Financial Reporter Verta Systems

Advanced stand-alone text/table editor for complex financial documents

www.findocseditor.com

Financial Reporter

Patent pending

www.findocseditor.com2

Professional services industry: a giant with improper softTop 6 accounting firms alone: 690 000 users, US$103 billion revenue

Revenue: US$26.20 billion (2009)

Employees: 163,000

PricewaterhouseCoopers

Revenue US$21.4 billion (2009)

Employees: 144,000

Ernst&Young

Revenue: US$26.6 billion (2010)

Employees: 170,000 (2010)

Deloitte

Revenue: $20.1 billion USD (2009)

Employees: 140,000

KPMG


Employees: 44,000

BDO International


Employees: 30,000 (2008)

Grant Thornton

+ smaller firms, lawyers, consultants, bankers – ALL use MS Office


Issue prospectus

Valuation reports

Management discussion and

analysis (MD&A)

Financial statements (IFRS and Statutory)

Proposals Investment memoranda

These firms have serious efficiency problems in their core business: preparation & review of financial documents

To maintain internal consistency of such document with MS Office after several rounds of updates requires a lot of effort and concentration

Example of typical report page:


Professional services firms need special tools for special tasks…


… but all they have is multi-purpose solutions!


Significant amounts of text/analytical information Lots of tables Most of the data has complex interconnections

Only the general structure can be agreed upon in advance; detailed structure and content is modified until the very end of the project

One project – one document. Changing conditions and changing disclosure requirements make the reapplication of a previously issued report difficult. Generally they are not applicable to a different period or client.

The appearance of the document demonstrates the quality of work Wrong fonts, improper placement of paragraphs, misprints are unacceptable

Consultants Lawyers Auditors Client

Financial documents have important specifics

Complicated structure

Uniqueness

Flawless look

Simultaneous work of several people/teams

Numerous reviewing / modification iterations

Preparation (team) – Review (reviewer) – Correction(team) – 2nd review (reviewer)

7

Where MS Office is not effective

• MS Word and MS Excel have major limitations:

– MS Word

• good for novels, but preparation and updating of financial disclosures with it is very frustrating task (there is

no proper cross-checks functionality, they all are perfomed manually)

– MS Excel

• flexible and great for calculations

• not good for quality presentation and printing

• numbers within paragraphs are not supported

– Moreover, for financial documents the whole distinction between tables and text implied in these

programs is very artificial!

• Accordingly, project teams struggle to continuously check to make sure that all required

changes have been posted and all the information has been properly updated. In practice

there are a lot of errors and unnecessary review iterations due to very significant risks:

– human element risk (increasing exponentially at night before the deadline) as well as

– risk of delay


Superior Interface

Automatic page

formatting

Real-time collaborat

ion

We designed Financial Reporter to address these specific issues

Teamwork

Easy cross-checks

Instant printing

Financial Reporter is based on the following principles:1. data in text or table form is edited and

processed in similar way

2. interface specifically designed to automate and ease cross-checks

3. multidimensional track changes and redo/undo (i.e. each text element editing history is independent)

4. instant printing (correct page formatting is done automatically - no broken tables or random fonts)

5. cloud-based

6. advanced version and review comments status control (same way it is done in professional services)

Financial Reporter may be used as a standalone editor already superior to MS Word and Excel, or it can be tied to an Excel/ERP as a consolidation tool

For extended features description please refer to Appendix 1.

This is how Financial Reporter looks

www.findocseditor.com

Professionals have seen this

prototype and approved it


Unique features of our product

There are some expensive ERP add-ons targeting Finance functions and CFOs. Accordingly they utilize bottom-up approach (from data consolidation to reporting). They generally require costly integration efforts. Smaller clients don’t have it and rely on auditors to check their numbers (in the end this is what auditors are being paid for!)

In contrast professional services firms are much more concerned about the quality of the documents they sign-off than are their clients. They have more incentives in using good software, no matter if their client/project is big or small. This is why they need a universal tool with no need to connect to clients’ ERP

At present MS Word and MS Excel mix (with various add-ons) is a standard platform for cross-team reports preparation and exchange. The reason is that everybody has them, and they are stand-alone solutions.

