As most finance executives now know, , the interactive data tagging format designed to make it easier for investors and others to find reported items, and work with them.
Even though it's not quite at the finish line, a few observations already can be made.
For one thing, complying with XBRL reporting requirements is significantly more challenging than making the earlier transition to EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, notes Harold Zeidman, audit partner with KPMG. He offers an analogy: filing in EDGAR is like taking a picture of financial data and submitting it. An XBRL filing requires the company to identify, or tag, each pixel within a digital picture, he notes.
According to , companies were spending anywhere from 12 to 2,000 hours per quarter preparing their XBRL filings.
Even so, a recent SEC review of financial reports submitted in XBRL found several common errors. Among them: companies' efforts to get their XBRL statements to look like exact replicas of their paper reports. This isn't a requirement, and because of their efforts, companies "are extending (the tags) when they shouldn't, or tagging inappropriately," says Ami Beers, the AICPA's manager of business reporting, assurance and advisory services, and XBRL.
Negative values have been another source of confusion. Some values that appear as negative on traditional financial statements generally should not in XBRL. "One of the most common errors filers make is to incorrectly enter an amount with a negative value," states.
Still, some companies seem to be doing it right. One key to success: Start early. Atlas Air Worldwide, a provider of aircraft and aviation services based in Purchase, N.Y., is part of the next group of XBRL filers, says CFO Spencer Schwartz. The company began its efforts a year ago, analyzing whether to outsource the process or manage it in-house. "We decided it was more economical to bring it in-house," Schwartz says. While Atlas had to purchase and implement new software to aid in the conversion, it will have a lower cost for each filing. In addition, the solution links to the company's general ledger and other systems, automatically pulling information from them. "It's pretty easy to use."
In addition, employees challenged themselves as they were working with the financial statements. Every time they considered a specialty tag, they asked themselves if the line item in question wasn't already covered by the existing taxonomy, says Keith Mayer, vice president and corporate controller. "That discipline has really helped us."
When Atlas Air submitted a test XBRL file to the SEC, it received back no errors, Schwartz adds.
The second phase of filing, in which companies tag the information in the footnotes to their financial statements, tends to be significantly more complex than the first. "The face of the financial statements is pretty standardized, which simplifies tagging," says Campbell Pryde, president and chief executive officer with XBRL U.S., a national consortium for XML business reporting standards. "In the footnotes, a lot of information is customized and requires additional work."
As a result, even companies that easily navigate the initial XBRL reporting requirements may find the job gets more difficult. "You may get through this summer," says David Price, chief financial officer with EDGAR Online, a provider of XBRL software, which has been filing in XBRL for three years. "But, next summer could be four to five times as difficult," Price adds, referring to the fact that this is when the latest group of filers will report footnoted information in XBRL.
Price estimates that were set up at his firm for the initial phase took about 40 hours, in addition to the time spent by the an outsource team. In contrast, the set-up for filing the footnotes took a number of weeks. The process now is embedded within the close process and takes about 30 to 40 hours, along with the time spent by the outsource team.
Even as companies work hard to comply with XBRL requirements, it's not clear how many investors are using it. According to the FEI's letter, of the companies that tracked it, none saw more than a slight uptick -- between three and 20 hits per quarter -- in web use after reporting in XBRL.
That's not to say organizations that implement XBRL don't benefit. Consider the Maryland Association of CPAs. While MACPA is not a typical public company filer --- it's a nonprofit organization with a $6 million budget and 38 employees --- its management saw some value to implementing XBRL, says Skip Falatko director of finance and administration. They would gain an understanding of the impact of the shift to XBRL on many of their members, and could more easily analyze and manipulate MACPA's own financial information.
The MACPA purchased XBRL software, and in January, an intern began working part-time with it to tag elements within MACPA's financial statements. He shifted to full-time this summer. Falatko, who also spends a couple of hours a week on the project, expects it to wrap up this fall.
So far, MACPA has tagged the data and begun building reports. While it's too early to see definitive results, Falatko expects that XBRL will allow the MACPA "to populate financial reports and key performance indicator reports internally, in a better, faster, quicker way," Falatko says.
In addition, Falatko will be able to click on a revenue or expense number and see the underlying components, down to the transaction level, reducing the need for backup spreadsheets and PDF files.
Scott Di Valerio is chief financial officer with Coinstar Inc., the company behind redbox DVD rentals and Coinstar coin-counting machines. Coinstar began filing in XBRL last year. The IDEA, or Interactive Data Electronic Applications, database designed to collate the XBRL tags on electronic filings, will offer some benefits, Di Valerio says. "As the software advances, it will enable the everyday user to search the IDEA database, via Excel or other add-ins, extending the benefits for companies to use internally," for functions like benchmarking and pricing, he says.