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SEC Financial Disclosure Management Platforms

Merrill Disclosure Solutions | May 12, 2014

SEC disclosure rules and filing procedures are complex, and companies must make filings in both EDGAR and XBRL formats. These pressures have prompted the development of disclosure management solutions or platforms, generally software-as-a-service (SaaS) products that companies license for in-house use. In the SaaS model, the vendor's applications and the client's inputted data and text are centrally hosted on the service provider's website (i.e., “in the cloud”).


SaaS products allow for collaborative document-drafting, integrate the preparation of the EDGAR and XBRL documents, and facilitate filing both documents with the SEC. For its clients, Merrill Corporation offers a choice of approaches, solutions, and levels of service in the preparation and filing of accurate EDGAR and XBRL documents, along with the printing and distribution of the paper copies. Merrill Bridge is the company's new disclosure management platform for SEC filings.

Key factor: the need for control

SEC Financial Disclosure Management Platforms

For its XBRL outsourcing services, Merrill is very flexible in setting deadlines. Its teams understand that companies sometimes need to make edits and additions at the last moment. With the internal control that a disclosure management platform provides over the financial reporting and disclosure process, companies can make changes themselves right up until the time of filing with the SEC. Any changes made prior to filing will automatically appear in the XBRL, HTML, and PDF versions. Consistency is ensured because the various outputs stem from the same source file, which is collaboratively generated online by staff who are often in different locations.

Demand for expedited delivery a top motivation

Cloud-computing platforms are the “next evolutionary step in the XBRL journey,” according to Ankita Tyagi in Taking XBRL And Financial Disclosure Management To The Cloud, a report published by Aberdeen Group two years ago. Aberdeen Group's survey, which included C-level executives at 88 companies, found the following to be the top drivers for adopting a disclosure management platform:

Motivation to adopt a diclosure management system

The best approach depends on the company's needs

Given the imperative need for accurate financial reporting, effective management of the SEC disclosure process is clearly crucial, whether the filer out-sources, in-sources, or uses a combination. Whether to use an XBRL and SEC filing solution depends on a company's requirements, level of XBRL expertise, staffing, and desire to manage the process. The goal for filers is an approach that helps them feel they can more smoothly complete the financial reporting and disclosure cycle while preparing accurate, compliant SEC filings. According to Kristine Brands, a professor at Regis University and the author of a monthly column on XBRL in Strategic Finance, for the right type of company, disclosure management platforms enhance how fast, effective, accurate, and efficient the process can be for financial reporting and disclosure.

A filer that uses a disclosure management system must be willing to commit the in-house resources needed for its staff to learn the licensed system and stay current on the SEC filing rules and the XBRL taxonomy. The process of preparing financial statements starts with journal entries and - after many stages and with the involvement of staff from many departments - finishes with earnings releases and SEC filings, all under the pressure of SEC filing deadlines.

“While companies have manually managed the process with word processing and spreadsheet documents,” Prof. Brands explained to Dimensions, “disclosure management systems can cut down the errors and automate various parts, such as account reconciliations, testing controls for SOX filings, and some aspects of XBRL tagging.”

Accurate Financial Reporting

“Companies that outsource the SEC filing process do not often have the in-house knowledge and the staff to take on more of that responsibility and prefer to use a service-provider,” explains Patrick Sheridan, Product Manager for Merrill Bridge. Even when a company has such a knowledge base, it may reside in just one person at the company, and the loss of that individual would mean the loss of that specialized knowledge. Given such a concern, the company would be better served by an outsourced solution.

Another reason companies give for not adopting a SaaS solution lies in how they work and set priorities. Preferring to focus on their core business and outsource other tasks, they favor a high-level service organization like Merrill to handle more of the process.

Making accurate, timely filings remains the primary goal

With the pressure for accurate and timely SEC filings, companies must continue to assess the best approach for them. Disclosure management systems generally work best for companies that have larger financial and external reporting teams and that want to develop internal expertise in XBRL and the related web-based programs.

Disclosure Management Platforms

“In the next five to ten years,” Prof. Brands explains, “I expect disclosure management platforms to become an automated, integral, and seamless part of the business-reporting supply chain. By streamlining the corporate reporting and disclosure process, the CFO's staff will be able to shift focus from transaction processing and manual analysis to performing high-value-added activities such as business analysis, strategic planning, and business intelligence.”

Yet SaaS solutions for SEC document preparation and filing do not fit all companies. Even companies that use these programs may need independent review to assure quality XBRL tagging, for example. “Our goal is not to move all of our clients into a SaaS solution,” said Merrill Bridge's Product Manager. “Our goal is to broaden our suite of financial disclosure services to include a SaaS solution for those clients where it makes the most sense.”

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