Streamlining Corporate IFRS Reporting with XBRL

Lindsey Domingo & Jason Daniels

PricewaterhouseCoopers

2

Objective To share with you the approach adopted and

lessons derived from a pilot case study on using XBRL to produce IFRS financial statements

3

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 Q&A / for more information

4

Background The approach for this case study was driven by

our experience both as preparer and advisor: Preparing several hundred financial statements under

different GAAP’s, 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

5

Business reporting:What 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

6

Business reporting:What organisations aim for (cont’d)

Monthlyforecast

Annualbudget

Operating Company Division Group

loadsubmitvalidate

inputsubmitvalidate

inputsubmitvalidate

Actualresults

ERP/GL

• review• approve• adjust• consolidate

approve

rejectsubmit

• review• approve• adjust• consolidate• intercompany• currency

Publishreports

approve

approve

reject

reject

approve

Industry regulatorTax

LegalTreasury

Management

7

Business reporting:What is often the reality (after adopting IFRS)

Monthlyforecast

Annualbudget

Operating Company Division Group

Actualresults

ERP/GL

8

Business reporting:What 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

9

Approach we piloted using XBRL1. Developed reporting templates based on PwC illustrative

IFRS financial statements

2. Created extensions to IFRS GP taxonomy 15/6/04

3. Mapped XBRL tags to reporting elements

4. Imported data from a variety of sources to generate XBRL instance documents

5. Rendered XBRL IFRS financial statements and other types of reporting

10

Approach we piloted using XBRL (continued)

11

Mapping structure with imported accounting data – core financials

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.

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.

To map an account, find its correct point in the hierarchy and then “drag and drop”

To map an account, find its correct point in the hierarchy and then “drag and drop”

Multiple accounts can be mapped to the same point in the hierarchy. The total of the accounts mapped will appear in financial statements.

Multiple accounts can be mapped to the same point in the hierarchy. The total of the accounts mapped will appear in financial statements.

12

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.

Cells which contain financial data imported from the accounting system can not be typed over, ensuring the integrity of 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.

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.

Note numbers are automatically linked to the corresponding note in the financial statements.

Note numbers are automatically linked to the corresponding note in the financial statements.

13

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.

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.

14

Sample Summary of Significant Account Policies Note

Presentation of both text disclosures and

financial disclosures in a single document

15

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.

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.

16

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.

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.

17

Preview of the format and

appearance of the financial

statements prior to printing

Preview of the format and

appearance of the financial

statements prior to printing

Print Preview

18

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

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

Adjusting,Reclassifying and Eliminating Journals

19

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.

20

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

21

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

22

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.

23

Q&A / for more information

Feel free to visit our BOOTH and to contact us:

lindsey.domingo@pwc.be, +32 2 710 7207

jason.daniels@au.pwcglobal.com, +61 7 3257 8536