2012 XBRL in Review: Progress Made but Concerns Remain
The year was like many previous years for reporting practices surrounding eXtensible Business Reporting Language (XBRL). Many regulators continue to evaluate and adopt XBRL requirements, while others struggle with the errors included in submissions. Many public companies continue to see XBRL as a cost, while some are recognizing benefits of internalization of tagging. For investors, resources are the key to extracting the benefits promised by this reporting change.
Regulatory movements toward XBRL reporting are occurring in markets of many sizes. In December, Australia released a consultation paper for possibly broadening the use of XBRL in business reporting. Latin American regulators in Chile, Peru, and Panama are also at various stages of implementing XBRL reporting requirements in their countries.
The U.S. Securities and Exchange Commission’s (SEC’s) XBRL requirements moved into their final stage with all U.S. companies reporting detailed footnote tagging in the second half of 2012. Even with the mandate’s progression, however, companies continue to submit filings containing errors. SEC staff patience is being tested as common errors have been addressed though staff observations and frequently asked questions pages.
The SEC XBRL requirements are adding to the frustration felt by the corporate finance departments of many public companies. Many firms do not recognize the benefit of having to XBRL tag their financial data; these firms continue to see XBRL as a compliance practice.
Companies that see XBRL as a compliance issue often only tag their information once the traditional reports have been completed. An active vendor in the XBRL space discussed in a blog post “how we can get companies to understand the benefits and how, more importantly, they can gain the benefits XBRL promised to us all.” The value of XBRL will become more apparent as companies begin tagging earlier in the reporting process, which can streamline additional internal reporting.
Just as companies are seeing improved resources for their XBRL process, end-user products are also advancing. The XBRL Challenge hosted by XBRL U.S. crowned its inaugural winner, Calcbench, in early 2012. The program’s success in advancing consumption-based applications prompted a second round of the competition. There is still time to enter your idea for an XBRL analytical tool.
Blog writer Qinlin Luo may be up for the challenge; he discusses how an improved XBRL search engine may be needed to re-engage research analysts. Companies need to understand that missing information when attempting to compare multiple companies is an obstacle to conducting proper research. If search capabilities assist in closing the information gaps from filings, the usefulness of the information should attract greater attention.
As the XBRL community moves into 2013, the future remains full of potential. Depending on your perspective, the future may be one of benefits and success for XBRL or another year of frustration in having to comply with a regulator mandates.