1 / 24

March 22, 2004

Identifying, Monitoring & Responding to Corporate Vulnerability Perspectives on the Future of Corporate Reporting. March 22, 2004. Predicting systemic corporate crises Is elusive for public & private sectors today.

ita
Télécharger la présentation

March 22, 2004

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Identifying, Monitoring & Responding to Corporate VulnerabilityPerspectives on the Future of Corporate Reporting March 22, 2004

  2. Predicting systemic corporate crises Is elusive for public & private sectors today Several elements are needed to improve the ability of both public and private sector companies to effectively predict systemic corporate crises: Relevant Economic Trend Data Timely, Accurate Financial Data Predict Crises! Reliable Market Data

  3. Quality data serves as the foundation for better predicting systemic corporate crises Reliable, timely data is foundation upon which methodologies and analytics for predicting and analyzing corporate crises are built. Analytics Most financial institutions are not dependent on a single methodology or model Methodology Depth, quality and breadth of data are key drivers of credit capabilities Data

  4. Solutions do exist, but are primarily limited to areas where data is readily available Where data is abundant, commercially available and proprietary tools provide a big part of the answer. Primarily limited to North America, Europe and Industrialized Asia Tools/Services • Probability of Default Models • Bankruptcy Prediction • Early Warning Models • Ratings Service • Risk Scoring • Data Services (Ratings, LIED, Recoveries, etc.) Comml. Services Providers • AM Best • Bureau Van Dijk • CreditAnalyzer LLC • Crisil (India) • Dun & Bradstreet • Egan Jones Ratings Co • Fair Isaac & Company • Fitch Ratings • ICRA (India) • IQ Financial (Misys ’04) • Kamakura • Moody’s/KMV • Moody’s Investor Service • Phillipines Ratings Svcs Corp. • RiskMetrics Group • Standard & Poor’s • Thai Ratings & Info Services • tradeRadar.net • UBS Warburg

  5. Availability of consistent, reliable data is hampering improvement efforts There are several key reasons why consistent, reliable data to improve the ability to predict corporate crises are not widely available: • Standards – There is a broad lack of global and/or regional standards for collecting and presenting market and financial data, particularly among global companies • Timeliness – The amount of time between when companies report financial performance and when it is audited (or verified), released and consumed is too long • Processes – Despite significant expense in automating reporting processes over the past 10 years, manual and spreadsheet driven-processes still prevail, increasing complexity and the possibility for errors • Availability – In certain developing regions, consistent, reliable economic, market and financial data is not readily produced, accessible or usable

  6. Improving the availability of critical data is possible…but not overnight Improving availability, reliability and usefulness of data will require focused efforts in addressing the following areas: • Development and adoption of global financial reporting standards. • Use of open data standards such as XML/XBRL to describe data elements and facilitate validation • Increased automation in the production, dissemination and consumption of data

  7. Regulators & Exchanges around the globe are leading efforts to streamline reporting • Australian Tax Office • Autoriteit Financaiele Markten (Netherlands Authority for the Financial Markets) • Banco de Espana • Bank of Japan • Bundesbank • Danish Commerce & Companies Agency • Dutch Tax Authority • Dutch Water Authority • The Irish Revenue • KOSDAQ – Korea • Luxembourg Stock Exchange • National Tax Agency of Japan • New Zealand Exchange • Patent and Registration Office (PRV – Sweden) • Shenzhen Exchange • Tokyo Stock Exchange • Toronto Stock Exchange • UK Financial Services Authority • UK Inland Revenue • US Federal Financial Institutions Examination Council (includes the FDIC and the Federal Reserve Board)

  8. FDIC OCC FRB OTS NCUA Today 8900 Banks Case Study: US FFIEC Call Report Modernization Project…Today • Multiple copies of data exist inside multiple agencies (error prone) • Avg of 60 – 75 days to receive, validate + publish filings (not timely) • Estimated processing costs over next 10 years - $65 million (costly) • March 2003 reports had nearly 18,000 errors that needed to be corrected (integrity issues) • 1,000 basic math errors • 17,000 quality (validation) errors

