Workiva Blog 03_19 - WHATS YOUR STATUTORY REPORTING FOR NON-FINACIAL DATA STRATEGY_ .pdf

Workiva Blog 03_19 - WHATS YOUR STATUTORY REPORTING FOR NON-FINACIAL DATA STRATEGY_ .pdf

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  WBlog - TheDigital Transformation of Statutory Reporting Series DATE: March 2019 By Liv Watson WHAT’S YOUR DATA STRATEGY FOR STATUTORY NON-FINACIAL REPORTING? Non-financial reporting (also referred to as extra-financial, pre-financial, ESG) requirements is no longer nice to have but a statutory reporting requirement in EU. The 2014 European Directive (effective date: 2017 ) on disclosure of non-financial and diversity information requires large public-interest companies with more than 500 employees to disclose non- financial information to local competent authorities adding more challenges to the statutory reporting process. Since the last financial crises over 50,000 regulatory documents of regulatory text was published across the G20 impacting public-interest companies. The complexity of the task facing compliance practitioners in understanding and interpreting the volume, variety and velocity of regulation and capturing this knowledge cumulatively and systematically is nothing short of daunting task in the statutory reporting process. The risks that stems from non-compliance with key legislative requirements can be very costly and damaging to an organization and the custodians of governance driving executive management to ask "what is our compliance data strategy?" Two Key Challenges to the Statutory Reporting Process (1) Multiple Regulatory Authorities and Voluntarily Reporting Mechanisms Regulatory divergence brings challenge to statutory reporting (i.e., refers to inconsistencies in regulation, data formats, and reporting frameworks between different regulatory reporting authorities). According to a recent report by IFAC the regulatory in supervisory interpretations and practices, fundamentally different regulatory frameworks, and different regulatory or data definitions is the most significant challenge to the corporate statutory reporting teams increasing compliance risks significantly. In today’s world, regulated entities deal with more than one regulatory and voluntarily reporting mechanisms of statutory data and many times with statutory reporting obligations in more than one country. The graph below explain the challenges of multi-entity reporting and regulatory divergence brings to a EU regulated entity reporting of non-financial data to multiple reporting authorities. The samples below demonstrate that an average EU regulated company reports financial and non-financial data to an approximately 14 different submission platforms in just one jurisdiction. GRAPH: The multi-entity reporting and regulatory divergence challenges:
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  (2) Multiple Truthsfor Statutory Reporting Information Across the Company A regulated entities data architecture describes how data is collected, stored, transformed, distributed, and consumed. Today the approach to statutory reporting across many organizations features specific risk, sustainability, legal, human resources and other statutory reporting teams often operating in silos, each carrying out its own evolving approach and methodology in response to increasingly complex laws, regulations and market expectations. Information stored throughout the company and across its supply chains has measurable, material value to the statutory reporting process; anything of value to the organization should be treated as an asset. Leaving valued statutory reporting information inside traditional word-processed documents, spreadsheets, slide decks and ad-hoc reports severely limits the value of the data within them and what can be done within it. According to an E&Y survey nearly 75% of enterprises rely on more than six different reporting systems—such as ERP, CRM and HCM systems. However, that data loses context and risks inconsistency when exported and disconnected from its source. Adding to the complexity is that the supporting compliance documentations are often managed independently across multiple departments, entities and systems. These decentralized method gives way to increased expenses, redundancy, or even worse multiple truths to the data that is to be submitted to regulatory authorities driving executive management to ask "what is our statutory reporting data strategy?" Connect Your Data and Trust Your Statutory Reports with Enhanced Data Governance Framework Forward thinking companies are developing enhanced Data Strategy Frameworks built on the concept of a Single-Source-of-Truth (SSOT) connected to Multiple-Versions-of-the-Truth (MVOTs) in the statutory reporting process to meet the diverse statutory reporting environment. (SSOT) connected to (MVOTs) unify, enrich and explore data at scale with advanced data preparation—and then create a single data source connected to reporting and analysis. As changes are made, data and narratives automatically update across presentations, reports and spreadsheets within the cloud. Built-in workflow and controls automate and optimism reporting processes with enhanced .
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  Enhanced Statutory ReportingData Governance Framework with a Single-Source-of-Truth (SSOT) connected to Multiple-Versions-of-the-Truth (MVOTs) The result is that today corporate compliance and regulatory disclosure have significantly raised the complacence risks of doing business. Failure to consider the impact of its actions on its shareholders, customers, employees and the markets may result in significant adverse publicity and reputation damage, even if no law has been broken. The “plumbing” aspects of statutory reporting data management may not be a "sexy topic" as revenue growth in colorful dashboards, but they’re vital to high performance and statutory reporting . As such, they’re not just the concern of the CFO, CIO and the CRO; ensuring smart data management is the responsibility of all C-suite executives, starting with the CEO. Companies today also face mounting pressures to perform well, create value, provide greater transparency and be more accountable to multiple stakeholders, minimize impact on natural resources, and be socially accountable. They need new tools and methods for gathering and communicating the expanded information sets (increasingly focused on non-financial, ESG information) that investors, analysts and others want. They need more evolved corporate cultures and vision to support and nurture these new types of disclosures. Enter the latest evolution in corporate reporting - Integrated Reporting (<IR>). So next time some asks you "what's you data strategy for statuary reporting for non-financial data is, I hope you can tell them that you have a (SSOT) connected to (MVOTs) data strategy just like you have with your finical statutory reporting processes! Here at Workiva, I spent the last 8 plus years with a great team building out a cloud-based SSOTs connected to MVOTs reporting platform that unifies structured and unstructured data from any origin. The end result is secure, accessible and reusable data that can be leveraged across multiple reporting streams— from internal and external presentations to any statutory reporting requirements. Let us know if we can be of any help you in your SSOT connected to MVOTs statutory reporting data governance journey. It is after all my favorite topic.