Transcript of Glen L. Gray Sung Wook Yoon California State University, Northridge Determinants of Levels of...
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- Glen L. Gray Sung Wook Yoon California State University,
Northridge Determinants of Levels of Satisfaction with SEC-
Mandated XBRL Filing Process: A Work in Progress University of
Kansas April 26-27, 2013
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- Disclaimer The analysis, interpretations, and views expressed
in this paper are solely those of the authors and do not
necessarily represent positions or opinions of the Financial
Executives International (FEI). 2
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- A Brief XBRL History 1969: Al Gore invents the Internet 1994:
Commercialization of the Internet 1999: FASB and IASC each publish
reports on financial reporting on the Internet Most large companies
are including financial reporting information on their Web sites No
consistency in terms of content, format, and navigation Probably
violating financial reporting regulations! (Still true?) Boundary
problems (In or out of financials?) Automated searches almost
impossible October 1999: First XBRL meeting with 13 members
December 2008: SEC required XBRL filings starting in 2009 3
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- Adoption summary for corporate filers Periods ending after June
15, 2009 Periods ending after June 15, 2010 Periods ending after
June 15, 2011 (1) A. Large Accelerated Filers w/ public float >
$5B (~ Fortune 500) Year 1 structure amounts in financial statement
tables in detail and notes to financial statements in 'block text'.
Roughly 300 disclosure elements. (~950 filings) Year 2 - structure
amounts in financial statement tables and individually tag each
significant accounting policy, table within a footnote and each
quantitative amount within a footnote. Roughly 3,000+ disclosure
elements. Same as year 2. Limited liability provisions are
scheduled to be lifted by the SEC after 2 nd year. Companies may
desire more comfort on processes and controls. B. Balance of
Accelerated Filers with public float > $700m (~ next 1,600
largest public companies) Early Adoption available.Year 1 structure
amounts in financial statement tables in detail and notes to
financial statements in 'block text'. Roughly 300 disclosure
elements. (~5,000 filings) Year 2 - structure amounts in financial
statement tables and individually tag each significant accounting
policy, table within a footnote and each quantitative amount within
a footnote. Roughly 3,000+ disclosure elements. C. Balance of
~10,000 public companies (including FPIs under IFRS) Early Adoption
available. Year 1 structure amounts in financial statement tables
in detail and notes to financial statements in 'block text'.
Roughly 300 disclosure elements. (~26,500 filings) US SEC Mandate
Summary 3 Three year phase-in In year 2, volume & complexity
increase 10X 4
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- Statusin the USA* IFRS FilersGAAP Filers Required SEC Filers
Tax Filers Internal XBRL Users Financial Statements to Banks *Much
more action outside the USA 5
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- PwC Common Adoption Alternatives Portal 1. Regulator provided
XBRL enabled excel, word, and PDF templates and Web Interface 2.
Bolt-on via Outsourcing or internal Utility 3. Bolt-on via Internal
Process 4. Embedded Processes The Regulator will provide submission
options using the Regulatory portal and via XBRL embedded word
documents, excel workbooks, and PDF templates Printers and other
third party service providers provide outsourced solution for
mapping the disclosure elements on the financial statements and
note disclosures (in block text) to the Regulator Taxonomy Report
Writer ERP XBRL can be adopted by companies at the highest
reporting level (i.e. consolidated) solely for purposes of
complying with regulatory requirements. However, potential XBRL
process enhancement benefits are not fully realized. - Enables
automation of currently manual assembly and review processes -
Requires companies to assess information needs and provides an
opportunity to eliminate inefficiencies in current compliance and
reporting processes. - Enables process enhancements that lead to
more timely higher quality data for decision making purposes -
Maximizes benefits of XBRL to preparers and internal users of
financial and non- financial information. 6
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- SEC Staff Observations On initial submissions
http://www.sec.gov/spotlight/xbrl/staff-review-observations.shtml
October 2009 1.Rendering 2.Element selection 3.Contextual
references 4.Negative values and negated labels 5.Decimals 6.Other
observations November 2010 1.Negative values 2.Extending for an
element where an existing US GAAP Taxonomy element is appropriate
3.Observations on Axis and Member use 4.Observation on US GAAP
modeling of Axis and Members 5.Observation on Tagging completeness
Parenthetical Amounts 7
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- FEI XBRL Preparedness Survey www.financialexecutives.org *
www.financialexecutives.org Conducted by Financial Executives
Research Foundation (FERF) Survey closed October 4, 2011 142
companies respond (138 unique companies) Tier 1: 34; Tier 2: 57;
and Tier 3: 47 55 survey questions (some w/ sub-questions) *SEC
Reporting and the Impact of XBRL: 2011 Survey Free to FEI members;
$49.95 for non-members, however Email: Bill Sinnett, Senior
Director, Research, at bsinnett@financialexecutives.org 8
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- Continue with Current Process? 9
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- XBRL Filing Status SEC Filing Status Bringing In- House/
Software Solution OutsourcingUndecided TIER 1Large Accelerated
Filer100%% TIER 2Large Accelerated Filer90%5% TIER 3Accelerated
Filer100%% Non-Accelerated Filer100%% Smaller Reporting
Company100%% If switching, what do you plan to change to? 10
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- Results Plan to Continue to Use Current Process (CONT)
Satisfied with Current Provider (SAT)NODon't KnowYES Not Very
Satisfied 68.0% 24.0%8.0% Somewhat Satisfied26.5% 46.9% Very
Satisfied 13.4% 73.1% 11
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- Fiat 500 12
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- A Deeper Dive into the Data Dependent Variables Will you
continue the same process going forward?(Q33). 13
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- A Deeper Dive into the Data Independent Variables (Survey)
Size: Revenue Complexity: International Ops & # of business
units Service provider XBRL filing bottleneck In-house vs.
