Save Time, Prevent Errors: Wdesk Also Streamlines Investor Relations

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December 15, 2010

Top financial executives at nearly every publicly traded company will privately admit to some sort of horror story about submitting an EDGAR filing to the Securities and Exchange Commission (SEC) with a missing page, or making an embarrassing subtraction error under a last-minute crunch.

The fallout can be serious. *The Boston Globe* recently reported that it found 55 errors in reports by 34 out of nearly 210 publicly traded companies in Massachusetts. Executive earnings were misstated for multiple executives for several years, triggering an SEC investigation. Nearly half the errors involved amounts of $10,000 or more, including nine above $100,000. Companies blamed the errors on typos, addition mistakes and other inadvertent errors. "It's beyond embarrassing,'' said Howard Schilit, a forensic financial professional and author of the book Financial Shenanigans. "At a minimum, companies used very sloppy processes.''

Even companies that do everything they can to play by the rules must deal with an SEC reporting process that is clumsy and error prone at best. To complicate matters, at some companies, the investor relations (IR) department is often brought in at the tail end of the process, to "wordsmith" the language in the SEC Form 10-Q and produce the SEC Form 8-K for earnings releases. Since both documents need to be in sync, that often requires an inefficient, parallel document management process, involving multiple source documents, versions and service providers.

How technology helps

In sharp contrast, the Wdesk External Reporting Solution leverages web-based single document datamodel, ensuring that data is synchronized across reports, XBRL exhibits, and EDGAR. Innovative linking capabilities using a workbook approach improve accuracy, simplify change orders, and enable the reporting team to handle nail-biting last-minute changes in stride.

While the Wdesk Solution is dedicated to the compliance reporting team, our customers have routinely been involving IR in the 10-Q report authoring, in particular with 8-Ks for earnings releases and earnings call transcripts. These reports are quite often filed on the same day. With the Wdesk linking capability, it quickly becomes clear that linking all three reports to the same data workbook is a great benefit. With all data references linked to a master source, if there are any last minute changes, all the reports are automatically updated, eliminating data errors.

Many IR groups have started using Wdesk for voluntary shareholder communications including "investor supplement documents" sent quarterly to all investors with summary information from the 10-Q. Linking these documents also ensures that the investor supplement automatically reflects any 10-Q updates.

No more 'ticking and tying'

In a recent blog posting on, IR guru Heather J. Weitzel puts it this way: "[Wdesk] can be used for the filed documents and earnings releases, financial supplements, conference call scripts, website copy and other financial documents. It reduces anxiety about accuracy and updates. Values in text and tables are drawn directly from single source spreadsheets, so there is no 'ticking and tying.'"

"Consider a value—for example, total invested assets—that appears in the Form 10-K MD&A and notes, news release, financial supplements and call script a total of 25 times. With [Wdesk], each of those 25 instances is updated when staff changes a primary data table (and the primary table does not need to appear in any of the document). A report is available to let staff review each change, if desired. And the same value can appear as $1.2 billion, $1,235 million or $1,234,567,890, as appropriate for each location."

The ability to manage last-minute changes is a major payoff for WebFilings customers. Blima Tuller, vice president of finance at MRV Communications shares this real-world example: "An event less than a week before the filing deadline required an adjustment that impacted the financials, multiple footnotes and nearly all of the tables and verbiage in the MD&A. We were able to manage that change and have a revised draft to the auditors in a fraction of the time such a change would usually take—and we were still ready to file sooner than in previous quarters."

Time and cost savings

WebFilings customers have saved three to five days on their 10-Q process and anywhere from five to eight days on a 10-K. Yet the real payoff comes from the extra time they can devote to quality control.

Brian Hrubes, controller at Winnebago Industries, says, "With our old process, we were always up against the due date. With Wdesk, we had a few extra days to look through things and do more analysis to make sure nothing was missed."

It's hard to quantify dollar savings, especially in IR, because the people involved typically end up using the extra time gained back to work on something else, perhaps a higher-value or more strategic activity compared to compliance-related work. In a telling example of time savings, WebFilings customer, MRV lost a person from its already lean accounting group just prior to implementing Wdesk, but has been able to handle the workload and maintain compliance without refilling the position.

Sleep-at-night insurance for the CFO

Process efficiencies and cost-savings are important, but there is a big-picture piece of the WebFilings approach to take into account. A recent study by the consulting firm Armanino McKenna LLP zeros in on the "CFO Agenda." The firm asked leading CFOs two questions: Where are you today? Where would you like to be? The study also asked about the CFOs' three different dimensions: financial professional, protector, and business leader.

The results? In the accounting role, CFOs want processes to be fast and accurate. In the protector role, they want to optimize a "no surprises" environment. And they want to play a more strategic business leadership role in their organizations.

Currently, CFOs say they spend 61 percent of their time as financial professionals, 24 percent as protectors, and 15 percent as business leaders. As to the future, survey responders indicate they want much more balance, with increased emphasis on leadership and protection, and less energy invested in the accounting or "budget cop" role.

When it comes to fulfilling the CFO agenda for financial reporting and solid investor relations, the unique approach of Wdesk streamlines the accounting role and optimizes the protector functions—while reducing risk and increasing control.

Mike Sellberg

About the author

Mike Sellberg is Executive Vice President and Chief Product Officer at Workiva. He is the former EVP and CTO at iMed Studios and the former Divisional General Manager at Engineering Animation, Inc.