Continued from Parts I and II...

4. How do you assess the ROI and how does it compare to initial expectations?

While soft cost considerations are important, I have noted a higher focus on third-party direct costs which ultimately misses much of the broader value proposition.

• Initial cost—license fee, set-up, XBRL conversion, hardware and related IT costs
• Recurring costs—maintenance, subscription fee, XBRL services, etc.
• Discontinued direct costs—document/ change management, rush fees, EDGARizing, filing, XBRL services, etc.

In many cases, the discontinued third-party costs more than offset the fees and costs related to the disclosure management solution

Note that some of these costs hit legal or other budgets and may not be easily visible to the reporting team.

• If the disclosure management solution expenditures exceeded discontinued or replaced costs, was this deemed to be a good investment from a financial perspective?
• What were the soft cost implications? Some examples are reporting and IT investment in implementation, re-deployment of team resources to other projects due to shorter reporting cycles, improved morale, lower turnover, increased competency and self-sufficiency, reduced reliance on third parties, reduced risk profile, deemed value of accelerated reporting calendar, etc.
• What was the structure, length and flexibility of the commitment?
• Does the pricing vary depending on the number or type of filings or activities or is it time-based or dependent on the number of users?

Other common uses include the earnings release, earnings call script, board reports and statutory reporting.

• SaaS solutions are available for as little as three-month rolling contracts with the ability to output all of the data on demand. Some solutions require multi-year commitments or imply a multi-year commitment due to the up-front cost.
• How flexible is the pricing to expand or reduce the number of users and were subsequent price changes, if any, in line with expectations?

5. Has your company expanded the use of the disclosure management solution?

Most companies start with the 10-Q and 10-K but quickly expand to 8-Ks, proxies and other ’33 and ’34 Act filings the earnings release, earnings call script and statutory reporting. Expanded use cases may include internal reporting, roll-ups for aggregating external reporting data or analyst communications, contracts, IR, legal, marketing collaboration, etc.

There has historically been a high level of consistency among registrants in the process for compiling reports for the SEC. Comprehensive discussions with peer companies can provide valuable insight into the solution attributes that contribute the most to real process improvements. Even companies that compete with each other are generally willing to collaborate on regulatory issues. It is too late to make any major process changes for the June quarter, however registrants are encouraged to observe which solutions are used by companies that have an easier and faster filing process and which are used by companies that have an easier and faster filing process and which are used by companies with more challenging filing processes. The December 10-Ks are around the corner and it’s not too late to plan for them.

The June 2012 quarter marks the final phase-in for XBRL reporting which requires roughly 6,500 accelerated, non-accelerated and smaller reporting company filers (Tier 3 filers to join the 1,500 large accelerated filers already submitting detailed XBRL reports. High dissatisfaction rates and frustration with the “pencils down” period (the period prior to the planned filing date when no additional changes are allowed by financial printers and other outsourced XBRL solution providers) has been a major factor precipitating the search for a better alternative.

Over the last two years disclosure management solutions (also referred to as built–in SEC reporting solutions) which automate and streamline the SEC reporting process have become mainstream. There is confusion among some registrants of whether or not to consider adopting a disclosure management solution and how to differentiate various solutions. A framework is provided below for reporting teams to evaluate whether a disclosure management solution is right for their company, and if so, which solution they should choose based on the results and experience of peer companies.

Disclosure management solutions more or less encompass a fully integrated SEC reporting process which addresses the collaborative drafting of the document and XBRL and may include integration with ERP systems, EDGARizing, and filing with the SEC. The significant reduction in time, resources, and money required along with the ability to control the entire reporting process contribute to the high adopting rates. Disclosure management solutions are offered on either a Software as a Service (SaaS) or an “on-premise” client server platform which influences the cost structure,   IT support required, time to implement  and accessibility among team members inside and outside of the firewall.

The various solution providers may contribute to the market confusion in their effort to maintain or grow their customer base. Providers often aim to differentiate themselves by focusing on product features and functions or perceived weaknesses in competitor offerings Many SEC reporting directors who undertook a diligent review process with a prioritized list of system requirements, concluded a few months later that some of the highest ranked feature requirements in the evaluation phase were unimportant. An evaluation approach, which focuses on organizational results and user experience, provides a broad perspective and protects against overemphasizing features that ultimately will have a minor impact.

There is now sufficient experience in the market that the limited number of disclosure management solution providers (along with legacy EDGARizer and XBRLsolution providers) should be easily referenced and not just from the hand-picked references given to you by the solution provider. Your peers at other companies are the best source of information about the solutions they are using as well as the solutions they stopped using or are planning on stop using.

Tier 3 filers are strongly advised to check references with large accelerated filers who already use detail tagging.  There is a big step up from first year XBRL tagging and Tier 3 filers will gain insight regarding the detailed filings that they will soon be submitting. The SEC Professionals Group (www.secprofessionals.org) provides an excellent forum for independent reference checking.  A confidential contact list of its 2,500+ members (membership is limited to in-house individuals focused on SEC reporting -- there is no cost to join) is accessible to members who are encouraged reach out to each other on topics of mutual professional interest. Quarterly SEC Professionals Group meetings across the country also provide a venue for informal peer-to-peer discussion.

Part II coming soon...

by Jerry Behar

The Digital Accountability and Transparency Act is headed to the Senate after the U.S. House of Representatives passed the measure to establish a consistent, transparent method for reporting federal spending information and making it accessible to anyone with an Internet connection.

The bill doesn’t mandate XBRL as the medium for gathering and reporting data, but it instructs the Federal Accountability and Spending Transparency Commission, to be formed by the bill, to incorporate existing nonproprietary standards such as XBRL if it’s practical to do so. XBRL advocates, like Barry Melancon at the American Institute of Certified Public Accountants and Campbell Pryde at the XBRL US consortium, are already stumping for XBRL to fill the need.

The DATA Act moved quickly through the House after outrage mounted over a lavish Las Vegas conference staged by the General Services Administration. The bill’s primary objective is to make government spending more transparent to the average American, but it also sets caps for government spending on travel and professional conferences.

Whatever brought it to a quick, unanimous vote in the House, groups like the newly formed Data Transparency Coalition are rejoicing at what it means for the proliferation of consistent data identifiers and markup languages for federal spending information. The Act, if approved by the Senate, will establish a complete, accurate, searchable web-based platform to allow the average American to access current government spending data on the Internet.

In a prepared statement, Melancon XBRL would create “intelligent data” to meet the bill’s mandate for consistent electronic identifiers and markup language. “A tag can be attached to each piece of data in a financial or business report,” he said. “All of the tagged data would be put on one public platform, which would make government spending more transparent.”

Pryde also assured the House knows how free and open XBRL is, and that it was developed specifically to provide the kind of reporting of financial and performance-related information that the DATA Act seeks to establish. “The ability of XBRL to enable greater standardization means that government agencies and the entities reporting to them can leverage the same software and infrastructure from agency to agency, and even more importantly, they can avail themselves of the tools already available on the market today,” he wrote to the House to support the measure. “XBRL is a low-cost solution that needs no further development and can leverage existing market tools, infrastructure and expertise.

The bill begins in the Senate with the Committee on Homeland Security and Governmental Affairs.