Streamlining Corporate IFRS Reporting with XBRL

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Streamlining Corporate IFRS Reporting with XBRL

• Lindsey Domingo Jason Daniels
• PricewaterhouseCoopers

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Objective

• To share with you the approach adopted and
  lessons derived from a pilot case study on using
  XBRL to produce IFRS financial statements

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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
• QA / for more information

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Background

• The approach for this case study was driven by
  our experience both as preparer and advisor
• Preparing several hundred financial statements
  under different GAAPs, 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

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Business reportingWhat 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

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Business reportingWhat organisations aim for
(contd)
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Business reportingWhat is often the reality
(after adopting IFRS)
Operating Company
Division
Group
Actual results
ERP/GL
Monthly forecast
Annual budget
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Business reportingWhat 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

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Approach we piloted using XBRL

• Developed reporting templates based on PwC
  illustrative IFRS financial statements
• Created extensions to IFRS GP taxonomy 15/6/04
• Mapped XBRL tags to reporting elements
• Imported data from a variety of sources to
  generate XBRL instance documents
• Rendered XBRL IFRS financial statements and other
  types of reporting

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Approach we piloted using XBRL (continued)
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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.
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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.
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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.
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Sample Summary of Significant Account Policies
Note
Presentation of both text disclosures and
financial disclosures in a single document
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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.
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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.
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Print Preview
Preview of the format and appearance of the
financial statements prior to printing
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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
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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.

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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

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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

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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.

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QA / for more information

• Feel free to visit our BOOTH and to contact us
• lindsey.domingo_at_pwc.be, 32 2 710 7207
• jason.daniels_at_au.pwcglobal.com, 61 7 3257 8536