|Why You Can't Ignore XBRL Any Longer
Two-thirds of finance execs may be running out of time. Next question: What’s in your economic future? Join the survey; see the results.
May 7, 2009
In a national survey — conducted by Grant Thornton — of corporate finance executives at public companies, almost two-thirds said they have no plans to start using eXtensible Business Reporting Language (XBRL) despite a new government mandate requiring the new financial data-tagging system as early as next June.
“Unfortunately, for those public companies that reported that they have no plans to use XBRL, this is no longer an option,” said Sean Denham, a partner in Grant Thornton’s Professional Standards Group and a member of the AICPA’s XBRL Task Force.
The U.S. Securities and Exchange Commission (SEC) has already mandated that public companies must report their financials using XBRL by 2011. The final rule calls for a three-year, phased-in implementation schedule that begins as early as June 15, 2009 for the biggest public companies.
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Among public companies, the survey found, 35 percent of corporate finance managers said they were not familiar with XBRL. And only 12 percent currently report with XBRL. The hazards of late adoption are clear from another finding: About 63 percent of finance executives who have adopted XBRL said the experience was, ahem, “challenging.”
XBRL has been called a move to “radical transparency,” in that, once keyed-in, financial data can be made free, accessible and open to analysis and understanding by anyone, anywhere, anytime. In a nutshell, XBRL uses an organized system of data tags to represent financial reporting concepts or functions. The user can call up these concepts or functions using readable labels in a variety of real-world human languages. Users can, in effect, construct their own financial reports. XBRL is a key step in the eventual shift to International Financial Reporting Standards (IFRS), which, of course, is a whole ’nother story.
The phase-in for mandatory XBRL filing covers three different tiers of companies:
Just a few weeks ago, XBRL US, the nonprofit group responsible for maintaining the U.S. GAAP taxonomies under contract with the SEC, published the 2009 edition of the interactive data tags for coding financial statements in accordance with U.S. GAAP. It’s a “digital dictionary” of XBRL tags.
The time to ignore XBRL is long past.
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Copyright © 2009 CPA Trendlines/BSG LLC. All Rights Reserved. Used by Permission. First published by the AICPA.
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