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

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

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  1. 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

  2. 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).

  3. 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

  4. US SEC Mandate Summary 3 Three year phase-in In year 2, volume & complexity increase 10X

  5. 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

  6. 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

  7. SEC Staff ObservationsOn initial submissions • http://www.sec.gov/spotlight/xbrl/staff-review-observations.shtml

  8. 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 bsinnett@financialexecutives.org

  9. Continue with Current Process?

  10. Continue with Current Process? If switching, what do you plan to change to?

  11. Results

  12. Fiat 500

  13. A Deeper Dive into the Data • Dependent Variables • Will you continue the same process going forward?(Q33).

  14. 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

  15. 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

  16. 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.

  17. 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.

  18. Results: Continue w/ Process

  19. Results: Continue w/ Process

  20. 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

  21. 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.

  22. Questions/Suggestions?Thank Youglen.gray@csun.edu

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