You are currently browsing the tag archive for the ‘XBRL’ tag.

Tagetik provides financial performance management software. One particularly useful aspect of its suite is the Collaborative Disclosure Management (CDM). CDM addresses an important need in finance departments, which routinely generate highly formatted documents that combine words and numbers. Often these documents are assembled by contributors outside of the finance department; human resources, facilities, legal and corporate groups are the most common. The data used in these reports almost always come from multiple sources – not just enterprise systems such as ERP and financial consolidation software but also individual spreadsheets and databases that collect and store nonfinancial data (such as information about leased facilities, executive compensation, fixed assets, acquisitions and corporate actions). Until recently, these reports were almost always cobbled together manually – a painstaking process made even more time-consuming by the need to double-check the documents for accuracy and consistency. The adoption of a more automated approach was driven by the requirement imposed several years ago by United States Securities and Exchange Commission (SEC) that companies tag their required periodic disclosure filings using eXtensible Business Reporting Language (XBRL), which I have written about. This mandate created a tipping point in the workload, making the manual approach infeasible for a large number of companies and motivating them to adopt tools to automate the process. Although disclosure filings were the initial impetus to acquire collaborative disclosure management software, companies have found it useful for generating a range of formatted periodic reports that combine text and data, including board books (internal documents for senior executives and members of the board of directors), highly formatted periodic internal reports and filings with nonfinancial regulators or lien holders.

vr_fcc_financial_close_and_automation_updatedTagetik’s Collaborative Disclosure Management automates the document creation process, eliminating many repetitive, mechanical functions and reducing the time needed to administer the process and ensure accuracy. Automation can shorten finance processes significantly. For example, our benchmark research on trends in developing the fast, clean close finds that companies that use little or no automation in their accounting close take almost twice as long to complete the process as those that fully automate it (9.1 days vs. 5.7 days). Manually assembling the narrative text from perhaps dozens of contributors and combining it with data used in tables and elsewhere in the document is a time-consuming chore. Regulatory filings are legal documents that must be completely accurate and conform to mandated presentation styles. They require careful review to ensure accuracy and completeness. Complicating this effort recently are increasingly stringent deadlines, especially in the U.S. Anyone who has been a party to these efforts knows that there can be frequent changes in the narratives and presentation of the numbers as they are reviewed by different parties, and those responsible need to ensure that any change to a number that occurs is automatically reflected everywhere that amount is cited in the document; to use the depreciation and amortization figure as an example, that would include the statement of cash flows, income statement, the text of the management discussion and analysis and the text or tables of one or more footnotes. Moreover, automated systems afford greater control over the data used. They make it possible to answer the common question of where a number came from quickly and with complete assurance. While inaccuracies in other types of financial documents may not have legal consequences, mistakes can have reputational or financial consequences.

Those managing the process also spend a great deal of energy simply checking the document to ensure that the various sections include the latest wording, that the numbers are consistent in the tables and text, that amounts have been rounded properly (which can be really complicated) and that the right people have signed off on every part of the filing. Automation obviates the need for much of these tasks. Tagetik’s CDM workflow-enables the process, so handoffs are automated, participants get alerts if they haven’t completed their steps in timely fashion, and administrators can keep track of where everyone is in the process. Workflow also promotes consistent execution of the process, and the workflows can be easily modified as needed.

In designing Collaborative Disclosure Management, Tagetik took advantage of users’ widespread familiarity with Microsoft Excel and Word to reduce the amount of training required to use its product. CDM’s workflow design makes it relatively easy for business users to define and modify business process automation. Typically, individuals or small groups work on different sections of the document. CDM enables multiple contributors from finance, accounting, legal, corporate and other functions to work with their part of the document without being concerned about other contributors’ versions. Work can proceed smoothly, and those administering the process can see at any time which components have been completed, are in progress or have not even started. Tagetik’s software can cut the time required to prepare any periodic document, since once a company has configured its system to create what is in effect a template, it’s relatively easy to generate these documents on monthly, quarterly or annual bases. The numbers relevant to the current period are updated from the specified controlled sources, and references to tabular data within the text are automatically adjusted to tie back to these new figures. Often a large percentage of the narrative text is boilerplate that either must not be updated or requires only limited editing to reflect new information. Starting with the previous edition of the report, contributors can quickly mark up a revised version, and reviewers can focus only on what has changed. Other important automation features are data validation, which reduces errors and revisions, and the system’s ability to round numbers using the appropriate statutory methodology.

CDM also handles XBRL tagging, which is essential for all SEC documents and necessary for an increasing number of regulatory filings around the world. The software specifically handles tagging for the two main European prudential regulatory filings for banks and other credit extending institutions, COREP (Common Reporting related to capital) and FINREP (Financial Reporting performed in a consistent fashion across multiple countries).

VR-BUG-WEBCompanies can gain several key benefits by automating the production of their periodic regulatory filings and internal or external financial reports that combine text and data. One of the most important is time. Automation can substantially reduce the time that highly trained and well-compensated people spend on mechanical tasks (freeing them to do more productive things), and the process can be completed sooner. Having the basic work completed sooner gives senior executives and outside directors more time to review the document before it must be filed or made public. Time that can be devoted to considering how best to polish the narratives or if necessary lengthen upstream deadlines to handle last-minute developments and consider options for how best to treat accounting events. Automation can also reduce the chance of errors, since the numbers tie directly back to the source systems and (if properly configured) ensure that references in the narratives and footnotes to items in tables and the numbers in those table agree completely. Restatements of financial reports caused by errors are relatively rare but when they occur are exceptionally costly for public companies’ reputations.

