As companies manage their financial close process, many steps are automated with the use of SAP solutions, from the local entity close in SAP ERP Financials to the corporate close using SAP BusinessObjects solutions for enterprise performance management. Once the books have been closed, however, a final step is still missing — the results still need to be published.

An example of these results includes the electronic filing of quarterly and annual financial statements in the eXtensible Business Reporting Language (XBRL) format with agencies such as the US Securities and Exchange Commission (US SEC). Another example is the electronic disclosure of tax information to agencies such as the UK HMRC (Her Majesty’s Revenue & Customs) and the Federal Ministry of Finance in Germany (the E-Bilanz mandate).

After a corporate close, many companies do not have an automated way to combine their financial results with narrative, descriptive information. Instead, they rely on manual processes that involve cutting and pasting of various data sources and descriptions into one document and then emailing the results to multiple approvers. These approvers may make contradictory edits. Consequently, additional manual validations need to be made to ensure the correct edits are incorporated and an audit trail is spread throughout various email inboxes. In addition, many companies have separate work streams for creating an annual report and for creating electronic filings. These separate processes and data streams increase the risk of inconsistencies in cases when a final adjustment is required.

SAP BusinessObjects Disclosure Management automates the process of managing the production, filing, and publication of financial statements and reports, including XBRL submissions of electronic filings. All data is collected within the application, making it the single source of information that then feeds all disclosures and reports, in multiple output formats. By introducing automation into the disclosure management process, you can reduce the time and cost associated with manual processes. In addition, you can decrease risk by implementing a comprehensive audit trail and ensure the consistency of your data in different reports.

The information flow of SAP BusinessObjects Disclosure Management (Figure 1) includes three stages: gathering the information (inputs); managing the revisions, validations, and approvals of the information (processing); and generating reports in various formats (outputs).

Figure 1

The data flow of the information in managing regulatory disclosures

In the input stage, key figures such as financial account balances can be brought in directly from multiple sources. Most commonly, information comes from consolidation systems such as SAP BusinessObjects Planning and Consolidation, SAP BusinessObjects Financial Consolidation, and SAP Strategic Enterprise Management. Other data sources include business intelligence systems such as SAP NetWeaver Business Warehouse, core financial systems such as SAP ERP Financials, as well as non-SAP systems and even spreadsheets. It is also possible to bring unstructured data into the disclosure management application, either from an application that gathers unstructured information, such as SAP BusinessObjects Notes Management, or by directly uploading documents containing text. A link to the source information is maintained, enabling updates to the disclosure management data repository if information in a source system changes – for example, when additional elimination entries are posted.

In the processing stage, the solution leverages Microsoft Office applications for processing documents, which is a familiar environment for financial and corporate reporting team members. Microsoft Excel is used for managing the key figures, whereas Microsoft Word is used to combine key figure information with narrative, or unstructured, information. You can use both Microsoft applications for tagging information in preparation for electronic filings. Finally, you can use Microsoft PowerPoint to combine key figures with other graphical information for presentations. All the normal capabilities of the Microsoft Office suite are available. A client-side add-in to Microsoft Office is delivered with SAP BusinessObjects Disclosure Management. The add-in creates a menu path (for earlier versions of Microsoft Office) or a ribbon (as of Microsoft Office 2010) that allows you to access functions of the disclosure management application from within the Microsoft Office documents, such as updating consolidation data in your documents and managing versions.

In the output stage, once the financial and regulatory information is finalized and approved, multiple output formats are available. Examples include output in Microsoft Office documents and Adobe PDF, both of which include formatting that is defined in a template within disclosure management; HTML pages; and XBRL instance documents that can be filed directly with regulatory agencies.

At each step of the disclosure management process, you can use collaboration to enable better communication between team members to accelerate the completion of the financial and regulatory statements, as well as to ensure that there are no conflicting edits to the chapters and reports. For further information about these features within SAP BusinessObjects Disclosure Management, see the sidebar “Collaboration to Ensure One Version of the Truth.”

Collect Information from Source Systems

From the Cockpit tab in SAP BusinessObjects Disclosure Management, choose the data repository and the period for which you are collecting information to see an overview of the data that is used for the various financial statements and reports. The data can be brought in directly from SAP and non-SAP consolidation and financial systems, business intelligence systems, financial transactional systems, and spreadsheets.

For each data source, you can see a traffic light status, an indication of whether the data is currently checked out by a team member, how many revisions have been made, and the date of the last change. A more comprehensive audit trail of changes is available from the History tab (Figure 2). You can assign a due date to each section of data. If the due date has passed, the status of the data source is set to red, providing better visibility of the timeliness of the information that is collected.

Figure 2

The cockpit of the data repository, here called the data cache, provides an overview of the status of each data source

From the General tab in the disclosure management application, you can update the information in the data repository with changes that were made in the source systems. You can choose to update only a single chapter or all chapters. Alternately, you can choose to edit one or more chapters in the data repository directly, which automatically opens a Microsoft Excel worksheet to allow access to the data. If you open multiple chapters at once, each chapter containing a set of data is opened in a separate worksheet tab.