  9. Case Study: US FFIEC Call Report Modernization Project…the Project The FFIEC awarded a $39 million 10-year project to modernize its Call Report (principal regulatory filing) process to a combined team of Unisys, PwC and Microsoft. The project involves: • Standardization of call report data among agencies • Creation of standard instructions and validations • Construction of Central Data Repository • Establishment of metadata management capability for providing context to call report data using XBRL • Web services applications to transmit and receive secure XBRL-formatted report data

  10. FDIC OCC FRB OTS NCUA Future FFIEC 8900 Banks Case Study: US FFIEC Call Report Modernization Project…Future • XBRL open source data standard used for communicating report requirements, validations, instructions (timeliness/flexibility) • Filers required to submit data in XBRL format over the web (automation) • Multiple sources of data SINGLE SOURCE (integrity) • Processing Time 60-75 days 2 Days (timeliness) • Processing Costs $65M $39M, a savings of $26M (cost/efficiency)

  11. What is XBRL? • XBRL (eXtensible Business Reporting Language) is: • An information format designed for the Internet. • Freely available • Developed and maintained by over 250 supply chain participants • Based on accepted reporting standards • The convergence of: • Technology = XML-based specification • Language/dictionary = Terms by jurisdiction/industry • Consortium Participants = Supply chain members

  12. Scope and role of XBRL XBRL Ledger XBRL Financial Statements Business Operations Internal Financial Reporting External Financial Reporting Investment, Lending, Regulation Economic Policymaking Processes Companies Financial Publishers and Data Aggregators Investors Central Banks Participants Trading Partners Auditors Regulators Management Accountants Software Vendors

  13. XBRL International is a non-profit consortium • Manages the royalty-free intellectual property • Facilitates knowledge sharing with members • Provide a framework for further development United States IASB Sweden United Kingdom Japan Ireland Korea Denmark Canada China Netherlands Germany Singapore Spain Switzerland Colombia Brazil South Africa New Zealand Australia Argentina

  14. Here is how this works http://www.nasdaq.com/xbrl

  15. XBRL Links to other concepts • XBRL adds to XML: • Multi dimensional financial data representations • Financial reporting vocabularies (taxonomies) • Aliases and other definition relationships • Mathematical relationships between concepts • Flexibility about how to present items to users • Structure for authoritative policies and guidance Reporting apps need these even when using XML Definitions cashCashEquivalentsAndShortTermInvestments Presentation Cash & Cash Equivalents References GAAP I.2.(a) Instructions Ad Hoc disclosures XBRL Item “200” Label US $ FY2004 Budgeted FormulasCash ≥ 0 Calculations Cash = Currency + Deposits

  16. The Growing XBRL Family Over 250 and growing

  17. Benefits of XBRL for Preparers • Lower cost of producing information • More timely, accurate, data for decisions • Enhanced analytical capabilities • Better control environment • Tell your own story (precise & clear) • Accelerate adoption of reporting models • Enhanced functionality • Ease of use

  18. Benefits of XBRL for Consumers • Lower cost of consuming information • Faster access to information • More timely, accurate, data for decisions • Enhanced analytical capabilities • Enhanced functionality • More useful access to information • Ease of access to definitions enhance comparability • Facilitates language translations

  19. Benefits of XBRL for Regulators & Standard Setters • Reduced Reporting Burden on regulated entities • Improved data timeliness • Improved data accuracy • Enhanced validation • Simplified programming efforts • Improved flexibility in handle changes • Enhanced inter-connectivity of standards content • Enhanced consistency of data for analysis • More proactive use of standards and regulations within the market • Enables more efficient research • More effective way of identifying changes and/or relationship with other standards

  20. XBRL – Ready for Prime Time “Some critics have suggested that XBRL is not ready for primetime. In fact, it is.” Hon. Richard H. Baker Chairman, Capital Markets Subcommittee

  21. Identifying, Monitoring & Responding to Corporate VulnerabilityPerspectives on the Future of Corporate Reporting March 22, 2004

More Related