Financial Reporter overcomes their major limitations:– It is flexible and great for calculations (unlike MS Word)– it is good for quality page layout and printing (unlike MS Excel). – eliminates artificial separation between tables and text processing implied in MS

Office, adds powerful cross-checks functionality– facilitates teamwork through online collaboration and enhanced project status

control functions– developed inter-document navigation

Designed primarily for professional

services

Standalone solution


Benefits of Financial Reporter for our cliens

Reduction of report

preparation time by 2-7 days

• Decrease of technical errors and rounds of reviewing

• Real-time team collaboration, more effective project management

• Synchronization of versions in different languages

Elimination of intolerable risks of technical errors in

the report

• Improving quality of reports/deliverables

• Platform for reliable consistency checks

Reduction of direct costs on to proofreading/typi

ng

• Decreases of the direct expenses on proofreading and typing personnel

Competitive advantage

for Professional

Services

Reports issued per year, pcs. 117 Total direct cost reduction, USD $260,676Headcount, employees 176Direct cost saving per employee per year, USD

$1,481

Revenue streams & Fees estimation

EmployeeTime saved,

hours

Rate (direct costs),

USD/hour

Direct cost saving, USD

Partner 4 $309 $1,236 Director 0 $73 $0 Senior Manager

0 $54 $0

Manager 4 $44 $176 Senior 16 $25 $400 Advanced Staff

16 $14 $224

Staff/Assistant 16 $12 $192 Intern 0 $7 $0 Total savings 56 $2,228

We propose fees based on estimated client’s direct cost savings per 1 PC

1. Annual clients cost savings : $1,481 / 1 PC 1. Annual license fees: $1,000 / 1 PC

+

This fees estimation is preliminary and done before consideration of client’s benefits from risk reduction (which are very critical). Fees estimation will be higher after risk reduction is considered

2. Additional fees for special customization / integration (if requested)

(1) Cost calculation assumptions are based on actual data form one of Big 4 companies(2) We include only direct costs in cost saving estimations(3) Decisions whether to use any specific software are made by the global head offices of audit companies and usually are compulsory

for local offices


Our progress as of today

1. We developed functioning prototype and arranged several successful demo-sessions for:

1. BDO

2. Ernst&Young

3. MDM Bank (IFRS department)

4. Bank of Moscow – VTB (Finance department

5. Start-sauna 2013 Moscow (winners)

2. 2014: Fully developed automatic page formatting as a stand alone product ready for sale

3. 2014: Filed US patent and PCT application


Major risks: competition and insufficient funding1.Competition

I. Microsoft Office (with Sharepoint & various plug-ins)

Everybody has MS Word and MS Excel, that's why this software became a standard for cross-team reports preparation and exchange.

These are stand-alone solutions - no need to connect it to ERP, or integrate ERP beforehand.

However, they absolutely don't suit specific needs of financial reports preparation.

II. ERP add-ons, ‘Last mile of finance’ type of software

1. Oracle Hyperion Disclosure Management2. IBM Cognos Disclosure Management 3. SAP Disclosure Management4. Longview Solutions disclosure management5. Tagetik

The software of this group has the following flaws:

1) utilizes bottom-up approach (from data consolidation to reporting). It generally requires expensive integration efforts. Smaller clients might not have it and rely on auditors to check their numbers. 2) is not customized for the needs of the auditors, who are often more concerned about quality of financials than their clients are (especially when the clients are small).

2. Insufficient funding at crucial development stages

Sales and additional funding are critical to retain development team


Financial Reporter team

Why us?

We have industry expertise We thoroughly know big 4 work process and our

product is tailored for our customer needs

We know people in the industry and know how to approach them We needed very little additional networking to

arrange presentations to key people in E&Y and BDO

Our customers and colleagues are familiar with our work and hope to see us succeed

We introduced several unique and novel interface features We showed the working prototype to potential

customers and they have approved it

Several our inventions allowed us to apply for a US patent protection

Aleksey Rubinov, CPA (functional design, founder) 6 years with Ernst&Young

Kirill Mikov (founder) Successful enterpreneur with projects in water

processing, real estate operations and chemical engineering

Ilyas Peshekhonov (technical design and development) Managed wide scope IT projects

core-system design for security agencies

lights-control device for night-clubs and concert venues

Android applications

www.findocseditor.comE-mail: [email protected]

Phone: +7 (926) 278 64 05

VERTA SYSTEMS

http://www.findocseditor.com/

mailto:[email protected]


Appendix 1. Detailed description of features


Unique features of Financial Reporter

No more Alt+TAB back and forth and unnecessary scrolling: If one divides the screen into two parts in existing text processing applications,

one has to manually scroll each of them. In FR the user navigates only through relevant information, no need for linear scroll.

This feature is similar to html design applications, where various windows dynamically change contents to show only relevant information. However, it is very different area, and functionally windows there are different (different layers and dimensions, etc). In FR two windows have exactly the same functions. Together these functions create a very effective way of browsing the documents:

Most text processors treat separate documents like separate universes. To navigate such massive array of information current systems utilize external applications: explorers, browsers, etc.

In FR it is the opposite: all the data is the same database. To navigate them we propose an analogue of Google Maps, but not for geographical area, but for array of financial disclosures (we also present the documents in two dimensions):

Google maps: 'Cities => Districts => Streets => Houses'. FR: 'Clients => Projects => Documents => Chapters'.

Accordingly we can make requests like that: Google maps: "Show me all ATMs of Bank of America in Boston", FR: "Show me all parts of all documents from ABC client which have been submitted for my review since the beginning of the week". And the results are be similarly highlighted in both maps.

