XBRL for the IRO
Jun 12, 2009
Understanding IR Strategies Behind XBRL – the IROs Evolving Role.
During the #NIRI09 Conference, I attended a panel discussion that focused on XBRL strategies and the changing role of IROs. The panel included XBRL experts Michael Becker and Mike Willis.
Why is XBRL Relevant?
I learned from our panelists that XBRL is a business language that facilitates communication standardization. The current conditions often involve third party intermediaries that take your information, modify it, parse it, and/or reorganize it that is then distributed in a different form from the original. It can end up being inaccurate or presented in a way that can be misinterpreted.
XBRL prevents the modification of information by standardizing the way it is labelled regardless of naming conventions or nomenclature a company may use to describe things on the front-end in their financial reports. In addition, it mitigates effort to compile and review information since it’s already in a standardized format from the get-go.
What is Required? The SEC XBRL Mandate requires submission of XBRL formatted statements via an “XBRL exhibit” for annual, quarterly, and registration statements and is required to remain on the website for at least 12 months.
RSS feeds can be used to lower distribution costs and burden (SEC site and IR site). Allows users to pull the data and use it for their own analysis.
What is it? “Bar Code” for business information. Computer code that can be rendered and displayed to include a label, presentation, definitions, calculations, contexts, formulas, references, and taxonomy.
What is in it for an IRO? A Streamlined Review Process. The laborious assembly and review process is mitigated. Ultimately, this reduces costs and time to produce financial reports. If the XBRL is implemented as close to the origin of information then more savings can be realized.
XBRL will allow IRO’s to communicate more relevant information to their constituents in a timely fashion. Summarized reviews can be accomplished using rendering tools and used by investors to configure and automate information to display the most important data to them.
Standardized formulas and rules in business rules will allow collaboration among investors/analysts so that models can be created to work across multiple periods across different companies. Such tools already exist like I-Metrix; this allows for comparisons and correlations in a simple way.
SUMMARY
> More effective communications
> Streamlined compliance processes
> Lower cost & more efficient documentation preparation
> Better insights via social analytics
> Explicit relationships between materials across sources
Peter Boritz
Jun 30, 2009 17:35
Filing with XBRL is new and still yet to be understood by the business community that must file. The US-GAAP is robust and requires an understanding of its intricacies. The process of educating people about the US-GAAP and how to apply it to a filing is paramount. The US-GAAP Preparers Guide lays out guidelines for a proper submission. Today, filings are limited in liability. That will be changing to full liability. Preparers need to be ready. Internal auditing and SOX compliance of filings are about to become relevant as full liability goes into affect.
Internal auditing of XBRL filings is still an open unexplored field. Auditors are yet to develop the procedures and milestones necessary for authenticating an XBRL filing. To date, liability is limited. That will be changing in the near future. Filers will be liable for the content of their instance documents and extensions. Internal auditing controls need to be ready.
Filers have a number of options in meeting compliance to the XBRL mandate. They can do the filing in house or they can outsource it. The in house approach has the advantage of full control. However, few businesses have expertise in SEC filings, much less XBRL. With outsourcing, you review reports, but you still have no control over what is actually represented in the instance documents and their extensions that will be sent to the SEC and there is minimal audit ability or SOX compliance management. Perhaps the best approach is a hybrid of the two. Perform the work in house with the consultation of a filing agent who has expertise in SEC and XBRL filings.
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