If you’re preparing a financial disclosure report, it’s imperative that you provide information that is accurate, transparent, and auditable. Your employees, shareholders, and other key stakeholders are counting on it. But exactly what information should be included? The truth is, it varies quite a bit depending upon what type of disclosure you’re submitting and the regulatory requirements, but there are some common pieces of information that your financial disclosure will likely include.
In our latest blog, we’re exploring the meaning of financial disclosure, what kinds of information you can expect to report, and how a disclosure management platform like Fluence Disclosure Management can transform your financial disclosure reporting.
What Is the Meaning of Financial Disclosure?
Financial disclosure refers to the process of sharing corporate financial and non-financial information. Financial disclosures may be internal or external. Internal financial disclosures are shared with employees, board members or shareholders, and may include information such as short- and long-term business indicators, key performance indicators, and overall financial performance. External financial disclosures, on the other hand, are shared publicly and are often geared toward current and potential investors or lenders. External disclosures may share information such as business activities, overall financial health, income statements, cash flow statements, operational performance, futurecasting, and more.
What Is the Purpose of a Financial Disclosure?
There are several reasons why financial disclosures are important, depending upon if they are internal or external.
Internal financial disclosures help guide short-and long-term decision-making, especially at the managerial and executive level. These decisions can drive day-to-day action to build upon or improve performance.
External financial disclosures publicly share information about the health of a company, which is especially important for companies looking for investors. While external disclosures may be voluntary or mandatory, public companies are often required to submit financial disclosures in order to meet mandatory reporting requirements laid out by regulatory bodies.
Who is responsible for financial disclosure? Common regulatory agencies include the Securities and Exchange Commission (SEC), the European Central Bank, the European Banking Authority, and the European Securities and Markets Authority (ESMA). Failure to provide financial disclosure could result in fines and other penalties.
What Does Financial Disclosure Include?
Because there are a number of different regulatory authorities and a variety of financial disclosures, there is no one set of financial disclosure requirements. Instead, corporations should follow the best practices or requirements laid out for the type of report they are preparing. Especially for those corporations working on mandatory financial disclosures, following the detailed list of requirements is absolutely essential.
With that said, here are some common types of information you may be asked to include in a financial disclosure.
- Business Information: Corporations may be asked to disclose various kinds of information pertaining to their business dealings. This might include key insights into products and services, subsidiaries, acquisitions, the market, regulatory updates, and more.
- Financial Information: Companies may be asked to provide information regarding their equity securities, market risk, or processes and procedures for internal quality control. They may also need to provide audited financial statements for the past quarter, year, or several years. This may include income statements, balance sheets, cash flow statements, stockholder equity statements, and more.
- Management Compensation Information: Companies may provide information on the compensation of their managers and executives, including any perks or benefits it provides these employees.
\Corporations preparing financial disclosures may also be required to follow specific guidelines regarding the formatting of reports. For example, European corporations preparing financial reports for ESMA are required to submit their annual financial reports in the European Single Electronic Format (ESEF), which requires XHTML formatting. Similarly, the SEC lays out formatting guidelines for those reports submitted through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
How Do You Prepare a Financial Disclosure? With Fluence Financial Disclosure!
Gathering all of the above information—plus any other pieces of data you intend to report on—is a complicated task. There are myriad data points to track down from several sources across the company. The process of extracting data from Excel and re-keying it is inefficient and time-consuming. And, the numbers are constantly changing, which can lead to deadline challenges—especially if you’re working with an external designer.
With Fluence Disclosure Management, there’s a better way. Our disclosure management platform was built to simplify the process and provide corporations with time and money savings. With Fluence Disclosure Management, you can:
- Build financial and other business reports to meet internal and external disclosure requirements.
- Automate report production and distribution.
- Use out-of-box controls, visibility, and inverse design.
- Combine data from multiple sources into a single report with collaborative features and Microsoft Office integrations.
- Map narrative and financial inputs.
- Work concurrently on different parts of a single document.
- Develop ad-hoc workflows.
- Access collaborative report production and distribution.
- Manage and maintain version control.
- Apply financial intelligence to collected data, including scaling, rounding, currency, and more.
- Check for data consistency within the same document.
- Release the final document in different formats, including XHTML and iXBRL.
Ready to learn about how Fluence Disclosure Management can save your team up to 90% on document setup time and reduce ongoing maintenance costs? Learn more about the platform and request a demo today.
