Written by Bob Schneider Posted on December 19, 2007
Back in the Early Paleozoic era of interactive data (i.e., autumn 2006), my Google Alerts on keyword XBRL would arrive only fitfully. Even when an alert did show up in my mailbox, it would have only an entry or two.
That prehistoric epoch is clearly past. This month, I've been getting alerts almost every day, sometimes with ten links or more. Some of the frenetic activity is due to the Vancouver conference, and some to the recent release of GAAP taxonomies. But overall, the explosion (well, uptick) in media coverage and blogosphere musings reflects the growing recognition that XBRL adoption is rapidly coming into view for US companies. Here is a roundup of some of the more interesting stuff that's recently appeared on the Web.
(1) As usual, Peter Wallison of the AEI had important things to say about XBRL in his address in Vancouver. He placed interactive data in the context of other watershed events in US financial history, such as the introduction of GAAP in the 1930s and the end of fixed commissions on the NYSE. Wallison offers interesting predictions of XBRL's impact, most of which I think are on target, such as CFOs will be put under greater pressure to explain the underpinnings of the financial statements they release.
One forecast I question, however, is his belief that the concomitant drop in research costs means that ...an industry of freelance analysts is likely to develop offering advice to ordinary investors for a modest fee. Let's assume more ordinary investors are indeed willing to lay out hard dollars for investment research, which is hardly a given. I think large, established financial players will still be much better positioned, since they can reduce their cost structures to offer an economical product that, importantly, has brand-name recognition. But overall, Wallison's predictions appear spot on.
(2) Don Tabscott, a leading business strategist, gave a speech titled Wikinomics: Mass Collaboration, Transparency and XBRL. I don't see it online as yet, but a post on his blog gives good insight into the content. The speech was sufficiently inspirational to motivate Charlie Hoffman to start his own blog on XBRL for financial reporting. In an announcement on the XBRL-Public group, he states the objectives of the blog and makes a persuasive case of why business users need to get involved and take XBRL "the last mile" to broad use.
A major focus of Charlie's blog (which already seems to be going great guns) will be the public review of the US GAAP taxonomy released on December 5 by the SEC. (The Commission's press release refers to its contents as computer labels, which seems unfortunate to me.) XBRL US has a step-by-step tool; the comment period ends April 4, 2008.
(3) Was Chairman Cox's recent discussion of XBRL on CNBC the first known mention of interactive data on everyday TV Perhaps, but after a few comments on XBRL by the Chairman, CNBC's reporters segued immediately into other, apparently weightier topics. (However, CNBC is still a step ahead of the New York Times: a search of their archives still doesn't reveal a single hit for XBRL.)
(4) Dominic Jones at IR Web Report has an amusing post on the efforts of Microsoft and EDGAR Online to claim bragging rights for being first to file its 8-K using the new XBRL tags. Although Microsoft apparently won the race, as the Comments reveal, EDGAR Online can claim victory too.
In general, the press coverage XBRL has received has been mostly positive; examples are found at the Financial Times, Reuters, and itbusiness.ca. One dissenter in a letter to the FT did see XBRL primarily as a ploy by consultants to increase their fees. But in a rejoinder Robert Kugel of Ventana Research, who recently did a great article for us on accounting standards and XBRL, makes quick work of dispatching his arguments.
Finally, Financial Week has an interesting piece on the speech John White, the SEC division of corporation finance director, recently gave to the AICPA. Mr. White said the SEC has lots of different choices of how XBRL might be phased in, including:
Mandating XBRL adoption based on a company's size;
Allowing companies to file XBRL statements 30 days after filing their paper 10-K; and
Having companies issue reports using XBRL that are more informal than filings.
Notably, he added I would not see us mandating anything in this area until we see that the actual taxonomy can be successfully, efficiently, effectively used.