings • Not yet, but I can see how there will be value in the future • No, and there never will be
  18. 18. Structured IR ContentEnables automation of information relationshipsStructured content enables automation of content development andrelationships with broad range of relevant supporting content.PwC 18
  19. 19. PEER COMPARISONS $1.7B market cap REIT  Use Crossfire for Interactive Reporting and another vendor for SEC filing  The company takes the filed XBRL information from the SEC of their 17 closest competitors and compares the results side by side with their results  Every time one of the 17 competitors files a new Q or K - the peer comparison is automatically updated.
  20. 20. ROI Considerations + License cost of software, dependent on factors including vendor, nature ofimplementation and number of seats.+ Implementation costs, using software license cost as an estimate+ Training time/costs, dependent on implementation approach- Outsourcing costs for XBRL tagging and related time for "pencils-down" allotments- Final format document costs including EDGARization fees/ typesetting fees/otherprinter costs (hard dollar costs for current expenses that could be removed)- Process enhancement costs (see listing of process enhancements areas)- Time/cost reduction multiplied by the number of reports assembled manually- Estimate a time line for increase in the number of reports processed through theDisclosure Management application (not just relevant to quarterly/annual reports)= Net Benefit/Cost (ROI)PwC 20
  21. 21. Differentiating DM Application Features• Nature (client server vs. SAAS) – ability to connect to source systems• Connectivity with full range of information sources (interoperability / consumption)• Rules management (validation and analytical risk assessments)• Collaborative workflows and controls (Administration across broadest range ofprofessionals)• Presentation management (disclosures reusable across broad range of reports)• Reference management (disclosure relationships w/ policies, models, risks)• Report Analytical assessments (collaborative nature of risk assessment rulesmanagement)• Support (timely international support and range of languages)• Technical compliance (with broadest range of technical standards – e.g. iXBRL)• Taxonomy management (automated vs. manual; multiple vs. single) • Mapping (wizards that support peer benchmarking / company specific extensions) • Taxonomy support (timely support for range of taxonomies – e.g. Solvency II)PwC 21
  22. 22. This publication has been prepared for general guidance on matters of interest only, and doesnot constitute professional advice. You should not act upon the information contained in thispublication without obtaining specific professional advice. No representation or warranty(express or implied) is given as to the accuracy or completeness of the information containedin this publication, and, to the extent permitted by law, [insert legal name of the PwC firm],its members, employees and agents do not accept or assume any liability, responsibility orduty of care for any consequences of you or anyone else acting, or refraining to act, in relianceon the information contained in this publication or for any decision based on it.© 2012. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLPwhich is a member firm of PricewaterhouseCoopers International Limited, each member firmof which is a separate legal entity. 22
  23. 23. Q&A Questions?