outsourcing Resources (e.g., training, FAQs, etc.) Preparation
hours XBRL familiarity Pencils down Level of tagging Delayed filing
date (caused by XBRL) Filing errors or issues 14
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- A Deeper Dive into the Data Independent Variables (Outside)
External auditor Audit fee/client revenue Non-audit fee/audit fee
for client XBRLCloud.com Numbers of errors related with EDGAR
Filing Manual Numbers of errors related with US GAAP Architecture %
Extension tags 15
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- 16 H1: More complex organizations will have lower satisfaction
levels. H2: Organizations with more complex XBRL filings will have
lower satisfaction levels. H3: Level of satisfaction will not be
different for in-house vs. outsources preparation. H4:
Organizations with Big 4 auditors will have higher satisfaction
levels. H5: Organizations with higher levels of using non-audit
services from their auditors will have higher satisfaction levels.
Working Hypotheses
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- 17 H6: Organizations with higher levels of training will have
higher satisfaction levels. H7: Organizations with higher errors
rates will have lower satisfaction levels. H8: Organizations that
experience filing delays due to XBRL will have lower satisfaction
levels. H9: Overall process satisfaction levels will not vary by
provider. Working Hypotheses
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- 18 Results: Continue w/ Process Will ContinueWill Not Continue
XBRL Filing Status (XBRLFILER)Tier 3Tiers 1 & 2 XBRL
ProvidersDonnelly & Other choiceIrrelevant XBRL Creation (FOUT
and INTERNAL)Completely internal process (INTERNAL)Irrelevant Hours
to review and coordinate with outsourcing provider (OUTHOUR) Less
than 80 hoursMore than 80 hours Pencils Down period (PENCIL)
Shorter periodLonger period Level of tagging detailsLower level of
taggingHigher level of tagging Filling errors or issues Less errors
or issuesGreater errors or issues
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- 19 R-Square0.4702 Max-rescaled R- Square 0.5426 Analysis of
Maximum Likelihood Estimates ParameterEstimate StandardWald Pr >
ChiSq ErrorChi-Square XBRLFILER1.50700.62685.78090.0162
Donnelley4.26171.62606.86940.0088 OtherPro4.33201.93685.00250.0253
INTERNAL2.11900.89505.60590.0179 OUTHOUR-0.49340.20925.56010.0184
PENCIL-0.55100.27593.99040.0458 TAGGING-2.83470.89809.96570.0016
ERROR-0.88110.50743.01550.0825 Results: Continue w/ Process
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- 20 No big surprises regarding what variables are on the prior
table. Some surprises regarding what variables are not on the
table. Big 4 vs. Non-Big 4 Non-audit fees Training and resources
Familiarity with XBRL Results: Continue w/ Process
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- 21 Field and case studies to look behind the numbers. Conduct a
survey with fewer, more-focused questions to achieve a higher
response rate. The application of various theories that can support
(or not) the findings. Moore, G.A. (2002) Crossing the Chasm,
revised edition, Collins Business, New York. Rogers, E.M. (2003)
Diffusion of Innovations, Fifth Edition, Free Press/Simon &
Schuster, Inc. New York. Swan, J.A., and Newell, S. (1995) The role
of professional associations in technology diffusion, Organization
Studies, 16(5), pp. 847-874. Swanson, E. B., & Ramiller, N. C.
(1997). The organizing vision in information systems innovation.
Organization Science, 8, 458-474 Troshani, I., and Doolin, B.
(2007) Innovation and diffusion: A stakeholder and social network
view, European Journal of Innovation Management, 10(2), pp.
176-200. Zhu, K., Kraemer, K.L., Xu, S. (2006) The process of
innovation assimilation by firms in different countries: A
technology diffusion perspective on e-business, Management Science,
52(10), pp. 1557-1576. Research Opportunities
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- Questions/Suggestions? Thank You glen.gray@csun.edu 22