When talking with your provider, it is critical to get a read on their ability to absorb this additional work.    You can ask about professional services staffing and what the provider plans to do with staff growth.  In addition, confirming that the software used is scalable and automated will help to determine if the provider is prepared for the additional work load.  Although detail tagging may not be at the  forefront of your brain yet, it is important that you understand how your provider will be using the software for detail tagging to confirm automation and efficiencies while they are working on your block tagging.   Also, find out how many people work on the software from a development perspective.  Does the provider have the development staff to support the software?  And lastly, how does the industry perceive your provider?  Are they the expert?  How long have they been in business?

These questions will start to point you in the right direction to make sure your XBRL filing is done to your satisfaction.

I believe that the winds of change are upon us and we will see just a few companies emerge as the XBRL leaders.  Rivet is continually being contacted by printers, law firms, accounting firms, and consulting firms asking us to help them provide quality XBRL services to them and their clients.  Recently, Rivet has contracted with a large worldwide printer to provide XBRL services for its clients.  This shows that the industry is starting to sit up and take notice of Rivet’s industry presence and leadership.  Rivet is here to stay!

Yes, I represent one of these vendors, Rivet Software.  Yes, I do have a bias.  But I am a Certified Public Accountant (CPA-13440) and have a strong loyalty to my fellow accountants.  We are always under constant scrutiny and are asked to do more with less.  We are once again in the hot seat with XBRL.  We are asked to either absorb this function in-house with no additional resources, or outsource it to a printer/vendor and hope it gets done correctly.  Either way, we can’t outsource compliance, so how do we ensure a proper filing with the SEC that gives an accurate representation of our company’s financials?

There is no getting around it, we must learn XBRL and get involved in the XBRL process.  One thought is that we are usually scrambling to get CPE, why not get it done early and take some XBRL classes?  Unfortunately, that’s not enough to get completely up to speed.  So here I sit, a representative of Rivet Software, yet determined to get the word out to my fellow accountants and CPAs that we are in the hot seat – we must take ownership of the XBRL process.

I decided to talk with some of Rivet’s current Wave 1 clients to ask them if you could start all over again with XBRL, what would you do different.  I focused on clients that started XBRL with a printer or other vendor and moved over to Rivet for their upcoming March filing and detail tagging.  I got lots of feedback and found that it all fell into the following categories:  Outsource versus do-it-yourself, cost, service, software, analysis, and most important, scalability/going concern.

• Outsourcing versus do-it-yourself: Wave 1 filers recognized they needed help from their XBRL vendor when they first started, but now that they have been at it for awhile, they want the option to bring it in-house after detail tagging gets under way.  If you are a Wave 2 or 3 filer, you may not want anything to do with the XBRL requirement now, but as I stated before, you can’t outsource compliance.  Therefore, look for a vendor who will let you bring the function in-house using their software if you change your mind in the future.
• Cost: Get a 3 to 5 year cost analysis from your current or potential vendor.  If it is included in the cost of your printing services, I can assure you that you will pay for it somehow.  Ask them to carve it out and define the XBRL portion for you.  Ensure that extensions and changes are not an additional charge.  This and other hidden fees can add up quickly.
• Service: Select a vendor who has an XBRL staff of accountants and CPAs who specialize in your industry and know what you are up against.  For Wave 1 filers this is that much more relevant as you start your detail tagging process.  Make sure that you talk directly to these individuals and not a service desk as this can cause long turnaround times and errors.
• Software: Even if you never want to bring XBRL in-house, you must evaluate your current provider’s software for both block and detail tagging.  Keep in mind that XBRL is created in a language called XML.  Theoretically, a vendor could have a staff coding your financials without your knowledge or consent.  I am not insinuating that this is currently being done in the market place, but we are in the hot seat to make sure, aren’t we?
• Analysis: Your XBRL provider should be able to produce peer to peer comparisons and benchmark reports using XBRL at no additional charge.  After all, we are going through the headache of complying with the mandate, shouldn’t we receive some benefits?
• Scalability/going concern: Will your vendor be around in a year or are they just riding the XBRL wave?

I also found that there was an original central belief for the Wave 1 filers that going with their printer would be safe.  XBRL was new and no one wanted to lose their job over a botched XBRL filing, right?  Unfortunately, all the points discussed above started to become issues as the process continued.  We all know that printers know printing inside and out.  How is it that they also know XBRL?  Are they as focused on XBRL as the other functions of their business?  I am not implying that printers can’t do XBRL, but it is our responsibility to insure XBRL is done accurately, timely, and cost effectively.  We must do our due diligence.  XBRL is changing what companies expect from us accountants and we need to step-up, accept our hot seat, and get to work.

