XBRL and Document Management: The Perfect Storm

By Diane Mueller
February 26, 2009

How can you turn the U.S. SEC eXtensible Business Reporting Language (XBRL) mandate's requirements into an opportunity when making process improvements to comply? Implement an XBRL-enhanced document management strategy as part of your internal corporate filing workflow which will both boost compliance and save money.

Strategies for Success

Document management is based on applying the principles of structured content -- documents that have been chunked into meaningful component parts and tagged in a systematic fashion. In the case of the corporate financial reporting process, the structure now being applied to financial content is XBRL, the financial XML standard that promises to transform, and perhaps revolutionize, how companies create and use their financial information to meet business objectives. With the SEC mandating the use of XBRL, now is the perfect time to take advantage of these two converging industry best practices. Its standardized structure makes the application of document management systems possible for the corporate accounting sector, whereas in the past, the lack of structure had hindered the adoption of document management strategies in this domain.

Document management workflows have long been known to speed the delivery of corporate information materials, improve quality and accuracy of content across the global enterprise, increase staff efficiency with content, and reduce publishing costs. IT departments have been waiting a long time for accounting departments to open up the kimono to document management practices for the sake of improving archiving, content reuse, and data management. Going forward, successful organizations will apply document management practices to help streamline their corporate reporting processes.

Outsourcing vs. 'In-Sourcing' XBRL

Most CFOs and external reporting managers will probably opt for the short term fix of 'outsourcing' XBRL filing requirements to financial publishers. Considering the time constraints, this is a valid approach for the first ~ 500 filers who are scurrying to comply by June 2009. This 'outsourcing' approach puts the burden of tagging accuracy onto a third party and simply adds yet another service fee to the cost of the corporate filing process without garnering any real internal benefits to the organization. However, in some cases, the filing process must be handled internally due to the complexity of reporting requirements. Bringing the tagging effort inside, or 'in-sourcing,' initially offers the opportunity to gain a better understanding of the technology as well as to examine the benefits of bringing XBRL-based structured content reuse into the corporate reporting process.

The more adventurous accountants might opt to 'in-source' the tagging effort and assign an external reporting manager with the role of expert tagger, using one of the many XBRL-tagging tools that have cropped up in the past few months to fill the gap. However, after the first few filing cycles, it becomes apparent that both of these approaches simply increase the burden on the corporate reporting department's limited resources and are just other versions of 'cutting and pasting' content from one application to another. The key to success is automation -- the manual 'tagging' process must become an automated process that is integrated with the existing corporate reporting workflows.

The sources for the filing's content can be connected directly to the corporate report generation workflow. Backend accounting and Enterprise Resource Planning (ERP) systems now let users export primary financial statements to XBRL. Also, the commentary -- management's notes and discussions or footnotes -- are easily stored in content management systems that now support the storage and retrieval of XBRL content. If your current accounting systems do not have an XBRL export function, there are many fully-automated XML mapping tools on the market today that can easily plug-in and create the required XBRL content. Document management systems connect all these sources of content for filing creation into a secure collaborative workflow.

Aside from the filing's primary author and gatekeeper who is usually the External Report Manager, imagine how many 'touches' it takes to get a filing ready for submission to the SEC. The filing process requires review and comment from multiple parties who review, reuse, and add value to the filing document:

  • C-levels (CEO, CFO, COO)
  • Internal Audit
  • Legal
  • Corporate Communications
  • Investor Relations
  • Even your Webmaster

With an XBRL-enhanced document management system, accounting departments can compose complex filing documents from multiple data sources, monitor the status of the review cycle, check in and check out the document, refresh data from the source when necessary, track changes, and enable reuse of the content for various publishing and investor communication needs in a connected, secure, distributed manner.

