XBRL: Lessons learned from early adopters
The final phase of XBRL implementation is fast approaching, and the SEC is trying to keep the next wave of filers ahead of the curve.
If you're late to the party, XBRL is a data tagging language that's supposed to save the world (or at least make it easier to understand) by delivering accurate, timely, transparent and standardized financial information. The SEC launched a three-year, phased-in mandate to get all companies to file their financial statements via XBRL.
The largest U.S. companies have been the canaries in the coal mine for the past two years. Their war stories are blueprints of sorts for the smaller companies, who are next out of the XBRL gate this year.
With that final phase on the horizon, the SEC has released guidance for smaller companies that are making the XBRL transition. According to Accounting Today, that guidance includes information about:
- Data quality: "Carefully selecting the best tags is likely to be the greatest contributor to the quality of an XBRL submission," writes Accounting Today.
- Viewing submissions: The short version: Use the SEC's "previewer," but don't trust it absolutely.
- Validation: Before you file, test, and test, and test some more.
The hardest part, though, might be wading through the XBRL myths that are scattered throughout the financial reporting landscape. Brad Monterio has taken a shot at it in a Business Finance article titled, "10 XBRL Myths Exploded." Among them:
- XBRL is just one more compliance burden imposed on my organization. Yes, you have to comply, but "all types of organizations can gain significant efficiencies" by using XBRL, writes Monterio.
- XBRL is only for publicly listed and / or large companies. The MACPA is using XBRL, and we're as non-public as you can get. You'll hear details about our XBRL journey at the 2011 Maryland CPA Summit on June 3.
- XBRL is only for financial reporting. Plenty of folks will disagree with that one. Take Nevada Controller Kim Wallin, for instance.
Read Monterio's list in its entirety, then give us your thoughts about XBRL.