kpmg Reforming Regulatory Reporting

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kpmgReforming Regulatory Reporting

• John Turner
• Leader KPMG Global XBRL Services Team
• john.turner_at_kpmg.co.uk

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Topic Outline

• Walking the tight rope
• Reaching common understanding
• Evolution of regulatory reporting
• Why XBRL?

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Walking the tightrope

• Regulation, and government as a whole, cannot
  exist without information from private
  corporations
• Lots of information
• No really
• Lots and lots of information
• This is variously estimated as around 0.6 of
  GDP.
• gt 8 Billion hours per annum in the US alone
• Regulators must balance their legitimate
  information needs against this provider burden.

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An ongoing balancing act

• Viewed as a whole, regulators appear to move
  between favouring industry and favouring
  government in terms of their data collections.
• Both extremes are undesirable for all concerned
• Reasons are complex, but include regulatory
  policy taking its lead from altering community
  expectations

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Topic Outline

• Walking the tight rope
• Reaching common understanding
• Evolution of regulatory reporting
• Why XBRL?

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Six principles for regulatory reporting
requirements

• Timely
• To be useful, information needs to be available
  within a reasonably short period from the time of
  measurement. The rear view mirror view of any
  qualitative measure is only useful where
  information is currentand its currency rapidly
  fades.
• Accurate
• Information should be free of data anomalies and
  errors and tested for manipulations.
• Reasonable
• Regulators should seek to minimize provider
  burden (the amount of effort imposed on the
  regulated community by the scope of the data
  collection).
• Relevant
• The definitions and interrelationships between
  data definitions need to be up to date and as
  tightly linked to information used for the
  running of the business as possible.
• Efficient
• The cost of collecting the information needs to
  be proportionate to the value of the data
  collected.
• Transforming
• Legitimate governmental information needs change
  markedly over time. Sometimes information
  collections are allowed to go stale as a result
  of a policy that favours the private sector.
  Stale information is resented, and eventually
  ignored by users, or, perhaps worse, is assumed
  to remain relevant by agency analysts, who
  quickly become out of touch with industry
  developments.

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Reaching common understanding

• Headline
• People turn to XBRL to help exchange information
  between systems.
• The sub-text
• In order to exchange information you need to
  understand it.
• Understanding metadata turns out to be tough.
• XBRL can help provide a consistent view of all
  the information that is used around the
  enterprise (or across enterprises)
• This is a way to componentise business activity
  without replacing systems

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Topic Outline

• Walking the tight rope
• Reaching common understanding
• Evolution of regulatory reporting
• Why XBRL?

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Evolving processes for data collection
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Paper Bound Unusable data

• The process of designing and deploying
  paper-based data collections is, of course,
  pretty simple.
• The actual use of paper-based data is
  problematic!

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Program Bound Continuous Programming

• In this mode, the process of implementing the
  decisions made about regulatory reporting
  requirements involve
• Providing the Excel and Word (eg paper) versions
  of the information requirements to the systems
  development team.
• These requirements get coded (by hand) into
  electronic forms.
• This goes backwards and forwards between the
  business and technology groups until the forms
  are right.

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Adaptive Improvement by the Business

• An Adaptive system is designed with a view to
  the need to make changes as being one of the key
  features of the business environment.
• By building requirements in a format that are
  human readable as well as understandable by a the
  system, the business experts get very fine-grain
  control over the creation of the form.
• It also imposes new levels of discipline over the
  creation of the regulatory reporting
  requirements, with business experts able to share
  the requirements with a range of stakeholders
  (internally and externally) in a very precise way.

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Topic Outline

• Walking the tight rope
• Reaching common understanding
• Evolution of regulatory reporting
• Why XBRL?

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Six principles for regulatory reporting
requirements revisited

• Timely
• Accurate
• Reasonable
• Relevant
• Efficient
• Transforming