July 15, 2008

A Cautionary XBRL Tale

There are gonna many good things that come along with XBRL. But there also will be a learning curve – just like anything else that is new – and that’s what scares me about implementing it next year for larger companies (whose XBRL tagging projects will be more complex than for smaller companies). Unlike Edgar, I believe your XBRL process will need to include someone who is familiar with XBRL – for things like error checking, to be sure the data is tagged correctly, that the taxonomy “builds” correctly (particularly with an extension taxonomy), etc. – even if you outsource tagging to a third-party or use a tagging tool to automate the process.

Here is a case in point: what to do about “bad” tagging that may be invisible when looked at through a viewer or other rendering tool, but can create errors when end-users try to slice and dice the data?

It’s possible that your financials can be tagged and everything will seem okay when you look at it, but there might be “hidden” errors. In other words, the human readable view may look correct, but the machine readable version may not be. I’m not sure how to fix that – but picking a reliable service provider or tool obviously will be important. Maybe the SEC’s proposed validation software – discussed on page 57 of the proposing release – will help here?

Or the SEC may rely on the market to self-correct this potential problem – that is, software would be available that enables users to catch tagging errors as market pressure forces companies to tag correctly because of the fear of reputational harm. Once again, this points to third-party assurance as the big issue for XBRL.

XBRL: Understanding the New Frontier

Print off these course materials and join us tomorrow for this webcast – “XBRL: Understanding the New Frontier” – and hear from these experts (audio archive available if you miss it “live”; but no transcript for this webcast):

– David Blaszkowsky, Chief, SEC’s Office of Interactive Disclosure
– Rob Blake, Senior Director, Interactive Services, Bowne & Co.
– Jim Brashear, Partner, Haynes & Boone
– Lou Rohman, Director of XBRL Operations, Merrill Corp.
– Michelle Savage, Vice President, Communication, XBRL US
– John Truzzolino, Director, E-Solutions, RR Donnelley Global Capital Markets

XBRL for Dummies

In this podcast, Wilson So, Director of the XBRL Business Unit of Hitachi, talks about his “XBRL for Dummies” book, including:

– What led you to write the book? How many copies have been picked up so far?
– What is the intended audience of the book? The relative sophistication?
– Any surprises as a result of the book?

Note the book is free, but you have to pay about $10 for shipping & handling. I still haven’t seen the book myself and can’t personally vouch for its utility.

– Broc Romanek