XBRL: The sooner you start, the better
The XBRL flywheel continues to turn.
The first phase of XBRL-based financial filings -- those for the largest public companies -- arrived in June. More large public companies will be required to file via XBRL in 2010, and by 2011 all public companies will be using the data-tagging language to file their financial reports.
And if mandated filing dates don't pique your XBRL interest, a recession might. The demand for accurate, timely and transparent financial information is as high as it has ever been. It seems the financial crisis is tailor-made for XBRL.
Despite all of that, Taylor Hawes says some significant challenges remain.
Hawes is CFO of intellectual property and licensing for Microsoft. He is also chair of the XBRL US National Conference Advisory Committee, and he says companies that must file via XBRL in 2010 have a ton of work to do ... and very little time in which to do it. In the immortal words of Jerry Reed, they've got a long way to go and a short time to get there.
"In Year 2, companies will be required to tag their footnotes at a level of detail that is relatively substantial, even exponentially larger than what they've had to do in the first year," Hawes said in a recent phone interview. "I think some of the challenges involve gaining the knowledge internally that will allow a company to do that, having the technical resources to be able to understand how XBRL will translate into a rendered document, and dealing with the sheer volume of tagging that's required. Getting all of that done in a compressed amount of time is significant."
It's hardly Mission: Impossible, though. The key to success, says Hawes, is to start early.
"The sooner you work through the taxonomy and extension issues that you might have, and the sooner you understand the complexity of your financial statements relative to the reporting requirements, the better off you'll be," he said.
That sounds like a pretty strong argument in support of "global GL," a concept that would find XBRL tags "baked" into financial reporting tools so that the output is pre-tagged with XBRL. "That makes a lot of sense," Hawes said. "When you bring it back to the challenges companies have with tagging ... having the data pre-tagged at a transactional level makes it a lot more compelling."
In the meantime, there are plenty of other XBRL-related issues to examine, including the implications for non-profits, uses for XBRL outside of the financial reporting realm, and how international financial reporting standards factor into the equation. Hawes touched on all of these issues in this MACPA podcast.
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Find out more about XBRL with these related resources:
- XBRL International
- XBRL U.S.
- SEC resources
- IASB resources
- The ABCs of XBRL: Here's what it can do
- XBRL and government: A marriage made in ... Nevada?
- XBRL case studies
- Demonstrations of XBRL in action
- More demos: Microsoft | Edgar Online | Rivet Software Crossfire | Google OneBox
- XBRL taxonomies
- Six Steps to XBRL (from the Journal of Accountancy)
- ROI on XBRL (from the Journal of Accountancy)
- Improved Business Process through XBRL
- Benefits and uses for business