Compliance, CSR Reporting, Integrating Reporting, XBRL, C

1. The Future of Financial Reporting
Greater Philadelphia Chapter IMA
Continuing Professional Education (CPE) Conference
Temple University
Friday, December 7, 2012
12:30 pm – 2:10 pm
Presented by:
Liv Apneseth Watson
Director of International Business Development
WebFilings

2. Failed Predictions
“The phonograph is of no commercial use”
- (Thomas Edison, 1880)
“Everything that has been invented has been invented”
- ( Charles Duel, Director US Patent Office, 1899)
“Who the hell wants to hear actors talking?”
- (Harvey Warner, 1927)
“I think there is a world market for about five computers” (Thomas J Watson, Chairman, IBM, 1943)
“There is no reason for any individual to have a computer in
their home”
- (Ken Oloson, President of Digital Equipment Corp., 1977)
“640k ought to be enough for anyone”
- (Bill Gates, 1981)

3. Liv A. Watson
• IMA Member since 2006
• Active leaderships roles
in local Evansville, IN.
Chapter
• Active leaderships role in
Lincoln Trail Council
• Active leadership roles in
IMA National Board of
Directors and several of
committees.
Director Of International Business Development

4. About Liv Apneseth Watson
Director Of International Business Development

6. Today Agenda
• TRENDS AFFECTING THE REPORTING PROCESS
OF THE FUTURE
• THE SOCIAL REPORTING REVOLUTION
• WHERE WILL THE JOURNEY TAKE YOU?

7. TRENDS AFFECTING THE REPORTING
PROCESS OF THE FUTURE

8. CORPORATE REPORTING
Critical for investor confidence
An essential element of corporate
governance
Influences decisions and behavior of
management
Influences decisions and behavior of
shareholders and other stakeholders
Affects resource allocation (financial,
natural and human resources) in
society
Influences perceptions of the
company’s customers, vendors, and
employees
Shapes how a company sees itself
and its role in society
Source: Prof. Robert Eccles, Harvard Business School

9. The Future
Michio Kaku
“predicts that computer
power will increase to the
point where computers, like
electricity, paper, and water,
"disappear into the fabric of
our lives, and computer
chips will be planted in the
walls of buildings."

10. Future of Humanity: Planetary Civilization
Kaku ranks the civilization of the future,
with classifications based on energy
consumption, entropy, and
information processing.
Michio Kaku is an American theoretical physicist

11. Information
Will Be
Available via
a Ubiquitous
Internet

12. Computing
Power Will Be
Cheaper;
Internet Will
Become a
Broader
Platform

13. KEY TAKEAWAYS

14. Mass
Collaboration
and Peer
Production
Online Models
Will Abound;
Machine
Readable
Information a
Must

15. Web Services Will Drive More Innovation

16. THE SOCIAL REPORTING REVOLUTION

17. “YOU CANNOT
MANAGE WHAT
YOU CAN'T
(OR DON'T)
MEASURE"
K1

18. Slide 17
K1
this graphic does not make sense to me. it doesnt correlate well with the text. Can we get rid of this and make the text bigger?
Korie.Downs, 11/9/2012

19. The Evolution of
Corporate Reporting
INTEGRATED
ENVIRONMENTAL
REPORTING
REPORTING
GRC
REPORTING
SUSTAINABILITY
COMPLIANCE
REPORTING
CSR
REPORTING
REPORTING
MANAGEMENT
FINANCIAL
REPORTING
STATEMENTS

20. INTEGRATED
REPORTING
STAKEHOLDER
ECOSYSTEM
Infomediaries
Investment
Community
EXTERNAL
STAKEHOLDERS
Subsidiaries
Investment
Community
Institutional Investors
Retail Investors
Infomediaries
Media
Social Media
Data Aggregators
Financial Publishers
Overseers
INTERNAL
STAKEHOLDERS
Overseers
Regulators
Lawmakers
Policy Makers
Central Banks
NGOs
Community Groups
Associations
Service Providers
External Auditors
External Legal
Professional Services
Technology Vendors
Trading Partners
INTERNAL
STAKEHOLDERS
Management
Employees/Staff
Board/Governance
Service
Providers
©2011 Brad Monterio
and Liv Watson

21. GOOGLE SEARCH
Environmental Reporting: 65 Million
Compliance Reporting: 60 million
Financial Reporting: 38 Million
Management Reporting: 32 million
CSR Reporting: 21 million
Integrated Reporting: 7 million
Sustainability Reporting: 3 Million
GRC Reporting: 2 million

22. “We’ve overspent our
financial, environmental,
social and governance
‘capital,’ and now the debt’s
come due.
Integrated Reporting is the
starting point to help us repay
that debt.”
Brad J. Monterio

23. INTEGRATED REPORTING
“This is a very
important initiative
that draws together
the key actors across
financial,
environmental and
social reporting. The
concept of integrated
reporting is coming
of age.”
Hans Hoogervorst,
Chairman, IASB
“Integrated Reporting demonstrates the
linkages between an organization’s
strategy, governance and financial
performance and the social,
environmental and economic context
within which it operates. By reinforcing
these connections, Integrated Reporting
can help business to take more
sustainable decisions and enable
investors and other stakeholders to
understand how an organization is really
performing.”
The IIRC (www.theIIRC.org)

