NW Natural excels at XBRL

Based in Portland, Oregon, NW Natural provides local distribution and storage of natural gas for nearly 670,000 residential, commercial and industrial customers in western Oregon and southwest Washington. Founded more than 150 years ago, the company now employs 1,100 people and is listed on the New York Stock Exchange (NYSE: NWN).

“Our status as a public company means that we need to file periodic reports with the Securities Exchange Commission,” explains Joseph Blanchard, Senior Financial Reporting Analyst and Project Manager at NW Natural. “Creating these periodic reports is an important process for our business – not only because there are penalties for errors and late filing, but more importantly because the reporting process is a public demonstration that the company is in good order financially. Correct and timely periodic reports help us maintain the trust and confidence of our investors and stakeholders.”

Meeting the deadline
The deadline for filing quarterly 10-Q reports is 40 days after the end of the quarter, while annual 10-K reports need to be filed within 60 days of fiscal year-end.

Taking the 10-Q reports as an example, NW Natural typically finishes its quarterly financial close within seven or eight business days of the end of the quarter, leaving only 30 days to consolidate financial data, create external financial reports, draft, edit and approve narrative disclosures (i.e. MD&A and footnotes), tag the report data in XBRL and file with the SEC’s EDGAR database. Until recently, this was a complex, sequential process involving numerous iterations of the draft, and late entries could often create substantial re-work.

“Getting everything ready on time was an intense process – there were frequent late nights to meet our internal processes and external deadlines,” explains Joseph Blanchard. “One of the major issues was accounting for late entries with integrity and consistency. By creating links and validation rules in our process, we have saved hours and gained more confidence from our executive team with faster turn-arounds and more accurate documents.”

The challenge of XBRL
An additional layer of complexity was introduced when the SEC announced its Interactive Data (XBRL) Mandate. All future 10-Q and 10-K reports would need to be tagged in eXtensible Business Reporting Language (XBRL) and filed as an exhibit with the official reports.

“Manually tagging all the XBRL elements in every quarter’s report would have been a considerable extra burden on our reporting team,” says Joseph Blanchard. “It’s a problem for every public company, and everyone is looking to simplify the solution, either by outsourcing or by looking for some kind of software solution to use internally. We were concerned that an outsourced process might cause more problems as we already have a tight process with late edits and didn’t want to shorten our editing time or increase our workload; so we began looking into in-house options.”

A comprehensive solution
Many of the solutions that NW Natural evaluated were simple XBRL tagging tools that ‘bolted on’ to the end of the drafting process. IBM Cognos Financial Statement Reporting (FSR) was different: it offered a more comprehensive solution that would help the team manage the entire quarterly filing process.

Joseph Blanchard comments: “When we saw Cognos FSR, we were looking for an XBRL solution, but realized that we could transform our whole SEC compliance reporting process with automation, workflow management, automated data validation and collaboration features, as well as simplified XBRL tagging.”

Ensuring integrity and consistency
A major benefit is Cognos FSR’s ability to ‘change once, update everywhere’. This ensures that when a number needs to be changed, it is automatically updated everywhere it appears in the report to ensure consistency. Users are able to create business rules and Cognos FSR can automatically perform validation of those rules, which streamlines many of the time-consuming checks that finance used to perform to ensure the accuracy of report data.

“Linked variables and validation are a huge boost to the accuracy of the final document, because they help us minimize errors and catch them when they occur,” explains Joseph Blanchard. “Previously, this all had to be done manually, so it’s a major time saving.”

Boosting collaboration
Additionally, with Cognos FSR in place, various people in different departments can now collaborate much more effectively and efficiently to draft and review NW Natural’s SEC reports.

“Cognos FSR enables the team to work in parallel on many tasks, and helps us share the work around more effectively – so instead of one person working evenings and weekends, we can have three people collaborating to get the job done in more regular hours,” says Joseph Blanchard.

Integrated ‘tag once’ XBRL tagging
Finally, Cognos FSR is a market-leading integrated XBRL tagging solution. Using Cognos FSR, users can tag their financial tables and disclosures once, and those tags can be automatically rolled forward for use in subsequent reports – greatly reducing the time and effort that needs to be spent on tagging future periodic filings.

“We’re going to save hours and days on XBRL tagging in future quarters,” says Joseph Blanchard. “Once we’ve configured it for one report, we can use the same template for the next, and just pull the new numbers through automatically. Compared to a manual tagging process it will literally save days of work.”

He concludes: “Looking to the future, the best thing about IBM Cognos FSR is that it’s not just limited to the Office of Finance: practically any team that manages the creation of large and complex documents can benefit from it. Within NW Natural we have already identified a number of other projects that could benefit from Cognos FSR, and we are looking forward to getting even more from our investment in the future.”

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