Mobile phones are an ideal platform for alert and feed-based apps. XBRL to text message alerts are sure to come soon – if they are not already here. And it’s easy to deliver an RSS feed  - like the S.E.C.’s XBRL filing feed that you can see embedded in the widget on our home page – to virtually any mobile phone. There’s already an App for that.

The iPad opens up another delivery platform that is perfect for delivering XBRL analytics via applications like our own CrossView. Despite the naysayers, I’m convinced that the iPad will become a de facto business meeting accessory, quickly replacing laptops, especially in the financial services sector where having the latest and greatest is part of the game.

And what better app for an iPad than a complete snapshot of the financial performance of a prospect, partner or peer-group competitor provided easily and quickly across the Internet courtesy of XBRL?

The two primary resources needed to meet the interactive data SEC filing mandate are training (people) and technology (software).  The typical options for obtaining the necessary resources to become compliant with the SEC mandate generally range from completely outsourcing the XBRL filing requirements to bringing the XBRL tagging process in house.  Your choice should be based on your company’s particular circumstances.  The following discussion will identify the pros and cons of three options; (1) outsource completely, (2) bringing XBRL compliance in house, or (3) some combination of both.

Option 1: Outsourcing

If you decide to completely outsource your SEC filing requirement you still need to understand the specifics of the SEC mandate relative to your company.  The compliance responsibility ultimately is still yours so the reliability of the interactive data service provider is crucial when choosing your XBRL service provider.  This option avoids the costs of XBRL technology training and the extra infrastructure that is required to run the software, including ongoing maintenance fees associated with both the hardware and software.  The degree of XBRL expertise necessary to meet a filing requirement once every quarter may be a core competency that can be more efficiently outsourced.

Pros: avoids XBRL-related IT and training costs

Cons: you are not in control of your filing and your internal staff does not have the knowledge to verify the accuracy of the filing (which you are still responsible for)

Option 2: In House

Buying the technology and training your internal resources to meet the interactive data SEC filing requirements provides you with complete control of the final work product.  There is benefit to knowing the details behind the numbers in the external financial reports while selecting particular taxonomy elements for the financial statement line items.  The initial costs may be higher than completely outsourcing. However, over time the ongoing expense may be lower with a successful initial implementation of XBRL technology and training.  On the other hand, if you experience personnel turnover in your external reporting group, your training costs could remain higher over time.

Pros: you are in complete control of your filing

Cons: you incur significant initial costs for IT setup and personnel training with no guarantee of success or accuracy

Option 3: Outsource / In House Combination

When you choose to outsource the technology while bringing the XBRL expertise fully or partially in house, you are generally choosing the best of both worlds. The decision to choose this option should be based on your company’s desired level of control, turnover expected in the external reporting role, and the cost versus benefit of having in house XBRL expertise as opposed to outsourcing your XBRL needs. But remember, you can outsource your XBRL tagging, but you can’t outsource compliance. It is a good idea to have someone internally that knows enough about XBRL to verify the accuracy of your filings. The software as a service (“SaaS”) business model has been in use for over 10 years and is continuing to gain traction in the marketplace as an efficient , secure and reliable technology option. By relinquishing certain controls over the systems when you choose a SAS 70 Type II SaaS model, you are freeing yourself from the burden of ensuring the security of the data.

Pros: you maintain control over your filing, your overhead is less than it would be if you chose a full outsource or in house solution, you receive training and support from a dedicated team of CPAs who are XBRL experts

Cons: perceived lack of control over the data

At Rivet Software we overcome this perceived lack of control by offering a customer empowerment business model that allows you to be as involved as you want to be in the tagging process. You can choose to have your staff fully trained by our experts from the beginning or you can opt to have our team handle your tagging for you. Our most common professional services delivery option has been to provide full service for the first year (4 quarters) block tagging filing requirements, then training the client to perform the quarterly block tagging instance filing thereafter. Then we provide full service during the second year (4 quarters) detailed tagging filing requirement, then train the client to perform the full block and detailed tagging for each ensuing quarterly instance filing thereafter. We also offer a test filing to all of our customers before they submit their filing. Our XBRL professional services team is comprised of CPAs with industry specific knowledge. Our flexible training and tagging options are complemented by our secure SAS70 Type II managed hosted facility. The SaaS technology delivery model promises easier, speedier and less expensive implementations.

The value proposition of Rivet’s combined outsource / in house solution is hard to ignore. 

This is a sentiment that I hear over and over again from folks working in the modern corporate world. That’s why I can understand how the recent XBRL mandate can be positioned as part of a long list of regulations that turn accountants into law enforcers. But this assumption severely undermines the ability of XBRL to transform the financial reporting and analysis inside an organization; XBRL isn’t only about financial transparency for outsiders or Street analysts, it’s about the financial transparency within an organization.