24. INTEGRATED REPORTING
Evolution
Journey
Challenges
Missing Links
Story
Opportunities
Economic value

25. WHY PRACTICE
INTEGRATED REPORTING
Shows commitment to being
sustainable
Helps integrate sustainability into
strategy and operations for a better
managed company
Commitment to sustainability is
good for shareholders
Improves engagement with other
stakeholders, especially employees
and customers
Improves reporting transparency
Simplifies external reporting
Positions company as leader and
innovator

26. WHY PRACTICE
INTEGRATED REPORTING
Improves relationship with
investment community
Enhances access to capital
Strengthens relationships within
communities through
stakeholder engagement
Improves reputation and
strengthens brand
Meets compliance/regulatory
needs

27. CSR
REPORTING
TRENDS

28. CSR
REPORTING
TRENDS

29. CSR
REPORTING
TRENDS

30. CSR
REPORTING
TRENDS

31. CSR REPORTS WITH FORMAL ASSURANCE STATEMENT
Country
CSR
REPORTING
TRENDS
France
Spain
Italy
UK
Denmark
Netherlands
Australia
South Africa
Sweden
Finland
Norway
Japan
Canada
USA
2002 (%)
2005 (%)
2008 (%)
14
27
66
53
45
38
42
100
15
29
20
26
10
2
40
44
70
53
31
40
43
22
5
19
33
31
10
3
73
70
61
55
46
44
42
36
33
30
30
24
19
14
Source: KPMG International Survey of Corporate Responsibility
Reporting 2008, p. 56-58

32. CHALLENGES TO INTEGRATED REPORTING
“Closing the non-financial books” on time
Required level of inter-functional
coordination
Deciding on appropriate level of detail
Deciding what’s material or not
Lack of agreed-upon standards and audit
(vs. assurance) methodologies
Poor understanding of the relationship
between financial and non-financial
performance
Getting the attention of investors for nonfinancial information

33. MISSING LINKS
Standardization
Comparability
Materiality
Complexity
Stakeholder engagement
Assurance
Trust

34. OPPORTUNITIES
Tell your story your way
(re)Build trust
Grow economic value
Restore the balance
Improve transparency
Manage entire supply
chain
Mitigate reputation risk
Save money
Build long term value
Attract capital

35. LEADING
REPORTERS

36. HOW TO SPEED ADOPTION?
Missing links need to be
connected
Companies must take
responsibility to act
Innovation by many
constituencies is necessary
Support from investment
community vital
Standards essential – XBRL
is part of it; must be global
Legislation and regulation
will ultimately be required
Support from civil society
will encourage others to act

37. INVESTMENT COMMUNITY SUPPORT GROWING
Thursday, November 18th, 2010
Statement Calls for Policies to Unlock the Vast Potential of LowCarbon Markets and Avoid Economic Devastation Caused by
Climate Change
(London) – The world’s largest global investors have a powerful
message for climate negotiators in Cancún and all national
governments: Take action now in the fight against global warming
or risk economic disruptions far more severe than the recent
financial crisis.
The statement was signed by more than 250 investors from Europe,
United States, Asia, Australia, Brazil and South Africa, with collective
assets totaling over US$ 15 trillion—more than one-quarter of
global capitalisation. Signatories included the global giants Allianz
Global Investors and HSBC Global Asset Management, as well as
many of the largest European pension funds and a dozen US public
pension funds and state treasurers. It is the largest-ever group of
investors to call for government action on climate change.

38. CHAOS OF FRAMEWORKS

39. SOLUTION MUST BE GLOBAL
“Sector, country-specific and
proprietary frameworks for
reporting on sustainability are at
odds with what the market needs
today. Solutions need to be global,
uniform, consistent, comparable
with current needs and extensible to
meet current and future needs; they
need to help the market understand
an organization‘s sustainability
practices, no matter in which
country or industry sector they
operate.”
- Liv A. Watson & Brad J. Monterio

40. Soft versus Hard CSR Laws

41. Rio 20 – 2012
Brazil, Denmark, France, and South Africa have created a self-named group called “Friends of Paragraph 47”
Extra-financial information
Grenelle II law
ISAE 3000 and the AA1000.
Ad Hoc Data

43. http://www.sseinitiative.org/publications/

44. http://www.responsibleresearch.com/Responsible_Research___Sustainable_Stock_Exchanges_2010.pdf

