derek abdinor

Ofttimes, people come up to me and say “please stop taking pictures” or “get off my lawn”. Othertimes, I talk to them about communicating to their stakeholders in an online fashion.

There are many tools to accomplish this. The variety becomes a problem because clients may see it as a shopping list. The real issue is the usability. If you do NOTHING online, do you expect an analyst to go to the stock exchange or regulator, or your company’s head office, and ask there for a report at reception? Of course not.

Its a continuum, stretching from extreme discomfort at getting public information, to extreme ease of use. The client has to decide where to jump off this line. As it is all really low-cost technology, the question should not be solely around cost.

continuum of investor information

What one must bear in mind, is that we live in a multi-channel world. By making all the formats in the graph available, some will still choose to have a printed report, others a PDF, others will only concern themselves with the Excel while some will have scanned the newspaper.

You can’t be all things to all people, but you can give all the options to all people.

I find the standard way of explaining XBRL using the barcode analogy doesn’t quite work for me. A barcode is a complex display with arguably more information encoded on that “tag” than exists for the object label itself.

I think of financial statements locked in a PDF or book as a flock of birds an ornithologist is studying. They all congregate at the right time, have some structure to their flight plan, and unnervingly know how to calculate themselves to arrive at a destination

The guy studying the evolution of the flock would do well to tag each bird with details like name/gender/status etc. Then individual movements would allow for greater analysis and data would be accurate and clean.

After deciding on how you’ll tag them, you attach the tag and thus begins the filing flying process…

The US SEC (our JSE equivalent) announced on Tuesday late August that the format for financial statements to the regulator, Edgar, will be superseded by a format that has more in common with the social media tools today’s users have come to enjoy.

You had to see the webcast (and followed the liveblog): The president-appointed chairman who oversees America’s $26-trillion investment management industry was talking mash-ups, RSS and the T-word, Twitter!

Twitter, corporate websites and corporate blogs will be used to disseminate financial information. Corporates will use those channels to communicate to the market and to shareholders. Using PR wire services is going to be phased out, heavily affecting that lucrative business. That’s the reading between the lines here, and it’s brewing into an ugly storm.

David Blaszkowsky, director of the SEC’s Office of Interactive Disclosure, said: “After 75 years of document-based static financial reporting, whether in paper documents or in electronic equivalents, it is exciting to see the SEC poised to cross the ‘data threshold’ and help investors receive financial information that is dynamic, usable and ready to go as they make their investment decisions. And when the investor wins, so does the public company, fund, or other filer who simultaneously benefits from greater transparency and trust in our markets. By tapping the power of interactive data to tear down barriers to quick and meaningful investment information, markets can become fairer and more efficient while investors can possess far better quality data than was ever possible before.”

IDEA allows for slicing and dicing of financial information and comparisons much like XBRL, which I mentioned here. It will be used to enhance Edgar filing for the next three years, and then replace it entirely.

post first published on TechLeader

The SEC announced last week that it would make a decision in 2011 on whether adoption of IFRS is in the public interest and would benefit investors.

SEC Chairman Christopher Cox, as part of his drive to make global sampling of financial statements easier, pointed out that there are many business languages in the world, and in most of these countries they report in IFRS.

There’s some analysis by Charles Hoffman highlighting different reporting standards for public and private companies, and the webcast of the SEC announcement. Calls for comment on the proposal are open. It would make XBRL taxonomy easier, n’cest pas?

I reckon that technology-ignorant clients are a double-edged sword. The Law states that whatever sophisticated concept you manage to run by them with no resistance, thou shalt be smitten with much rebuking about low-end things, eg:

• this content management tool doesn’t accept my MS Word tabs and indents! Shriek!
• I just want to print one piece of paper off this website page, not all 20! Rant!
• Search on my site doesn’t find the document I put up on the intranet last week! Rail!

An essential point about client education was made by Dominic Jones in a different forum: XBRL. I quote:

Most US investor relations officers (IROs) are not directly involved in disclosure technology and have a very poor understanding of it. This is mostly because about 75% of investor relations sections on US corporate websites are outsourced to hosting services. IROs have generally been entirely hands off when it comes to these sites so they’ve lost out on a lot of important learning over the years. They don’t understand what HTML is, so XBRL is even more alien to them.

As much as we think of expediency and taking problems out of the clients’ hands (or outsourcing those to us in these times), it makes us party to them not knowing more about the technology issues. The cycle continues.

Taking a leaf out of the “teach a man to fish” parable, I’m going to escalate the training of clients. Not just in terms of social knick-knacks, but along the lines of: What Every IRO Should Know.

Good piece by Confluence about how they see financial data going in 2008. Some key take-aways from this slightly-edited release:

According to Kirk Botula, Executive Vice President and Chief Operating Officer, “There are many forces driving the automation of fund administration functions. These include the global expansion of fund companies, increased frequency of reporting across many different regulatory and accounting regimes, and heightened transparency demands.”

•  Back-office shortages will intensify.
  In 2008, staffing shortages in fund companies’ and service providers’ back offices will intensify, as pressure to support additional mutual fund and alternative investment instruments places even more demands on a limited talent pool. Fund administrators will seek technology solutions that enable them to automate routine processes to reduce staff dependency and eliminate the risk of error.
• Investor pressures will drive expense control.
  Market pressures have been driving down the operating costs that investors are willing to pay. Investors will continue to seek out low-cost products, and this price sensitivity will force fund companies to exert more cost control over their expenses. Leading service providers and fund companies will include the automation of expense payments and budgeting as key initiatives in 2008.
• FAS 157 requirements “in full swing.”
  The Financial Accounting Standards Board’s (FASB) new fair valuation reporting rule, FAS 157, went into effect in November 2007. Fund companies’ fair value committees and their auditing firms continue to be pressured to have the proper data to support the valuations that they set for securities. As they incorporate the newly mandated FAS 157 Level 1, 2 and 3 disclosures into their reports in 2008, fund companies and service providers will demand that their accounting and fund administration systems automate the reporting process. This automation will help reduce the burden on back-office staff and lower the risk of error.
• SEC continues focus on XBRL, short-form prospectus.
  The SEC continues to champion the XBRL language for electronic reporting, and that momentum will continue with its short-form prospectus initiative. This initiative is intended to improve mutual fund disclosure by providing investors with information in a clear and concise format. Confluence believes that, though a commendable endeavor to simplify investor disclosure, the short-form prospectus is another reporting requirement that will burden already-taxed administrative staff without technology to streamline the process.

Companies automating fund administration processes need to pay special attention to issues of data integrity, as well as scalability. Confluence advocates a centralized, “platform-agnostic” database as the backbone of this process.

I’ve been asked for links to XBRL information, here you go. Suggest you read exponentially, ask me questions later;enjoy!

SEC Readies XBRLTagging Rules for Financial Filings | eweek.com

XBRL: Is the Time Finally at Hand? | WebCPA

XBRL Case Studies | XBRL.org

Tag, you’re it: XBRL bridges the GAAP | CPA success

To start using XBRL, the following steps are needed:

1. Contact your local XBRL “jurisdiction”
2. Look for technical support for initial programming and setups.
3. Use XBRL-aware accounting software to export data in XBRL format.
4. Map charts of accounts and other structures to XBRL tags.