Implementing XBRL Reporting

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					                                                    T E C H N O L O G Y
                                                   electronic reporting




                          Implementing XBRL Reporting
                                                   Options and Issues to Consider


By Deb Sledgianowski,
Robert Fonfeder, and Nathan S. Slavin



I
     n January 2009, the SEC ruled that pub-
     lic companies will now be required to file
     their financial statements using Extensible
Business Reporting Language (XBRL)
interactive data to be phased in beginning in
2009, with all U.S. publicly traded companies
complying by 2011. As such, high-level
accounting personnel and CPAs should con-
sider their options when making decisions and
recommendations related to XBRL imple-
mentation. Three options for accountants to
consider are discussed below, along with eight
characteristics of sourcing decisions to con-
sider when developing the implementation
plan and deciding whether the project
should be outsourced or done in-house. For
a primer on how XBRL works, see “How
CPAs Can Master XBRL,” by Jianing Fang
(The CPA Journal, May 2009).

XBRL and the SEC Interactive
Data Ruling
   XBRL is a standards-driven, open-
source markup programming language that
uses common tags based on a standardized
taxonomy to label each individual element
of data, which together are stored in an
instance document. These instance docu-
ments can be read by the many software
applications that follow the standards. XBRL          The SEC’s ruling requiring public com-      all other regulated filers, including smaller
has recently come into the spotlight as an         panies and mutual funds to file their finan-   reporting companies and all foreign filers
information technology (IT) tool to facilitate     cial reports using XBRL necessitates that      using International Financial Reporting
the transmission of financial statements that      companies contemplate how to implement         Standards (IFRS), are required to file in
publicly held companies file with the SEC.         this requirement. The SEC rules, which are     XBRL by 2011. First-time filers must
For example, when electronically filing their      being phased in over the next three years,     include tags for each element amount, with
10-K and 10-Q statements using XBRL, a             require 2009 financial statements to be        this requirement escalating in subsequent
company would code a tag (in this case,            filed in XBRL for domestic and foreign         year filings to include detailed tagging of
“usfr-pte:NetIncome”) along with its U.S.          accelerated filers that are using U.S. GAAP    amounts, tables, and narrative text within
Generally Accepted Accounting Principles           and have a public float (common equity         footnotes and related schedules. In addition
(GAAP) net income figure on its income             owned by unaffiliated persons) greater than    to mandatory XBRL filings with the SEC,
statement. This tag signifies that the follow-     $5 billion. Those companies with a public      companies are required to publish the XBRL
ing data are the amount of the “Net Income”        float between $700 million and $5 billion      files on their corporate website, if they
element from their financial statement.            are required to file in XBRL by 2010, and      have one.


68                                                                                                        AUGUST 2010 / THE CPA JOURNAL
   Besides being in compliance with the        means there are still thousands of public          Gianluca Garbellotto, current chair of the
SEC mandate for publicly traded compa-         companies in the process of considering            XBRL global ledger (GL) working group,
nies, there are other benefits for companies   how to implement.                                  suggests three implementation options
using XBRL. XBRL US, the consortium               The SEC estimates that the direct costs         organizations should consider:
developing XBRL taxonomies and                 to a company submitting its first interactive      ■ Tagging financial statements at the end
specifications for the United States, sug-     data financial statements, with block-text         of the reporting process as an extension to
gests that benefits include the automation     footnotes and schedules, could average             the traditional process in order to convert the
of manual data entry and validation, which     $40,510 with an upper bound of $82,220.            statements to XBRL format (bolt-on),
can provide a better quality of informa-       The costs for subsequent block-text filings        ■ Integrating XBRL mapping capability
tion to facilitate more accurate and timely    could average $13,450 with an upper                within information systems across the
decision making. XBRL could also make          bound of $21,340. The estimated costs to a         firm’s value chain as part of the reporting
it more convenient for financial analysts to   company for its first submission with detailed     process (built-in), and
compare companies, which could increase        footnotes and schedules could average              ■ Standardizing the internal reporting pro-
their coverage of smaller reporting com-       $30,700 with an upper bound of $60,150;            cess by embedding it in enterprise resource
panies, potentially making these companies     subsequent detailed filings could av
				
DOCUMENT INFO
Description: In January 2009, the SEC ruled that public companies will now be required to file their financial statements using Extensible Business Reporting Language (XBRL) interactive data to be phased in beginning in 2009, with all US publicly traded companies complying by 2011. As such, high-level accounting personnel and CPAs should consider their options when making decisions and recommendations related to XBRL implementation. Besides being in compliance with the SEC mandate for publicly traded companies, there are other benefits for companies using XBRL. XBRL US, the consortium developing XBRL taxonomies and specifications for the US, suggests that benefits include the automation of manual data entry and validation, which can provide a better quality of information to facilitate more accurate and timely decision making. The requirement for US public companies to file their financial reports in XBRL is being phased in over the next few years.
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