The XBRL mandate is here, though, and the first step is to ensure compliance with the SEC. But we at Rivet also know the extraordinary benefits that XBRL can have for an organization. That’s why our Solution for SEC Corporate Filers minimizes the compliance burden and maximizes the benefit for an organization, all while keeping the customer in control.

One concern that comes up frequently from our clients is how to really be sure that the XBRL files produced will be blessed and accepted by the SEC. The validation tool in our product happens to be a beneficiary of Rivet’s 5 years and 100,000+ hours of experience with XBRL. Rivet’s developers, QA team and Professional Services team have been meticulous in their research and integration of the EGDAR manual and XBRL specifications. I have even seen one particular QA Manager with the EDGAR manual on in her kitchen! The validation tool in the Compliance Package runs the documents through three levels of validation: XBRL 2.1 specifications, EDGAR requirements and taxonomy calculation. And because the Crossfire products are web delivered, any updates from the SEC or XBRL US are quickly integrated into the validation tool and no software updates or installs are required by the user. This is just one of the ways that the Crossfire Financial Reporting Platform aims to make accountants’ lives a little easier.

I have also heard again and again from clients that while undergoing the XBRL vendor evaluation process, they couldn’t help but wonder if and how XBRL could be beneficial for them. Rivet has a way to make XBRL work for you. The Compliance Package includes an easy to use Excel add in which allows the user to pull all XBRL filings to the SEC into a spreadsheet to slice and dice to the heart’s content. Within seconds (not hours), our customers create KPIs, benchmark reports or any other kind of analysis one can think of. They can compare an internal quarter filing to competitors’ before it even goes live. They can create bar charts in Excel using publicly filed data without ever having to comb through their own or a competitor’s financials. In fact, Crossfire emails them an alert any time a particularly interesting data field is updated. Seriously!

Rather than becoming a compliance burden, the XBRL mandate has allowed Rivet’s clients to drastically improve and revolutionize their internal reporting processes, leaving them more time for analysis. With all of the slicing and dicing made possible by Crossfire, I might get that MBA in accounting after all.

Key requirements/skills:

• Committed to the notion of financial transparency and standards-based reporting
• Familiarity with the concept of taxonomy-based reporting
• Previous experience of SEC regulatory filing using XBRL
• Exposure to packaged solutions that generate XBRL report formats
• Expertise in the use of Rivet financial reporting products

Well maybe that last one is a stretch but you can’t blame me for trying…

A good internal audit department audits based on risk. A risky area, say derivatives trading, deserves a lot more attention from internal audit as opposed to a non-risky area, like marketing. However, internal audit needs information in order to assess risk. If they can’t assess risk, they end up auditing areas that don’t really matter and miss out on the areas that do.

In a large organization, internal audit will be choosing from a diverse set of risks such as:

• risk of financial statement misrepresentation
• lawsuits deriving from illegal hiring practices
• bribery charges stemming from a foreign operation
• purchasing managers colluding with suppliers
• inventory shrinkage
• rogue traders
• a lack of a disaster recovery plan for critical IT systems

The list could go on and on since each part of the organization has its own set of risks.

So the question is how to determine where to allocate audit resources in order to mitigate these risks. Getting a global vision of the activities that require internal audit’s attention is a transparency problem. This is one of the very things XBRL is excellent at resolving. By creating a taxonomy of relevant data points, then collecting that data and tagging it with the proper elements, one can create a data warehouse of risk related information that can then be used by internal audit to make effective decisions.

One such project has been initiated by OCEG (http://www.oceg.org/Details/GRC-XML). OCEG is a non profit organization dedicated to providing standards and metrics for governance, risk management, and compliance (GRC). The organization announced in September 2008 that they would be developing a taxonomy dedicated to GRC. While I’m unsure of the status of the taxonomy at this time, the other tools to make this a reality are available now.

I imagine the workflow of an XBRL savvy internal audit department would be something like this:

1. Create XBRL enabled interview templates for the initial data gathering stage. These would be questions designed for managers representing each core function of the organization.
2. Conduct phone interviews and fill in the templates with the appropriate responses.
3. Create instance documents from the templates (an instance document consists of the business facts being reported, and a collection of the taxonomies which define metadata about these facts, such as what the facts mean and how they relate to one another).
4. Load the instance documents into a data warehouse.
5. Analyze the results.
6. Select the area considered to be the most deserving of internal audits’ attention.
7. Perform the audit using the normal procedures, but any data produced from the audit would be captured using XBRL.