45. • 75 Banks

47. Agreements, standards and recommendations

49. SEC Adopts Rule for Disclosing Use of Conflict Minerals
Washington, D.C., Aug. 22, 2012
• The Securities and Exchange Commission today adopted a rule mandated
by the Dodd-Frank Wall Street Reform and Consumer Protection Act to
require companies to publicly disclose their use of conflict minerals that
originated in the Democratic Republic of the Congo (DRC) or an adjoining
country.
• The minerals are “necessary to the functionality or production” of a
product manufactured or contracted to be manufactured by the company.
• Congress enacted Section 1502 of the Act because of concerns that the
exploitation and trade of conflict minerals by armed groups is helping to
finance conflict in the DRC region and is contributing to an emergency
humanitarian crisis. Section 1502 of the Act amends the Securities and
Exchange Act of 1934 to add Section 13(p).
• Companies will file their first specialized disclosure report on May 31,
2014 (for the 2013 calendar year) and annually on May 31 every year
thereafter.
• The final rule requires a company to provide the disclosure on a new form
to be filed with the SEC (Form SD).
http://www.sec.gov/news/press/2012/2012-163.htm

50. The minerals involved in this trade – cassiterite (tin ore), coltan (tantalum ore),
wolframite (tungsten ore) and gold – are traded into international supply chains and
used in the production of consumer goods such as laptops, cell phones and jewellery.

51. http://hausercenter.org/iri/about/global-csr-disclosure-requirements

52. CSR Reporting Challenges
CONTENT &
STRATEGY
PROCESS
Linkage: financial & non
financial performance
Collaboration
Materiality
Version control
Level of detail
Data aggregation
Lack of standards &
frameworks
Access and control
Helps CSR report
preparers eliminate
or minimize these
process challenges
Allows company to
focus on content &
strategy
Frees up time to
better tell the
company “story”

53. CSR Reporting Pain Points
#
Excel works poorly
with Word
1
#
2
No supply/value
chain collaboration
or version control
#
3
#
Managing change is
difficult
#
XBRL
Compliance
Copyright 2012 WebFilings LLC
Company Confidential
5
4
End-game crunch

54. WHERE WILL THE
JOURNEY TAKE YOU?

55. The Information Overload Challenge
“ in this networked world, there is a need for
greater flow of knowledge across boundaries.
. knowledge needs structure - without structure
you cannot retrieve it efficiently and you cannot
personalize
the internet has facilitated access to
information, but complicated the task of
identifying relevant knowledge”
Source: Quotes from TFPL Taxonomies for Business conference, London 23 October 2000

56. XBRL is the
electronic
language for
business
information
exchange

57. XBRL a 2007 Breakthrough Idea!
Here Comes XBRL

58. Looking at XBRL in Different Ways
• A freely available, market-driven, open, global
standard for exchanging business information

59. Looking at XBRL in Different Ways
• XBRL is a means of modeling the meaning of
business information in a form
comprehendible by computer applications
XBRL is a formal description
of concepts, terms, and
relationships within a given
knowledge domain.

60. Adding Meaning to Electronic Data
Standardization
Presentation
Presentation
Presentation
Presentation
Presentation
Comptant Comptant
現金及び現金等価物
Деньгиenїх etэквиваленты
Гроші & Cashеквіваленти
Kas ихEquivalents
现金与现金等价物
Geld &и Geldmiddelen
Cash та Geld nahe Mittel
Equivalents
References
Label
GAAP I.2.(a)
Instructions
Ad Hoc disclosures
cashCashEquivalentsAndS
hortTermInvestments
XBRL
Item
Calculation
Cash = Currency +
Deposits
Validation
Formulas
Contexts
US $
FY2004
Budgeted
Cash ≥ 0

61. Intelligent Machine Readable Data

62. “Adoption of new technologies never occurs as
quickly as we expect – but the impact is far greater
than we realize.”
- Cringley’s Law

63. The Benefits

64. GRI and XBRL
The goal of this document is to
provide guidance to people
who use the GRI
Taxonomy to either report
sustainability information or wish to
receive it.
Source: https://www.globalreporting.org/resourcelibrary/GRI-Taxonomy-Implementation-Guide-2012.pdf

65. Different types of users of the GRI XBRL taxonomy
• Reporters:
– Organizations who disclose their sustainability performance
• Filing agent:
– Organizations creating a report on behalf of another organization
• Consumers:
– Organizations that use information provided by reporters
• Extenders:
– Organizations that create an XBRL taxonomy reusing the work done
by GRI
• Regulators and governmental agencies:
– Organizations that adopt the GRI Taxonomy to define reporting
requirements to be provided by filing organizations
• Software vendors:
– Organizations that embed the GRI Taxonomy in their solutions

66. GRI’s XBRL Voluntary Filing Program
• GRI Taxonomy 2012 / G3. and G3.1.
• GRI Taxonomy enables organizations to tag their
sustainability data in reports
For More Information Contact: XBRL@GlobalReporting.org

67. Greenhouse gas emissions and global warming are amongst the most material and
commonplace sustainability challenges addressed
Paul Simpson, CEO Carbon Disclosure Project

68. Why Disclose CDP data?

69. KEY TAKEAWAYS
Corporate reporting is evolving
Many new data sets are non-financial
CSR is leading into integrated reporting
XBRL mandates: CDP, GRI and IIRC
Structured Data is here to stay!]
Innovation

70. Liv A. Watson
Director, New Markets
liv.watson@webfilings.com
Author or contributing author to the following books:
Liv A. Watson
www.webfilings.com