Disclosures are a part of the financial regulatory and compliance environment that no company enjoys but every company must accept in some measure. Most companies do not see the benefit beyond compliance in disclosure preparation. Although it is difficult to measure the increase in investor-interest attributable to the disclosure, a relevant and attractive disclosure document can often influence investors positively.
Disclosure management, therefore, needs experts – companies that create disclosures efficiently and effectively – in order to make sure that the company can get it out-of-the-way while allocating the least possible man-hours to it. Companies have two options in such a case:
1. Outsource the entire disclosure preparation to a third-party vendor
2. Buy a Disclosure Management tool and do the actual preparation in-house
Both have their advantages, most ostensible being complete freedom from the process in the former and control over data in the latter. Companies, of course, need to decide which solution works better for them.
However, the Disclosure Management System used even in the first option by the outsourced-to firm tends to be the same as the one that is sold as option 2.
So what makes for an effective disclosure management system?
Here’s our list:
The first thing that your DMS must do is offer a collaborative environment. A financial disclosure is a huge document, and more importantly, it is a document that is easily amenable to work division. So, when someone is working on the Balance Sheet, someone else can work on the Statement of Operations, all while retaining the power to switch the two, so that a fresh pair of eyes can look at the statement. This allows people to distribute work, troubleshoot much more easily and creates a much more robust document.
The next thing that you should keep in mind is that a DMS must – must – use a single-source platform. Such platforms ensure that your data stays consistent across formats. Data consistency is one of those things that worry CEOs and CFOs a lot. For example, in the US, mistakes could get them in serious trouble under Sarbanes-Oxley. A good DMS ensures that either:
- Changes are only possible in one format and that is replicated across formats and versions no matter how many of those there are; or
- Changes made anywhere on any format or any version is reflected across
Needless to say, a DMS that is not up 24×7 every week every year is just not good enough. No matter where you are in the world, you must be enabled to work on your disclosures any time you want.
DMS often need software expertise. This means that a company wishing to use a DMS often needs to pay someone with expertise in that software (usually subscribe to some IT support from the software vendor) to do this job. A better way to do this is to use a DMS that offers 24×7 support to your in-house team when they need it.
DataTracks has been innovative in this front and has come up with a third option for companies wanting to subscribe to DMS, which is – companies can subscribe to DMS, use 24×7 unlimited support at no extra surprise cost; Yet, companies can take control of the document when they want. This works beautifully for companies who would want to have control for doing just the last-minute changes alone and who do not have in-house resources for doing the XBRL or EDGAR HTML heavy-lifting work.
Correct disclosures are important. They keep the lawyers off your door and they attract investors. A good DMS can take a huge load off your back. Make sure that you get one.
DataTracks US is part of DataTracks Services Limited, leaders worldwide in preparation of financial statements in EDGAR HTML, XBRL and iXBRL formats for filing with regulators. DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland and MCA in India.
The views expressed are that of the author’s and DataTracks is not responsible for the contents or views expressed therein. If any part of this blog is incorrect, inappropriate or violates the IP rights of any person or organization, please alert us at firstname.lastname@example.org. We will take immediate action to correct any violation.