by Anuradha | August 10, 2018
Out of the many things a CFO is responsible for, complying with the SEC tops the list. Being one of the most important yearly tasks, it directly comes under the purview of the CFO and compliance teams.
The overall SEC reporting process is a very time bound activity with strict deadlines to be met for filing; therefore it is important that the process right from document preparation until filing is done in an efficient manner. One can imagine the complexities of a financial report preparation- many disclosures and many numbers that need to be accurately reported. Out of the numerous complexities and challenges in the overall filing, the SEC compliance process can be a huge deal breaker in terms of time and cost.
To make the job easier, companies invest in a software to assist with their AFS as well as SEC compliance filing in the XBRL format. Apart from pricing, here are a few must haves that a CFO should consider to make a software buying decision.
1. iXBRL ready product
In early 2016, the SEC had announced a voluntary filing program encouraging companies to file in the iXBRL standard. From a companys perspective, it is very important for the compliance team to know if their existing process is equipped for the upcoming iXBRL mandate.
Towards the end of June 2018, the US SEC mandated to make Inline XBRL (iXBRL) as the official format for digital financial reporting. This will replace the dual formats of XBRL and EDGAR HTML and will henceforth be the single format that companies will need to file with.
Being one single format, iXBRL brings in efficiencies in the review process since filers need to review only one document, considerably saving time and cost.
2. A Cloud-based, Collaborative, Single Source platform
With the reporting process itself being so lengthy, there may be one or many authors to the financial report but many stake holders who review and provide their comments. There may also be a lot of back and forth and revisions before the document reaches a final stage. Added to this, updates would need to flow through HTML, XBRL and any other output file. One can imagine the amount of time it would take for one change to reflect suitably in different output files.
Having a cloud-based platform solves many of these problems. Multiple members can work on the document; even if a single user is working, it would support assistance in the form of XBRL tagging so that there is just one document in place which guarantees visibility and control over the document.
It would be a good idea to always check if the software that you want to look for has a single-source feature i.e. make updates at one place for all the respective output files having the latest content flowing in seamlessly without any issue.
3. Spreadsheet and Linking Feature
4. Product Support and Customer Service
Even when the product scores a 10/10 on every parameter such as UI/UX, ease of use etc.; it is very important that the product support and customer service is equally good too.
Most product companies today try to introduce a Do It Yourself model. With complexities like filing with the SEC and setting up a document each quarter, the need of having a good team of product support and customer service can be of utmost importance. Hence it is imperative before signing up with any product/service provider you check-
5. Roll forward feature
Creating a financial report each quarter is no easy task- especially when you have two documents- HTML and XBRL; both to be submitted on the very same day. A huge time saver would be to have a roll forward feature where the document can be automatically rolled forward for the next reporting period along with updating dates both in the document and in XBRL too. How easy would it be to just change dates of a June report to September within just few minutes!
6. Review and Commenting
A cloud based solution has the advantage of having one document on the cloud but the overall review and sign-off process is better managed than any other process that is prevalent today. The main things to look for in the review process are the following.
7. SEC updates and market needs:
Apart from many other updates, the SEC does a yearly revision of its US-GAAP taxonomy. It only allows the latest version of the taxonomy to be used, but recommends companies that comply with the same. It is always important to know and understand how quickly your SEC compliance software is updated to meet with the latest revisions and requirements aligned with the SEC and how it is ahead compared to other products in the market.
Another significant introduction by the SEC is the In-Line XBRL (i-XBRL) which was announced in June 2016. IRIS CARBON® already caters to the UK and Ireland markets where iXBRL is the mode of filing and therefore it will be very easy to update the platform with the US-SEC requirements.
We believe this 7 point check list will be useful if you consider changing your software. From our experience handling customers who have signed-up with IRIS CARBON®, these have been some major aspects that clients experienced.