XBRL: Connecting the Dots

XBRL is inherently a connective technology. As the document is assembled and circulates for review, it remains connected not just to the sources of the content (accounting systems, document archives, ERP databases) but to additional resources that enable the reviewers to make informed decisions. For example, the U.S. GAAP taxonomy comes with a reference linkbase that connects concepts to their Financial Accounting Standards Board (FASB) authoritative literature. So, if the reader is unsure of the definition of 'Fair Value Assessment' as described in the document, they will be able to click through to the most current online documentation on the subject. This same capability could connect the reader to the company's Accounting Policies and Procedures manuals and take the reader directly to the section that explains how the company interprets the FASB ruling on the topic.

Why Now?

If you look across your organization, you will probably see many examples of document management, structured content authoring, and XML already at work today. Marketing, technical publications, and sales and training departments have long been strong proponents and avid practitioners of document management systems. Managing manuals, datasheets, parts catalogs, safety and training content, and other core publications in a structured fashion helps to substantially reduce costs. In other areas, key documents such as proposals, RFP responses, sales collateral, and contracts that directly impact revenue growth are most likely already incorporated into a document management system. Document management systems enable content reuse by presales and sales departments helping to improve win rates by allowing sales personnel to access a library of existing, proven RFP responses and standard content components to assemble custom tailored proposals and correspondence. These same principles of document management are well documented and ready to be applied to financial content.

Now is the time to apply these principles to the corporate filing process and reap the benefits across multiple departments. Content tagged and stored in a document management system can be reused securely on your investor relations website; it can be securely reviewed and revised by internal audit review, legal, and corporate communications prior to filing; and best of all, the content can be updated and reused in the next filing cycle complete with version control and change management.

Leveraging the structure inherent in XBRL documents enables you to take advantage of recent advances in content management and publishing systems to create an end-to-end corporate reporting solution that includes authoring, reviewing, publishing, translation, and management of financial information.
With resources and dollars tight, it makes good sense to take advantage of the timing of the SEC mandate to review your corporate reporting strategies. Going forward, it is key to have effective document management strategies in place for financial reporting, so take advantage of this perfect storm -- the requirement to comply with the mandate and the opportunities of structured content presented by the advent of the XBRL standard -- and realize a measurable impact for your organization now.
umbrella.jpg

How can you turn the U.S. SEC eXtensible Business Reporting Language (XBRL) mandate's requirements into an opportunity when making process improvements to comply? Implement an XBRL-enhanced document management strategy as part of your internal corporate filing workflow which will both boost compliance and save money.

Strategies for Success

Document management is based on applying the principles of structured content -- documents that have been chunked into meaningful component parts and tagged in a systematic fashion. In the case of the corporate financial reporting process, the structure now being applied to financial content is XBRL, the financial XML standard that promises to transform, and perhaps revolutionize, how companies create and use their financial information to meet business objectives. With the SEC mandating the use of XBRL, now is the perfect time to take advantage of these two converging industry best practices. Its standardized structure makes the application of document management systems possible for the corporate accounting sector, whereas in the past, the lack of structure had hindered the adoption of document management strategies in this domain.
Document management workflows have long been known to speed the delivery of corporate information materials, improve quality and accuracy of content across the global enterprise, increase staff efficiency with content, and reduce publishing costs. IT departments have been waiting a long time for accounting departments to open up the kimono to document management practices for the sake of improving archiving, content reuse, and data management. Going forward, successful organizations will apply document management practices to help streamline their corporate reporting processes.

Outsourcing vs. 'In-Sourcing' XBRL

Most CFOs and external reporting managers will probably opt for the short term fix of 'outsourcing' XBRL filing requirements to financial publishers. Considering the time constraints, this is a valid approach for the first ~ 500 filers who are scurrying to comply by June 2009. This 'outsourcing' approach puts the burden of tagging accuracy onto a third party and simply adds yet another service fee to the cost of the corporate filing process without garnering any real internal benefits to the organization. However, in some cases, the filing process must be handled internally due to the complexity of reporting requirements. Bringing the tagging effort inside, or 'in-sourcing,' initially offers the opportunity to gain a better understanding of the technology as well as to examine the benefits of bringing XBRL-based structured content reuse into the corporate reporting process.