Project map

Two dynamically connected windows


Unique features of Financial Reporter (continued)

We introduce iterative calculations into financial documents. In accounting all numbers are interconnected, so there could be many calculation starting points.– Other disclosure software problem works this way: first the numbers are

calculated in the ERP or Excel, and then they get in. – In contrast, our technology allows for constant changing of a starting

calculation point (as it happens in real life) and still maintain integrity of the documents.

In existing applications this functionality is very linear: to undo a change done a week ago, one has to also undo a change done yesterday. In FR it is not the case because we introduce totally different approach: where each element changes can be undone/redone independently

Our software automatically scales all the tables and text for printing, no need to additional formatting before print. No problem with titles being left in the bottom of the page and the text on the following page and similar MS Word problems.

Automatic page-make up

Multidimensional track changes and

redo/undo

Similar processing of tables, numbers

and text


Unique features of Financial Reporter (continued)

Usually in the final stage of document preparation, there are several open issues on particular numbers, statements or disclosures. The final decision is usually made in the last minute before sending it to printing.

To address this issue, at the same time with the master document, there is “alternative document” which mirrors the master with the exception of numbers or paragraphs marked as “alternative”

There might be many alternative versions but if some particular numbers are not “alternative” then it is automatically modified in all versions simultaneously

Today these numbers are updated manually!

This allows for synchronization of reports in different languages, consolidated and stand-alone

Automatic review of the text for similar looking numbers or names (risk of misprint or “1”-s)

Automatic search for empty cells in tables

Different legal forms of the business having the same names (LLC, CJSC)

Other common misprints

Pre-footing

Alternative versions

synchronization


In the project map, parts reviewed by other members or teams, are shown in yellow.

In the project map, parts that are currently being edited by other colleagues are shown in red

At any given time, one can see who is working on the document and what part he is editing and the changes being made.

Simultaneous editing of the document is supported for up to 20 people

All participants have their access levels (only violated in emergency situations) You can lock the paragraphs which you don’t want to be changed after your review.

The reviewer can sign-off any paragraph or the whole part of the text thus effectively blocking any further modifications

Every change is tracked and signed with initiator’s name and can later be undone

Reviewers’ comments have statuses: Open, Cleared, Closed. They are easy to locate and track progress

Real-time collaboration in Financial Reporter

Oversee who works in what part of the

document

All changes are updated in real time

Pre-define access levels

Reviewer comments


Page make-up: Financial Reporter VS MS Word

A high-quality formatted document is ready for printing at any moment

Financial Reporter is based upon professional page design software

The page design software applies complex formatting rules to the document automatically

Even after careful proofreading there is inevitable risk of errors when text is actually printed

The reason is MS Word and other general purpose text processors apply WYSIWYG approach (What You See is What You Get)

Financial Reporter MS Word


After the page break there is the name of the note + «(continued)»

Paragraphs are not split in half at the end of the page, but rather start from the next page

Spacing between paragraphs is automatically adjusted depending on what page the particular paragraph is indicated to belong to

There should be no blank pages due to improper page break. Titles should not be left on the page without the following text body

There is a predefined set of styles which are applied to the whole document. It is not possible to accidently alter the style of a single word or paragraph

– There should be no accidental Arial text among Times New Roman report!

Tables don’t stick to page margins

Tables don’t break between several pages

Numbers in the tables should always be clearly visible (due to font decrease)

– Numbers don’t brake/hyphenate

– Cell margins don’t hide any part of the number

– Indentations throughout the document are standardized.

Table format for one year is exactly the same as table format for the comparative prior year. The format of one table is easily copied to another

– Today it is almost impossible to make two separate tables, which maintain each other’s format

Different indentations

Un-unified paragraph formats

Some fonts appear on screen to be identical, only to discover upon printing, they are different

Formatting of large tables is very complicated and time consuming

Accidental but inevitable incompliance to the rest of design rules described above

FinReporter: Paragraphs FinReporter: Tables Word’s common issues

Financial Reporter solves today’s common formatting issues


Once formatting rules are set (and in professional services they change relatively rarely) the document is ready to be published at any moment. It will be correctly formatted and look professional. There will be no font surprises after printing

Principles of automatic page design in Financial Reporter


A sample page produced using TeX

MS WORD


Main features of data control

Main features for data control

Our numbers ‘know they mean’, it is not just ‘sheet1!b235’. It is “Fixed assets 2007 – Fixed assets 2006”. Whenever you see the number, you see the substance behind it and can check whether it is in the right place. How does it know it’s name? From the table it was taken.

The links allow for consistency checks

– When connection is more complex and cannot be presented with the formula

– When a phrase or paragraph is connected to each other

You can link “profit grew steadily” in MD&A and actual amount of profits

Text links: link the terms in different languages, in different clauses


Thank you!

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Financial Reporter Verta Systems

Software

Transcript of Financial Reporter Verta Systems