It’s that time again: Financial reporting season. Of course before you actually start creating a filing, there’s a laundry list of things you must to do to prepare: check your internal controls, gather precedents and consolidate your financials. This preparation is no easy feat!
There are so many different components to consider when formatting disclosures, not to mention the vast array of stakeholders who consume each disclosure filing.
Despite this, throughout the disclosure management process there is one constant that will make this process a little less painful: disclosure research.
Here are five ways disclosure research enriches financial reports:
- Supports plan modelling, forecasting and budgeting
We sat down with one accounting professional who discussed how she uses disclosure research during the early stages of her reporting cycle:
“Since forecasting and budgeting requires a lot of assumptions, I use disclosure research to identify trends and averages in the market. I then use that knowledge as a base for my assumptions.”
One straight forward example relates to estimating phone bills. It’s as simple as doing research on peer companies to identify the cost of their phone bills over time. If phone bills, on average, grew by 5% over the last two years, then that assumption can be applied as a basis for the upcoming forecast. And just like that, you have an educated forecast that’s backed by real numbers.
- Supports consolidation
During consolidation, many accountants conduct disclosure research on accounting standards in order to source the best way to present consolidated financial statements. It’s then up to the discretion of the accountant to pick the best method for the company. This may call for the accountant to look at peer filers and report in-line with their statements’ format.
- Supports risk research
When looking up narrative to support disclosures, or even looking for examples of the very disclosures to include, many executives look at the risks their peers disclose in their own filings. This includes peers that are direct competition and those that share the space. Not only does risk research improve the phrasing of a disclosure, but it can shape the very risks that you consider and how you prepare for them.
- Supports disclosures with benchmark and precedence
When you’re creating a report, language can be a tricky road bump on your way to quality disclosures. Published filings support disclosures by giving you a “how-to” when you’re creating your own reports. To ensure you’re gathering best practices, look for companies checked by a trusted auditor and with a track record for accuracy.
- Supports compliance with regulations
With so many regulations and so little time, finding early adopters that abide by the latest rules helps ensure you also follow the rules. This in no way discounts understanding the intricacies inherent to the actual rules and regulations, but certainly is a valuable buffer for a first time filer.
Disclosure research can help you improve your financial reports today – sign up for a 30-day free trial of our SEC filing research solution, DisclosureNet.