In the last few articles, we introduced you to two powerful artifacts – technology and the power of XBRL – which you could use to up the quality of your financial reports. Here, we dive into details to provide you with a checklist to navigate through various software options in the marketplace.
Get a financial disclosure management software that can also handle XBRL
Assuming you are reading our articles in a sequence, you probably recognize the huge benefit of a software solution that would make your financial reporting process far smoother. You would have understood, too, that the XBRL standard can add an extra layer of quality to your reports.
A logical start, therefore, is to look for financial reporting software that integrates XBRL.
Checklist for financial reporting software
We have already given a checklist for financial reporting software in a previous article. To quickly recap, the best ones –
- Are cloud-based — to facilitate easy coordination across multiple geographies
- Our collaborative, since the creation and review of financial reports typically involves multiple people
- Enable smooth integration between numbers and text — especially critical in financial report creation
- Allow easy document management — including a centralized repository of all versions created, version compare, commenting, etc.
- Allow workflows to facilitate easy review and sign off
To further refine the selection, we now add the XBRL overlay or a software checklist from an XBRL perspective.
A logical start is to look for financial reporting software that also integrates XBRL
Checklist for XBRL aspects of the software
1. XBRL International Certification
One of the first things to consider is the software’s certification. And the one certification that matters in the XBRL world is by XBRL International (XII), a global not-for-profit organization committed to the ‘open data exchange standard’ for business reporting.
XII certifies software based on how well they meet XBRL specifications — the one outstanding feature being interoperability, wherein a document compiled by a report creation software moves seamlessly through a report consumption software. XII provides a list of certified software on its website.
The certification needs to get renewed every year. So, you can be sure that XII-certified software is always compliant with the latest specifications.
Under the ESMA ESEF mandate, XBRL Europe, which is part of the XII consortium, lists software or service providers that can help issuers produce Inline XBRL files for ESEF compliance and also allow analysts to consume that data.
Check these lists as a starting point, and narrow down on software that covers the core disclosure management functionalities as well as an XBRL certification.
2. Third-party quality rankings of XBRL
Within the software you have shortlisted, look for any independent verification of quality, especially on the XBRL side. Different solutions integrate and leverage the standard differently, and the best ones squeeze in as much as they can from the specifications to offer their clients the highest quality.
While you may not come across a software ranking in your country, you could refer to those in other countries. For example, there are independent third-party experts in the US who analyze and rank the quality of software based on XBRL / iXBRL filings published with the US SEC. Rankings are a good way to get a feel for how well a software has leveraged the innate advantages that XBRL makes available to companies.
3. Customer References and Testimonials
Nothing beats feedback from actual users of the software, who can share their experience with you. As you go down your evaluation process, do not hesitate to ask (or look) for testimonials and references. Whether it’s a firm in your jurisdiction or elsewhere, hearing from users who have hands-on experience with the solution makes a tremendous difference.
While this article focused solely on external validations through certifications, rankings, and recommendations, the next article will focus on what you should look for in the internals of the software you select