From the Disclosure Management add-in menu in Microsoft Excel, you can also update the source data of a chapter from within the worksheet. After the updates, if you would like to see the changes that were made in a particular worksheet, you can choose Compare from within the Microsoft Excel add-in, and choose any of the prior versions against which to make the comparison. The results of the comparison are shown in a new document, which you can save. Each cell that was changed is highlighted in a different color, as shown in Figure 3. In addition, the value in the cell in the prior version is captured as a comment to the cell. You can see it by hovering over the changed cell. This capability allows you to easily see changes without having to run multiple reports and perform manual comparisons.

Figure 3

The spreadsheet highlights the data that was changed in one sheet of the workbook

The information in the data repository is used in all the reports that require this information. Ensuring that the reports and disclosure statements refer to the data repository maintains consistency of the information across all reports.

Manage Statements and Reports

The structure of various financial reports and disclosure statements is also defined within the disclosure management application. The various chapters and subchapters are again accessed from the General tab. You can reuse the same chapter in multiple reports, so it only needs to be maintained once.

You can assign responsibility for updating the document at the chapter and the subchapter levels. This capability allows multiple team members to work on the report at the same time without overwriting each other’s sections to ensure one version of the truth. Selecting an individual chapter shows the document information in the right panel (Figure 4). The details include the status of the document and the associated possible actions, the last time it was checked out, and any comments that summarize the most recent changes. Again, a more detailed audit trail is available under the History tab.

Figure 4

The structure of the financial report is shown in the left panel, and the chapter information of the selected chapter is shown on the right

The financial statement chapters contain narrative information, as well as references to the key figures that have been imported into the data repository within SAP BusinessObjects Disclosure Management. To reflect changes to key figures that were made in the data repository, you can update the entire financial statement or individual chapters from the General tab. Again, you can also choose to edit a chapter directly, which automatically opens the document in Microsoft Word.

Using the Disclosure Management add-in menu in Microsoft Word, you can also update the key figures from within the financial document. After an update, you can use the Compare feature to see any changes that have been made (Figure 5). You can make this comparison against any prior version of the document. The Microsoft Word document review capabilities are leveraged to keep track of any changes, including data element values from the data repository, any narrative that is maintained directly in the document, and formatting.

Figure 5

The document identifies the data that was changed, leveraging the document review capabilities

To add further data elements to a document, you can choose additional key figures from the disclosure management application’s data repository. You can insert individual numeric or text fields by choosing Floating Text; formulas by choosing Formula Field; and tables by choosing Table, all from the add-in menu in Microsoft Word. To insert tables, you must define them as named ranges in the data repository’s Microsoft Excel file. Figure 6 shows the pop-up that allows you to preview and choose the information to be included in the document chapter.

Figure 6

Preview a table from the data repository and select it for inclusion in a particular chapter

Publish Disclosure Statements and Reports

Multiple document output formats are available for the disclosure information. For external statements, such as the annual report, the most common format is Microsoft Word or Adobe PDF. Alternately, for executive board packages, Microsoft PowerPoint can incorporate numeric and narrative disclosure information and display it in a graphical presentation format.

At any time in the process of collecting and editing the financial and disclosure statements, you can generate a preview in various formats. From the General tab, you can select an individual chapter or the entire document, such as the entire annual report. From the document information screen, you then select the output type to generate the document, which includes both the financial information and the narrative descriptions. You can control the formatting of the document through the use of templates that are applied to the document. The template contains default style information, such as the font, logos, and table formatting. Figure 7 shows an example of an annual report in a PDF format, including the cover graphic, table of contents, and formatted text and tables.

Figure 7

One of the available output formats is an Adobe PDF, which includes both graphics and formatting of the tables and the narrative

Filing with XBRL Instance Documents

An increasing number of countries are mandating the electronic filing of financial and other regulatory documents in the XBRL format. To meet these requirements, companies doing business in those countries need to be able to tag source information and create XBRL instance documents. These documents are then filed electronically with various regulatory agencies, including the US SEC, the United Kingdom’s HMRC, and sustainability disclosures for the GRI (Global Reporting Initiative) Sustainability Disclosure Database.

The capability to tag data and create XBRL documents is built directly into SAP BusinessObjects Disclosure Management, by leveraging UBMatrix applications. The same information in the data repository that is used to create financial statements is leveraged to also create the XBRL instance documents, thereby ensuring the consistency of information across all reporting formats, regardless of whether the completed regulatory statement information is published in a report or is filed electronically.

Note
XBRL is an open standard that is fast becoming the global standard for electronic filing of disclosures. Information in financial and other regulatory disclosures is tagged with a set of standard, computer-readable tags based on eXtensible Markup Language (XML). These tags identify the components of a statement, such as a footnote, a table, and individual data elements such as a description of individual values, rounding (such as identifying whether rounding is to the thousands or millions), and reporting currency. Standard taxonomies, or a set of tags for a particular agency or tax jurisdiction, have been agreed on by XBRL International. These tags can be extended in certain circumstances. More information is available at www.xbrl.org.