Disclosure management systems are an essential component for any financial performance management (FPM) system. All midsize and larger corporations should be using this software to automate the production of their periodic mandated filings and other documents that combine text and data. They will find that they are useful in cutting the time and effort required to produce these documents, provide senior executives and directors more time to review and craft the final versions, and reduce the chance of errors in the process. Companies that are using older FPM software should investigate replacing it with an FPM suite to gain the additional capabilities – including disclosure management – that newer suites offer. Tagetik’s should be among the financial systems evaluated for office of finance.


Robert Kugel – SVP Research

Reconciling accounts at the end of a period is one of those mundane finance department tasks that are ripe for automation. Reconciliation is the process of comparing account data (at the balance or item level) that exists either in two accounting systems or in an accounting system and somewhere else (such as in a spreadsheet or on paper). The purpose of the reconciling process is to identify things that don’t match (as they must in double-entry bookkeeping systems) and then assess the nature and causes of the variances. This is followed by making adjustments or corrections to ensure that the information in a company’s books is accurate. Most of the time, reconciliation is a matter of good housekeeping. The process identifies errors and omissions in the accounting process, including invalid journal postings and duplicate accounting entries, so they can be corrected. Reconciliation also is an important line of defense against fraud, since inconsistencies may be a sign of such activity.

But let’s be frank: The reconciliation process is tedious. As for all tedious processes in modern corporations, it makes sense to let machines do this work. Reconciliation is a part of the accounting close process, and one of the main benefits of automation here is that it can accelerate the process. This is important because our benchmark research on closing finds that it’s actually taking longer for companies to close their books than it used to. The research also shows a correlation between the degree of automation in the close process and the time it takes to complete it.

vr_fcc_financial_close_and_automation_updatedBack in the days of quill pens and blotters it might have been manageable to meticulously comb through accounting entries. Today, however, volumes of data are too great to make this realistically feasible, and technology provides accountants with faster and more effective means of spotting patterns and familiarizing them with the peculiarities of the company’s books. For CFOs and controllers who are trying to determine how to begin the process of transforming their department to make it a more strategic player in their company, here is a way to free finance staff to do more productive tasks.

There are three important virtues associated with automating reconciliation. The first is consistency: Business rules, policies and procedures are applied consistently in ways that are in line with accounting policies that external and internal auditors accept. Machines are more reliably consistent than humans in such tasks. The second virtue is elegance: Automated systems simplify the process while making it faster and more accurate. They enable auditors to focus their time and attention on the most important issues that arise from the process. The ability of automated systems to highlight exceptions eliminates the need for random sampling, which both consumes time and poses the risk that something important will go unnoticed. The third virtue is efficiency: Automated systems enable a company to substantially reduce the amount of time needed to complete the reconciliation of accounts because the system performs the purely mechanical tasks and skips the accounts in which there has been no activity or in which the amounts to be reconciled are too small to be material. These systems also reduce the time internal and external auditors need to check reconciliations because all of the work is centralized in a single system and because the system and its configuration functions as a higher level of control in the reconciliation process that’s easy to test and monitor.

Despite these obvious virtues, most companies don’t use such capable automation. The majority manage reconciliations in spreadsheets shared through email. Electronic spreadsheets were a major advance decades ago. Today, however, they are not the best choice because the information they contain is fragmented, difficult to consolidate, hard to share and prone to error. Running this process with spreadsheets and email is more difficult and time-consuming to manage and control than using a dedicated reconciliation application. A well-designed dedicated application assigns ownership of every task to individuals and provides real-time visibility into which parts are on schedule, which are behind and which may be in danger of falling behind schedule. These systems employ templates that are centrally controlled to ensure consistency and quality. The templates can be updated as needed. A spreadsheet may start as a template, but it’s difficult to control them, even with protections built in.

Documentation is another weak spot in spreadsheets shared through email. Although there are objective aspects to the reconciliation process, those performing it ultimately must use their judgment. These judgments must be supported by narratives and calculations that clearly and completely explain the decisions each person made and by citing supporting documents wherever necessary. A related aspect is approvals, since good governance and control of accounting systems requires that someone inspect and approve the work of others when their actions (or lack of action) can have a material impact on the quality and accuracy of financial statements. So another important element that a dedicated reconciliation system can provide are approval workflows to ensure that the work has been completed before the books can be closed.

Automating reconciliation can be a first step in creating a virtuous cycle. Many executives in finance organizations would like to improve the performance of their department but face the challenge of finding the time to devote to such efforts. The staff time that can be saved through automation can be reinvested in finding the root causes of other issues that bog down the department and fixing them. Automating reconciliation can accelerate the financial close, improve productivity, reduce errors and the related possibility (albeit limited) of financial misstatements, enhance control and diminish the risk of financial fraud. These are reasons enough why all midsize and larger corporations should investigate the benefits of dedicated reconciliation software.


Robert Kugel – SVP Research

RSS Robert Kugel’s Analyst Perspectives at Ventana Research

  • An error has occurred; the feed is probably down. Try again later.

Twitter Updates


  • 127,003 hits
%d bloggers like this: