Transcript Streamlining Corporate IFRS Reporting with XBRL

Streamlining Corporate IFRS
Reporting with XBRL
Lindsey Domingo & Jason Daniels
PricewaterhouseCoopers
Objective
 To share with you the approach adopted and
lessons derived from a pilot case study on
using XBRL to produce IFRS financial
statements
2
What we will cover








Background
Business reporting: what organisations aim for
What is often the reality (after adopting IFRS)
Approach we piloted using XBRL
Lessons learnt
What are we doing to incorporate these?
Opportunities, challenges and way forward
Q&A / for more information
3
Background
 The approach for this case study was driven by
our experience both as preparer and advisor:
 Preparing several hundred financial statements under
different GAAP’s, increasingly IFRS
 Assisting companies with their IFRS transition
 Working with organisations to enhance the quality and
timeliness of their internal/external reporting
 Implementing XBRL at clients to streamline reporting
for APRA and taxation reporting
4
Business reporting:
What organisations aim for
“Straight through” process - minimal manual intervention
Smooth data transfer from underlying systems
Timely, accurate and relevant information
Controls embedded within reporting systems and
processes
 Compliance with regulatory requirements
 Mechanisms for rapid resolution of queries and issues
 Finance teams can focus on analysing results rather than
producing the numbers




5
Business reporting:
What organisations aim for (cont’d)
Operating Company
Division
Group
Actual
results
load
submit
validate
approve
Publish
reports
ERP/GL
Monthly
forecast
approve
input
submit
validate
reject
•
•
•
•
review
approve
adjust
consolidate
submit
review
approve
adjust
consolidate
intercompany
currency
Industry regulator
Tax
Legal
Treasury
Management
approve
Annual
budget
•
•
•
reject •
•
•
approve
reject
input
submit
validate
6
Business reporting:
What is often the reality (after adopting IFRS)
Operating Company
Division
Actual
results
ERP/GL
Monthly
forecast
Annual
budget
7
Group
Business reporting:
What is often the reality (continued)
 Poorly harmonised reporting processes:
 different reporting requirements
 inconsistent definitions
 issues integrating data from different sources.







Long, painful closing and reporting cycle
Spreadsheet-based reporting & manual workarounds
Multiple, expensive to maintain, proprietary systems
Many “versions of the truth” to reconcile
Limited drill-down and analysis capabilities
Too much time spent on producing the numbers
Lack of timely information for decision-making
8
Approach we piloted using XBRL
1. Developed reporting templates based on PwC illustrative
IFRS financial statements
2. Created extensions to IFRS GP taxonomy 15/6/04
3. Mapped XBRL tags to reporting elements
4. Imported data from a variety of sources to generate
XBRL instance documents
5. Rendered XBRL IFRS financial statements and other
types of reporting
9
Approach we piloted using XBRL (continued)
10
Mapping structure with imported accounting data – core financials
To map an account, find its correct
point in the hierarchy and then
“drag and drop”
To allow companies to prepare
financial statements where
XBRL has not been embedded
in the process, the left side of
the screen contains the
imported accounts for your
accounting system. Mapping
these accounts to the correct
point in the hierarchy is
simply a case of “drag and
drop”. This process only
needs to be undertaken the
first time data is imported. For
each subsequent year, only
new accounts added in the
past year need to be mapped
into the hierarchy.
Where XBRL is already
embedded in the process, this
mapping of trial balance data
is not required.
Multiple accounts can be mapped to the same point
in the hierarchy. The total of the accounts mapped
will appear in financial statements.
11
Sample Balance Sheet for a Consolidated Company
Cells which contain financial data
imported from the accounting system
can not be typed over, ensuring the
integrity of the financial statements.
Note numbers are
automatically
linked to the
corresponding
note in the
financial
statements.
Within an allowable tolerance, the
financial statements will
automatically allocate a rounding
amount to a selected account,
ensuring that this account appears
correctly in the notes and flows
correctly through the financial
statements.
12
Drill Down
From any mapped
balance in the
financial statements,
it is possible to drill
down to the
underlying trial
balance information
that makes up that
balance.
The drill down report
provides a
reconciliation of
imported information
and subsequent
adjusting journals to
provide the final
balance that appears
in the financial
statements.
13
Sample Summary of Significant Account Policies Note
Presentation of both
text disclosures and
financial disclosures in
a single document
14
Integrity of the financial statements
Throughout the financial statements we have included tables that cross-reference related balances to ensure that errors are
highlighted during preparation. These can be printed in the draft financial statements for review purposes and then removed
prior to signing.
15
XBRL Tagging
A simple mechanism for tagging and reviewing the tagging of financial statements is provided. Companies can use pre-tagged
financial statements and modify the tagging to suit their own purpose. They can also setup their own taxonomy and tag the
financial statements.
Financial statements can be tagged with multiple taxonomies.
16
Print Preview
Preview of the
format and
appearance of
the financial
statements prior
to printing
17
Adjusting,Reclassifying and Eliminating Journals
A range of journal entries can be
processed within the application
which will affect the balances shown
in the financial statements.
Normal adjusting journals are
processed where the same change is
required to be made in the accounting
system.
Reclassifying journals are processed
where the adjustment is only required
for disclosure purposes. No change
is required in the accounting system.
Eliminating journals are processed for
consolidation purposes.
A report for each of these journals
can be created for audit and company
processing purposes
18
Lessons learnt
 Financial v/s Non-financial data
 Tagging the financials
 Time-consuming process - there are 2.000+ items in the
illustrative financial statements to be tagged
 Version control of taxonomies
 Working with extension taxonomies
 Software
 Still differences in implementation, but significantly better than
previous pilots
 Need to differentiate between XBRL, and the functionality and
limitations of the application/s
 Need to provide feedback to vendors to obtain improvements in
functionality.
19
Lessons learnt (continued)
 Some old problems do not go away
 Rounding – still requires application specific solution
 Not all data is captured in sufficient detail in source
systems
 Still requires some manual intervention
 Requires controls around the adjustment process
 Mixed team
 XBRL expertise
 IFRS technical
20
What are we doing to incorporate these?
 Providing a high controls environment to allow
adjustments to management information for statutory
reporting
 IFRS projects are restructuring data to provide sufficient
detail
 Pre-tagging reporting templates to minimise user
intervention
 Regular updates to reporting templates
21
Opportunities, challenges and the way
forward
 Obtain efficiencies by creating pre-tagged pro-forma
templates across a corporate group
 Using XBRL for IFRS Content management
 Ensure consistent application of accounting standards across
companies and jurisdictions within a corporate group
 Version control over future releases of taxonomies
 How will applications deal with future changes?
 We plan to carry out the same extension and tagging
process for Financial Services once the taxonomy is
available.
22
Q&A / for more information
Feel free to visit our BOOTH and to contact us:
[email protected], +32 2 710 7207
[email protected], +61 7 3257 8536
23