internal reporting internal controls mike willis, cpa partner, pricewaterhousecoopers, llp founding...
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Internal ReportingInternal Controls
Mike Willis, CPAPartner, PricewaterhouseCoopers, LLPFounding Chairman, XBRL [email protected]
XBRL Public DayGeneral Ledger Track
November 8, 2005
Discussion Topics Standards; Interoperability & Controls
The Analogy The Case Study
Common Data Problems Impacted Process Areas:
Internal Reporting Internal Controls/Validation/Analysis Internal Controls Documentation & Analysis
Typical business objective
“Increase production and throughput by leveraging the large warehouse engine. Tightly integrate critical business functions and align business processes to enhance flexibility, increase efficiency and productivity.”
Does this sound familiar?
“Leveraging the warehouse engine”
From proprietary to infrastructure
1. Rail Road
2. Telegraph
3. Electricity
4. Telephone
5. Shipping
6. Product
7. Networking
8. Internet
9. Information
A. RJ 11
B. 40’ x 8.5’ x 8’
C. UPC
D. HTML / SOAP / Web Services
E. 4’ 8.5”
F. RJ 45
G. Rosettanet, MDDL, XBRL
H. Morse Code
I. 120V, 50Hz
Match the infrastructure to the standard
Candy?
Corporate reporting supply chain
ExternalReporting
BusinessOperations
InternalReporting
Investment,Lending,
RegulationProcesses Economic
Policymaking
Participants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies CentralBanks
XBRLLedger
XBRLExternal Reporting
Disparate Systems
Air ConditioningHeating
Water Heater
Security
Sound
Electricity
Lighting
Cable
Phone
Internet
Interoperability drops operational costs
Air ConditioningHeating
Water Heater
Security
Sound
Electricity
Lighting
CablePhone
78o
11:45amIntercom
LightsSoundOther
Interoperability drops operational costs
Lessons Learned Manual processes are pervasive Tools
Must be interoperable Look Different Enable greater range of capabilities
Business Rules applied across applications Functions/Controls may occur at new locations Control is greatly enhanced Flexibility and Agility is enhanced
Compliance capabilities significantly improved Operational costs are significantly reduced
More flexibility, fewer custom interfaces
Definitionsand
Formulas
Definitionsand
Formulas
ReportsReports
Organization 1
Consumptionand
Analysis
Organization 1
Consumptionand
Analysis
Organization 2Prepare and
Validate
Organization 2Prepare and
Validate
Organization 3Prepare and
Validate
Organization 3Prepare and
Validate
Common Data Problems Data is replicated at the application level resulting in
multiple versions of the truth. Accounting elimination information is often manually
obtained from the data sources below the consolidation application layer
Data validation processes are often conducted manually
Business rules are embedded within specific applications; either the consolidation application or the analysis application
Controls like business rules are embedded within specific applications or they are manually applied
Language labels are applied at the application level
Common Data Problems Linkages of data to company policies is
manual and/or application specific and in most cases inadequate
Data models are application specific Data flows in one direction; audit trail is lost Reporting (book, tax, management) is not
reconcilable to each other Communication is bottom up only Investments are lost when systems change
External AND Internal Processes Intermediaries exist in the market… but also
within the company: Internal locations
Disparate applications Manual transfers Automated transfers of disparate ledger concepts Manual analysis and controls Manual aggregations
Inefficient aggregation
Inefficient aggregation
Manual mapping and preparation
Manual mapping and preparation
Internal Controls Documentation & Analysis Process Documentation Visual representations of processes XBRL articulation of facts Linkage of facts to related concepts (controls) Assessment of facts for:
Missing concepts (controls) Inefficiencies Redundancies Others
Internal ReportingInternal Controls
Mike Willis, CPAPartner, PricewaterhouseCoopers, LLPFounding Chairman, XBRL [email protected]
XBRL Public DayGeneral Ledger Track
November 8, 2005
An XBRL reporting system will disseminate relevant information in a flexible, usable format to markets on an almost real-time basis… Too much damage has occurred to the U.S. economy and the capital markets because of the lack of timely and transparent financial information. I have confidence that XBRL will eliminate those deficiencies.
The Hon. Richard H. BakerChairman, House Capital Markets Subcommittee
Transaction data
Multiple departmental
Excel spreadsheets
Consolidated spreadsheets for
management
2000 elements = 6500 spreadsheets (this is not a typo)
SQL
SQL
Consolidation & Aggregation Processes
Senior Management
Transaction Data
Multiple Departmental
Excel Spreadsheets
Consolidated spreadsheets for management
SQL
SQL
Current Consolidation & Aggregation Processes
Senior Management
Subsidiary ERP’s
Supplemental information aggregation
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Controls
Control located with data or in supplemental manual processes
Current Consolidation & Aggregation Processes
Senior Management
Services architecture leveraging information standards
Transaction and or
subsidiary Data
Senior Management
Viewing and aggregation for department & management
XBRLWeb
Services
Controls
Controls
Controls
Controls
Controls
Controls
‘Wrap & Map’XBRL GL
XBRL GL
XBRL GL