Outdated Systems Risk Shareholder Value
April 9, 2013The demand for transparent financial information is eclipsing corporate America’s ability to safely handle it. Massive amounts of financial data from public companies have to be recorded, analyzed, understood, and compiled into meaningful reports every quarter to comply with federal reporting rules. It is a daunting task with enormous room for error.
Damaging errors can happen when a public company shares its SEC password with a third party. Other errors can come from a deficiency in disclosure controls and procedures. In both situations, shareholders will bear the significant costs. These types of errors are what keep risk officers and audit committees up at night.
Most public companies struggle under the heavy load of financial reporting. There is a lot of pressure to be right and to be on time, because every number is subject to scrutiny. Consequently, it is surprising that many corporations still employ an archaic system based on draft documents, emails, and password sharing.
Something as simple as clicking on the wrong email address, or accidentally sending a draft copy instead of a final version, can have severe consequences. What’s more, much of the pre-released financial information is not encrypted before it’s sent. It flies around the internet in clear view.
These types of financial reporting errors will continue until CEOs and CFOs adopt new ways to handle sensitive data. A public company should never share its SEC password with an outside party. They must keep the data solely in-house and under the control of the team ultimately responsible for the outcome.
Corporations must also get rid of numerous versions of the same document and the confusion of who’s doing what and when. It’s no wonder that companies who pass around rolling versions of hundreds of spreadsheets and word documents have difficulty managing data and controlling errors.
Wdesk Solutions use one document; thus ensuring consistency among the different formats, such as HTML and XBRL, for financial reporting. Our single document datamodel technology also permits seamless, instant collaboration and enables disclosure controls. It includes a tracking system, so the owner of the process and his or her team can see who makes changes. Lastly, the solution encrypts the data before the reports are publicly distributed.
This puts the control where it needs to be: squarely in the company’s hands, with no conflicting versions, and most importantly, no security breaches.
If such systems are in place, then it becomes nearly impossible to hit the send button with the wrong version or at the wrong time. In fact, controlling the data from start to finish means companies can pinpoint the timing of their release.
About the Author
Matt Rizai is the former Chairman and Chief Executive Officer at Workiva, and the former Chairman and CEO at Engineering Animation, Inc.