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University of Kansas April 26-27, 2013 . Determinants of Levels of Satisfaction with SEC-Mandated XBRL Filing Process: A Work in Progress. Glen L. Gray Sung Wook Yoon California State University, Northridge. Disclaimer.

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Determinants of levels of satisfaction with sec mandated xbrl filing process a work in progress

University of KansasApril 26-27, 2013

Determinants of Levels of Satisfaction with SEC-Mandated XBRL Filing Process: A Work in Progress

Glen L. Gray

Sung Wook Yoon

California State University, Northridge


Disclaimer
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).


A brief xbrl history
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


Us sec mandate summary 3 three year phase in
US SEC Mandate Summary 3 Three year phase-in

In year 2, volume & complexity increase 10X


Status in the usa
Status—in the USA*

Required SEC Filers

GAAPFilers

IFRS Filers

Internal XBRL Users

Tax Filers

Financial Statements to Banks

*Much more action outside the USA


Common adoption alternatives
Common Adoption Alternatives

1. Regulator provided XBRL enabled excel, word, and PDF templates and Web Interface

Portal

The Regulator will provide submission options using the Regulatory portal and via XBRL embedded word documents, excel workbooks, and PDF templates

2. Bolt-on via Outsourcing or internal Utility

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

Portal

3. Bolt-on via Internal Process

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.

Portal

ERP

Report

Writer

4. Embedded Processes

  • 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.

ERP

Portal


Sec staff observations on initial submissions
SEC Staff ObservationsOn initial submissions

  • http://www.sec.gov/spotlight/xbrl/staff-review-observations.shtml


Fei xbrl preparedness survey
FEI XBRL Preparedness Survey

  • 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 SurveyFree to FEI members; $49.95 for non-members, however…Email: Bill Sinnett, Senior Director, Research, at [email protected]



Continue with current process1
Continue with Current Process?

If switching, what do you plan to change to?




A deeper dive into the data
A Deeper Dive into the Data

  • Dependent Variables

    • Will you continue the same process going forward?(Q33).


A deeper dive into the data1
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


A deeper dive into the data2
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


Working hypotheses
Working “Hypotheses”

  • 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 hypotheses1
Working Hypotheses

  • 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.




Results continue w process2
Results: Continue w/ Process

  • 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


Research opportunities
Research Opportunities

  • 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.


Questions/Suggestions?Thank [email protected]


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