With the ESMA iXBRL mandate around the corner starting January 2020, issuers need to give some serious thought to the way they plan to prepare their Annual Financial Report (AFR) in iXBRL format. for ESEF reporting.
Issuers have multiple options to go about complying with the mandate. Either you outsource the iXBRL creation process or handle it in-house. While many may speak to the overall uptake of buying or using cloud-based solutions, there are still several organizations that hesitate to make the move. The reason for this could be several misconceptions. And while we may dismiss these myths as harmless, for issuers it could mean relinquishing the opportunity to streamline their overall reporting process.
In this blog, we present to you how a cloud-based disclosure management solution is best suited for ESEF reporting.
Secure your Unpublished Reports
Unpublished financial data has the highest risk of information security. The trends around the world indicate issuers send their AFR to an outsourced iXBRL provider through emails. Emails are the most insecure way to send across AFR, especially if they contain highly sensitive unpublished data. Emails are prone to virus attacks, other cyber security risks, and other digital security dangers. Apart from this, humans could also be a point of data misuse. The documents that you outsource are highly insecure as the data can be leaked by any member of the outsourced team which can cause unimaginable impacts and consequences on the issuer’s AFR.
Cloud-based solutions, on the other hand, are highly secured, the data on the cloud is encrypted, and there are security measures in place to make sure the data is accessible only to authorized users.
Efficient Streamlined process
The overall preparation process of compliance reports is highly iterative with tight deadlines. The need to deal with a lot of numbers and text with even more edits and iterations could be daunting if you do not have an efficient way of working. Cloud-based solutions offer a centralized way of working where all changes done in one document will reflect instantaneously in all output formats which include iXBRL, Word, and PDF. It gives you confidence that you are always working on the most updated version of your documents; you can track and review not just your document but your iXBRL as well.
Greater Visibility and Control
The traditional outsourcing of word drafts for iXBRL creation to outsourced service providers leaves you losing sight of the document. There might be a loss of data as well. There are solutions in the market which handle only tagging and not formatting. Many providers are partnering with design firms to handle the stylization part of the AFR. The tagging team works on selecting the appropriate tags from the ESEF taxonomy, creating company taxonomy, extensions, anchoring, etc., while the design team works on the layout of the AFR. Issuers have multiple rounds of drafts and versions of the document floating around. The series of drafts and versions are usually sent separately to both the tagging teams and the design team. These teams have separate processes, resources and tools for XBRL tagging and design/formatting. While you may send v4 of the document, the team who handles tagging would be working on v3 and the design team on v2. You won’t be having any idea at what stage your document is with your service provider.
With the availability of new technology, issuers are adopting cloud-based solutions for their compliance process. One of the biggest benefits of using a cloud-based solution is that you NEVER lose sight of your compliance documents. You get a greater level of control and visibility of your documents, iXBRL tagging including any last-minute changes.
Superior iXBRL Report Quality
If you have opted to outsource your iXBRL creation process, high chances are that your service provider’s XBRL tagging and design teams work separately, there is a good chance that any changes, especially the ones made at the last minute are missed in one of the file formats. This leads to widespread quality issues and results in incomplete and inconsistent data being reported, which reduces the comparability of the data being reported.
With a single-source cloud solution that handles iXBRL and design/layout in one single platform, numbers are always in sync in all output files. You will always be confident of the number you are reporting.
Quick Tips: Check the Tagging Method
# If your outsourcing firm uses the ‘keying-in’ approach for iXBRL tagging where the format of the annual report is not maintained, then you seriously need to look for other options to handle your AFR iXBRL filings.
# Most cloud-based solutions have XBRL tagging embedded in the document that the users are working on, therefore making it easy for transitioning to iXBRL. Cloud-based solutions also offer the flexibility to take the iXBRL tagging process in-house if issuers want to or use their XBRL expert teams who do the tagging on their document.
# Out of the numerous items which an issuer’s compliance team is responsible for, using a cloud-based solution for compliance reporting helps issuers with saving a lot of time with just a simple and streamlined process and provides a new and improved way of working.