Presentation Transcript

1. Sonja SimonHead of Group Accounting and Reporting

   XBRL Financial Statements @ SAP
2. SAP’s XBRL Motivation Requirement to provide XBRL data to the SEC starting with financial statements for 2011 Requirement to electronically file financial statements with German Company Register with XBRL as one permitted format SAP as a software company wants to be an early mover rather than a late follower Support “SAP runs SAP” campaign - outsourcing not an option Compliance SAP‘s XBRL Motivation Business Opportunity ProcessImprovements SAP views XBRL as helpful for streamlining financial reporting processes (e.g. matching note disclosures with disclosure requirements)
3. SAP‘s XBRL Adoption Process Prepare Company-specific Taxonomy Define XBRL Strategy Align financial statements with IFRS Taxonomy Prepare & publish XBRL data 1 2 3 4 Key Objectives Identified „Hardcopy“ financial statements and XBRL data should look similar => Minimize differences between them Align with original IFRS XBRL taxonomy as much as possible => Minimize number of company-specific tags (extensions) Use tools from SAP portfolio to design our taxonomy and prepare the XBRL data=> No use of external support Use 2009/2010 year end closing as a learning cycle=> Learning experience more important than outcome Consider resource constraints=> 2009: Limit tagging to primary statements, no tagging of individual note disclosures, just block tagging => 2010: Start detailed tagging of the notes
4. SAP‘s XBRL Adoption Process Prepare Company-specific Taxonomy Define XBRL Strategy Align financial statements with IFRS Taxonomy Prepare & publish XBRL data 1 2 3 4 Objective Align “hardcopy” IFRS financial statements with XBRL taxonomy as far as necessary to make the “hardcopy” financials and XBRL data look as identical as possible Align naming of financial statement line items (e.g. from “net income” to “profit”) Align classification (e.g. split former item “other assets” into “other financial assets” and “other non-financial assets”) Major Challenges The IFRS taxonomy currently lacks some basic line items (e.g. no tag for “operating profit”) resp. industry-specific line items (e.g. “Software revenue”)=> decision needed in each case: classify under existing tags or add an extension Some inconsistencies in IFRS (e.g. Are prepaymentsmadefinancialassets? IAS 1.78: yes; IAS 32.AG11: No)=> decision needed in each case: which view to follow How to handle immaterial balance sheet items? (e.g. inventories at SAP)=> decision needed in each case: tag according IFRS taxonomy or classify under other tags
5. SAP‘s XBRL Adoption Process Prepare Company-specific Taxonomy Define XBRL Strategy Align financial statements with IFRS Taxonomy Prepare & publish XBRL data 1 2 3 4 Approach Use of SAP BusinessObjects XBRL Publishing application by UBmatrixas the tool to prepare taxonomy Close alignment with the respective product area in SAP Experience Significant number of company-specific tags in the income statement (e.g. revenue sub-items, operating profit subtotal), and also the cash flow statement. Fewer extensions needed in the other statements Numberofextensionsincreasedconsiderablyduringthedetailedtaggingofthenotes due to Company-specificdisclosures (segmentreporting, sharebasedcompensationplans) Disclosures made due to German GAAP requirements (listofsubsidiariesincludingrevenue / equity etc.)
6. SAP‘s XBRL Adoption Process Prepare Company-specific Taxonomy Define XBRL Strategy Align financial statements with IFRS Taxonomy Prepare & publish XBRL data 1 2 3 4 Preparation Approach Use the same data that are used for the „hardcopy“ report, i.e. numbers in euro million after rounding)=> data will be extracted from an excel file (“one source of truth”) used for the preparation of the hardcopy report as well as the basis for the XBRL tagging using SAP’s Disclosure Management tool. Minimize manual efforts and potential for errors Publication Approach Publication on SAP website together with HTML- and PDF-Version of annual report
7. Benefitsidentified Forcedustotake a „freshlook“ atSAP‘sfinancialstatementsandnotes Terminology in financialstatementsisnowmorecloselyalignedwith IFRS standards Detailedtaggingofnotesrequired a two-waymatch – fromrequireddisclosurestonotesandviceversa Effective check forcompletenessofdisclosuresandinconsistenciesbetweendisclosuresmade Freshlookatdisclosuresthatrequireextensions eithercompanyspecificdata (e.g. segments) orvoluntarydisclosureswhichcouldpotentiallybedeleted Reconsiderrearrangingcertaininformation (e.g. moved all accountingpoliciestoonesectionofthenotes) Focus on requireddisclosuresandeliminatevoluntary, non-valueaddedorclearlyimmaterialdisclosures Integrated businessrulesadd additional checks Summary: XBRL improvedcompleteness, presentation and clarityofSAP‘sfinancialstatements
8. Lessonslearned Benefits will onlyberealizedif: The projectisapproachedas an opportunitytoimprovefinancialreportingratherthansimplyfulfilling a regulatoryrequirement The projectteamisstaffedwithbothaccounting and IT experts – thispointiscritical! Start early! You will need time to: Familiarizeyourselfwiththetechnicalaspectsoftagging Fully understand the IFRS taxonomy and howtoproperlycreateextensionswhenneeded Criticallyreview all extensions – a predefined tag mightbeavailablewhereyou do not expectit
9. Future Developments Currentlymostcompanies in the US use a serviceprovider Goingforward, companies will realizethebenefitsfrom an in-housesolutionandbelesswillingtoaccepttherisksassociatedwith a serviceprovider (time constraints, only limited controlover final product etc.) Software developers must offersolutionswhichintegratetheprocessofproducingandsimultaneously XBRL taggingfinancialstatements Potential synergiesbetweenproducingfinancialstatementsand XBRL tagging: Integrated disclosure checklist (completenessandplausibilitychecks) Integrated businessrules Obviouschecks, e.g. assets = liabilities + equity Complexchecks, e.g. warningmessageifsignificantchangescomparedtoprioryearshouldbeexplainted Automation ofchecks will reducemanualefforts , ensurecompletenessandconsistenciesofchecksperformedandshorten time requiredtofinalizereporting Tagging in different languagesbased on theofficial XBRL resp. IFRS translations
10. SEC‘sno-action : Acceptanceof XBRL filesof IFRS financialstatements? Recently, the SEC hasdecidedtopostponetheacceptanceof IFRS XBRL filespreviouslyscheduledforJuly 2011 („noaction“) The SEC will usethedelaytofurtheranalyzethemaindifferencesbetweenthe US GAAP / IFRS taxonomy The maindifferencesbetweenthosetaxonomiesrelatetothefollowing: US GAAP taxonomy was developedusingcompanies‘ disclosuresas a basis. Ifthosedisclosurescouldbetracedto GAAP, an appropriate tag was developed. IFRS taxonomyisbaseddirectly on the IFRS standards. US GAAP taxonomyofferscommonlyused tags – but onlyifthosecanbetracedto GAAP. IFRS taxonomy will soonintroducecommonlyused tags – irregardlesswhetherthesecanbetracedto GAAP US GAAP taxonomyprovidesdefinitionstothe tags (explanationsabouttheexpectedcontent). The IFRS taxonomydoes not becauseitisderiveddirectlyfromthe IFRS standards. What will befuture bring? When will the SEC accept XBRL filesof IFRS financialstatements?
11. Thank you!