The more adventurous accountants might opt to 'in-source' the tagging effort and assign an external reporting manager with the role of expert tagger, using one of the many XBRL-tagging tools that have cropped up in the past few months to fill the gap. However, after the first few filing cycles, it becomes apparent that both of these approaches simply increase the burden on the corporate reporting department's limited resources and are just other versions of 'cutting and pasting' content from one application to another. The key to success is automation -- the manual 'tagging' process must become an automated process that is integrated with the existing corporate reporting workflows.

The sources for the filing's content can be connected directly to the corporate report generation workflow. Backend accounting and Enterprise Resource Planning (ERP) systems now let users export primary financial statements to XBRL. Also, the commentary -- management's notes and discussions or footnotes -- are easily stored in content management systems that now support the storage and retrieval of XBRL content. If your current accounting systems do not have an XBRL export function, there are many fully-automated XML mapping tools on the market today that can easily plug-in and create the required XBRL content. Document management systems connect all these sources of content for filing creation into a secure collaborative workflow.

Aside from the filing's primary author and gatekeeper who is usually the External Report Manager, imagine how many 'touches' it takes to get a filing ready for submission to the SEC. The filing process requires review and comment from multiple parties who review, reuse, and add value to the filing document:

  • C-levels (CEO, CFO, COO)
  • Internal Audit
  • Legal
  • Corporate Communications
  • Investor Relations
  • Even your Webmaster

With an XBRL-enhanced document management system, accounting departments can compose complex filing documents from multiple data sources, monitor the status of the review cycle, check in and check out the document, refresh data from the source when necessary, track changes, and enable reuse of the content for various publishing and investor communication needs in a connected, secure, distributed manner.

XBRL: Connecting the Dots

XBRL is inherently a connective technology. As the document is assembled and circulates for review, it remains connected not just to the sources of the content (accounting systems, document archives, ERP databases) but to additional resources that enable the reviewers to make informed decisions. For example, the U.S. GAAP taxonomy comes with a reference linkbase that connects concepts to their Financial Accounting Standards Board (FASB) authoritative literature. So, if the reader is unsure of the definition of 'Fair Value Assessment' as described in the document, they will be able to click through to the most current online documentation on the subject. This same capability could connect the reader to the company's Accounting Policies and Procedures manuals and take the reader directly to the section that explains how the company interprets the FASB ruling on the topic.

Why Now?

If you look across your organization, you will probably see many examples of document management, structured content authoring, and XML already at work today. Marketing, technical publications, and sales and training departments have long been strong proponents and avid practitioners of document management systems. Managing manuals, datasheets, parts catalogs, safety and training content, and other core publications in a structured fashion helps to substantially reduce costs. In other areas, key documents such as proposals, RFP responses, sales collateral, and contracts that directly impact revenue growth are most likely already incorporated into a document management system. Document management systems enable content reuse by presales and sales departments helping to improve win rates by allowing sales personnel to access a library of existing, proven RFP responses and standard content components to assemble custom tailored proposals and correspondence. These same principles of document management are well documented and ready to be applied to financial content.

Now is the time to apply these principles to the corporate filing process and reap the benefits across multiple departments. Content tagged and stored in a document management system can be reused securely on your investor relations website; it can be securely reviewed and revised by internal audit review, legal, and corporate communications prior to filing; and best of all, the content can be updated and reused in the next filing cycle complete with version control and change management.

Leveraging the structure inherent in XBRL documents enables you to take advantage of recent advances in content management and publishing systems to create an end-to-end corporate reporting solution that includes authoring, reviewing, publishing, translation, and management of financial information.
With resources and dollars tight, it makes good sense to take advantage of the timing of the SEC mandate to review your corporate reporting strategies. Going forward, it is key to have effective document management strategies in place for financial reporting, so take advantage of this perfect storm -- the requirement to comply with the mandate and the opportunities of structured content presented by the advent of the XBRL standard -- and realize a measurable impact for your organization now.


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