Of course, there are many details to be hammered out but this gives a general road map of how it could be done and yes, it can be done today. To give you an example of the tools that are available for using XBRL for whatever purpose you think is appropriate, I was interested in gathering economic data to get a feel for the economy. I wanted to see if the United States was pulling out of the current recession so I gathered leading indicator data from several sources (the Bureau of Labor Statistics, the Census Bureau, the Federal Reserve, etc). Of course, this data is not in XBRL format (maybe someday!) so I created elements for this data by extending the US-GAAP 2009 taxonomy using Rivet’s Crossfire Preparer. I then, in Crossfire Preparer, created a template (a template basically looks like an Excel spreadsheet but contains all the metadata needed to describe each fact) and imported the data from Excel. At that point, I created an instance document. The instance document was loaded into Rivet’s Crossfire Analyst (our data warehouse) and from there I could easily analyze the data however I wanted and even combine it with data from SEC filers. It was probably eight hours of work, including the data gathering piece which includes data going back to 1995.

I know these things can be done without XBRL, but the beauty of XBRL is the standard taxonomy that enables data to be defined and shared across departments, organizations, and system platforms. In the internal audit scenario, once a well-defined taxonomy, which includes all the necessary concepts and relationships, is developed, the data and the meta-data can be shipped all across the organization and each consumer of the information needs only an XBRL viewer to digest the information (however, tools like Crossfire Analyst make it much easier to analyze the data). XBRL is taking hold in a business-to-government setting. It’s time it took hold in an intra-business setting too.

Now I should say that this post is not going to go into any more detail about Jan’s clothing being disheveled. These Texas gals can be a touch feisty. Instead I want to focus on another part of Jan’s post – namely – I don’t want to build it up too much but this is the future. (her italics).Here at Rivet, we believe that the future of financial reporting is taxonomy-based: Not just for regulatory reporting, but for all kinds of financial information communication both within and across organizations.

Already in the present, there’s a need to control taxonomies within your reporting application in order to comply with regulatory mandates. But the future of financial reporting may also require additional flexibility. So that financial information can be communicated between business units or with partners based on agreed taxonomies that you yourself ‘mandate’ as the basis for your internal or collaborative financial reporting.

The IMA recognizes this future as do the guys and gals at the front line, like Jan, implementing and supporting today’s financial report writers . So if you are considering a new financial reporting solution for your business or wondering about the longevity of the one you already have,  you should take a look at the way we do it in Crossfire. You never know. It might just set your bow-tie spinning or blast off your shorts…

The new tagline reflects two key messages: That Compliance is just the start of a journey towards financial transformation of your business and that Rivet’s Crossfire Reporting Platform will support you on every stage of the journey.

Here at Rivet we like to think that every CFO or Controller can be a financial transformer – someone with both the strategic grasp and tactical grip to change the way an organization manages business performance. We see executing this financial transformation as a journey where the destination is active participation in a global financial ecosystem that benefits all participants.

In the USA, the journey begins with compliance. The SEC mandate for filing financial information in XBRL format can be viewed either as an unwelcome burden or an opportunity. It’s undoubtedly a burden, adding extra effort and cost to the filing process, but it’s also undoubtedly an opportunity to standardize financial reporting, improve transparency and benefit from an expanding universe of like-for-like performance data to compare against.

The ‘big idea’ behind the SEC’s mandating the use of taxonomy-based reporting was not that the journey would stop there – with compliance – but that having done the hard work, business filers will create a new financial ecosystem that they and other stakeholders can benefit from. An ecosystem based on standardized information formats and a new information communication channel.

By control we mean taking control of this new financial information format and communication channel by using it as the means to better analyze your financial performance both internally and against national, and eventually international, industry peer groups. For the first time you will have taxonomy-based financial reports that mean the same thing and can be reliably compared and contrasted with some confidence – not a just a bunch of spreadsheets. So it’s not only easier to compare and contrast against your own previous or projected period reporting but also against the reports filed by your competitors and peers. Control also means having the ability to streamline the financial reporting process utilizing XBRL-GL format and finally be able to unify various data sources under the same reporting framework. Finally, the control belongs to end users, not the IT group.

By communicate we mean making your business more transparent to all your stakeholders – whether they are regulators or investors, partners or customers. The opacity of the financial services sector and the banking industry in particular has precipitated the greatest financial crisis the world has seen in living memory. Transparency is no longer a game or a nice to have it’s something the global economy needs in order to survive, to enable businesses to start and grow, to keep people like you and me in work.

This comply, control, communicate journey won’t take place overnight. As the slide below shows, it involves lots of collaboration and thoughtful effort. And the destination may never be fully realized. But having set foot on it, you might as well put your best foot forward.

Journey Towards Financial Transformation