FSB goes digital

The Financial Services Board (FSB) is the first regulatory agency in SA able to receive digital financial reports with minimal human intervention, says accounting firm PricewaterhouseCoopers (PwC).

PwC has for some time been touting the business value of Extensible Business Reporting Language (XBRL). The group has for the past year-and-a-half been involved in implementing the South African XBRL Retirement Fund Digital Supply Chain Initiative, on which it has published a case study.

Based on Extensible Markup Language (XML), XBRL is a standard aimed at eliminating the constraints of incompatible formats and vocabularies and to use recent trends in technology to enhance business reporting.

PwC says the South African XBRL Retirement Fund Digital Supply Chain Initiative was born out of the need to be able to provide clients with a solution to allow them to satisfy pending changes in laws around retirement fund reporting requirements in SA.

The project brought together Alexander Forbes Financial Services, FRS Financial Reporting Solutions, the FSB and PwC.

The FSB is responsible for analysing the financial reports of registered retirement funds for compliance and sound financial management. To do this, it has had to comb through each financial report and manually recapture and extract information.

PwC says the body decided to introduce XBRL as the format for electronic submission for financial statements to enhance the overall efficiency of financial statement processing, enhance the effectiveness of the regulatory function and be proactive in its effort to comply with the Electronic Communications and Transactions Act.

"At the time of the project kick-off, the FSB received annual financial statements from around 3 300 private retirement funds," says PwC. "However, pending legislation in SA will soon add an additional 11 000 underwritten funds to the pool of retirement funds required to submit their annual financial statements to the FSB."

It says the volume of the statements would have made it impossible for the FSB to cope, given the existing staff complement and manual accounting process.

One of the other participants in the project, Alexander Forbes, handles several retirement funds for a range of customers, with each fund having its own rule and accounting and financial reporting processes.

Each fund`s financial statement was composed manually by several people performing the daily fund administration and preparation of the accounting data.

In terms of the XBRL initiative, the supply of XBRL-based financial reports begins at Alexander Forbes. Once documents are verified they are downloaded into the FSB workflow system and the relevant people are notified via automatically generated e-mail.

PwC says the FSB is now able to receive the information in a less stressful and timely fashion, with the required data downloaded in the format the FSB requires.

However, the FSB has decided to keep current staff levels to cope with the almost 11 000 new funds to be introduced into the supply chain in future. "In the interim, the current staff can be used for more value-adding analysis functions, rather than mere data capturing."

Alexander Forbes is expecting savings of up to 30% in the bookkeeping staff requirements for the data capture and report preparation, freeing staff for use in other areas.

PwC says the total time required to prepare and finalise a set of financial reports suitable for submission has been cut from five days to mere minutes.

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XBRL set to change business reporting