Written by Matt Kelly Posted on June 1, 2009
Matt Kelly is editor-in-chief of Compliance Week, a magazine and online newsletter on corporate governance, risk, and compliance. Prior to his role at Compliance Week, Kelly was a reporter and contributor on corporate compliance and technology issues for magazines such as Time, Boston Business Journal, eWeek, and numerous other publications.
To the best of my knowledge, XBRL has no tag for “disinterest.” That’s unfortunate, since it seems to be the adjective that best fits the U.S. Securities and Exchange Commission these days.
Yes, large U.S. companies must begin filing financial statements tagged in XBRL technology starting June 15. Yes, that’s because the SEC approved an XBRL mandate months ago after years of telegraphing its intention to do so. And yes, the plain truth is that most large filers will muddle through their first XBRL submissions without collapsing into chaos or bankruptcy.
Still, at what should be a proud hour for XBRL, enthusiasm has faded. We’re filing. Oh. Yippee.
The culprit here is new SEC Chairman Mary Schapiro. Given America’s current economic plight, she has astutely identified XBRL for what it is: the financial reporting equivalent of tidying up the front lobby for visitors, while the back of the company crumbles to the ground. Schapiro believes the SEC has much, much bigger problems to worry about than XBRL and the promise of easier comparison of financial data — and she’s right. The agency’s enforcement arm is a mess; the Obama Administration has proposed parceling out most SEC functions to the Federal Reserve or other agencies-to-be-named later as part of Washington’s wholesale regulatory reform. Now is not the time for the SEC to be worrying about tags.
William Lutz, director of the SEC’s 21st Century Disclosure Initiative, admitted as much at a May 28 conference discussing the future of XBRL. “A lot of the commission’s resources are turned internally” right now, he said, leaving “limited resources” for XBRL. Lutz added that two XBRL projects planned for this year — one to tag the Compensation Disclosure and Analysis and another to tag asset-backed securities — have been put off until next year, at least as far as SEC participation goes.
You can’t fault the SEC for putting its resources where they are needed. But it does underscore a fundamental problem with XBRL: adoption not only requires some specific vow of action; it requires maintenance, day in and day out, and that can be hard to deliver. Already, the XBRL taxonomy on the SEC’s website uses U.S. GAAP as of 2008 — not the updated taxonomy for 2009, which was released in April. And neither taxonomy incorporates Financial Accounting Standard No. 165, Accounting for Subsequent Events, approved by the Financial Accounting Standards Board only last week.
Will either of those glitches last very long? Probably not. Still, they probably will last until someone at the SEC decides to fix them — and with the new SEC leadership responding to new problems that will endure for quite a while, expect fewer people at the SEC to be thinking about XBRL.
Sir,
Is it possible to update XBRL taxonomy with every new pronouncement?
To me it looks an impossible task, currently XBRL US comes out with a new version of taxonomy once a year.
May be a possible solution could be like a guidance note on those new pronouncement (for FAS 165) stating how the elements needs to be extended. So as to fulfill the new disclosure requirements.
I am from India, our premier accounting body i.e. ICAI (Institute of Chartered Accountants of India) keeps releasing guidance note, say if there is any change in method of disclosure.
Could similar thing work, say when there is a new pronouncement or new disclosure requirements, rather than wait for a taxonomy to include them. Some guidance note could be released, so as to explain how the elements are to be extended for each of those filer companies...
Based on the SEC's webcast on XBRL this week, it sounded like their intent at this point is to update the taxonomy only on an annual basis.
XBRL US and FASB could work together to update the taxonomy in real time if that were in the best interests of investors. FASB's due process is sufficiently leisurely that if they shared their plans with XBRL US it would be possible to issue pronouncements and tags simultaneously. There may be other reasons for annual instead of continuous updates. In any case, the FASB codification should make accounting more accessible to more people; combined with XBRL, I think we'll see good things for business and accounting in the near future.