Data Tagging and Validation

Each jurisdiction typically has a standard taxonomy that you can access through the Web or download and store locally. Within the disclosure management application, all taxonomies are supported. After choosing the taxonomy that you want to use to tag data, you launch a report builder, which facilitates searches, filters, and use of business rules so that you can identify the appropriate tag for each data element. You can then easily tag the information in the spreadsheets through drag and drop as shown in Figure 8. Once the information is tagged, you can reuse the spreadsheet that contains the tags in future periods with refreshed values.

Figure 8

The taxonomy, as well as the detail of each tag, is shown (the data in the spreadsheet is tagged using drag and drop)

Note
The capability to tag data from within Microsoft Word is available beginning with Support Package 02, which was released in November 2011.

You can create validations in the system for both syntax and semantics to ensure that the data is correct. Examples of validations include finding data elements for which tagging is not complete, and finding errors and inconsistencies. A common example is ensuring the balancing of totals within the balance sheet.

Generate the XBRL Instance Document

Once all the information has been mapped and validated, you can create the XBRL instance document. Because the syntax of this document is difficult to read, you can use a preview capability to more easily verify that the information in the instance document is correct (Figure 9). You can also call up additional reports to facilitate auditing, such as validation reports and full mapping reports.

Figure 9

A preview report (shown on the right) provides an easy-to-read format of the native XBRL instance document (shown on the left)

Collaboration to Ensure One Version of the Truth

SAP BusinessObjects Disclosure Management enables communication and workflow between team members who are responsible for creating financial statements and reports. The collaboration features can apply to the management of the data repository, to the individual chapters within a financial statement, and to the summary level of each entire financial statement and regulatory report.

Document Management with Check-Outs

Your finance team members have the ability to check out a portion of the data repository, an individual chapter, or the entire financial statement for editing. When one team member checks out a chapter, that portion of the report is locked against changes by other team members, guarding against a proliferation of versions and conflicting edits. The check-out occurs automatically when you access a chapter in edit mode. When the document is checked back in using the add-in menu that is installed in Microsoft Office applications, all changes are tracked, and an audit trail is created to record each check-out, cancellation of check-out, and check-in of a document.

Definition of Workflow

Workflow capabilities are embedded within SAP BusinessObjects Disclosure Management to define each step that is required in producing chapters and financial statements. A standard workflow is delivered, but you can change that workflow and add further workflows. The workflow is configured from the Workflow link under the Administration tab. A tabular format is available as well as a graphical visualization as shown in Figure A. For each step that is defined as part of the workflow, you can configure the following options:

• The next possible activities, or steps, that you want to allow a financial user to carry out. For example, if a chapter is open, it cannot be approved without going through the intermediate editing steps. For a chapter that is finished, the possible activities are an approval or rejection, but editing is not possible.

• The corresponding status that is active for each step, such as In Process or Finished. This option allows you to simplify monitoring of the progress of a financial statement on overview screens using meaningful statuses.

• Conditions that further refine the possible actions. The most common type of condition allows you to assign specific user roles to individual steps, such as editor roles to the processing of documents, and managerial roles to the step that controls statement approval.
  
  

Figure A

The workflow can be displayed in a graphic format for easy visualization of the steps and their corresponding status values

Once you have defined the workflow, you assign it to one or more reports. The workflow then applies to all chapters within that report or statement, as well as to the overall report.

Automatic Notifications

You can enable notifications to be sent to team members after a chapter or financial statement has been checked in and the content is ready for further editing or approval. These notifications are activated on a report level, which then applies to the entire financial statement as well as to each chapter within that statement. As shown in Figure B, in configuration, you can determine whether the notification can be set to mandatory, optional, or inactive (no transmission). These settings are made from the Managing reports link under the Settings tab.

Figure B

Email notifications are activated at the financial report level

Document Approval

When the editing steps have been completed for a chapter or statement, the workflow also controls the management of the approval process. The document status configured in the workflow, for example Finished, determines that the only available activities are approval or rejection. The approval step is typically assigned to managers and executives who have responsibility for corporate financial reporting. At this step, you can accomplish the approval or rejection in one click (Figure C). When a chapter is approved, it is locked for further editing. You may choose to give a select group of power users the ability to unlock an approved chapter or statement to accommodate additional changes.

Figure C

The options to approve or reject a chapter are normally provided to management

Birgit Starmanns

Birgit Starmanns is a senior director in solution marketing at SAP for EPM (Enterprise Performance Management) and Finance solutions. Birgit has more than 20 years of experience across solution marketing, solution management, strategic customer communities, and consulting. Her functional experience is in finance, including core SAP ERP and enterprise performance management, as well as customer relationship management, which has allowed her to focus on the integration of cross-functional business processes. Prior to joining SAP, she was a principal in management consulting organizations, redesigning business processes and implementing SAP R/3 and R/2 for numerous Fortune 500 and SME companies, with a focus on management accounting. Birgit holds a BA and an MBA from the College of William and Mary.

You may contact the author at birgit.starmanns@sap.com.

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