Written by Michael Alles     Posted on August 25, 2009

Dr. Michael Alles is associate professor at the Department of Accounting, Business Ethics & Information Systems at Rutgers Business School and editor of the International Journal of Disclosure and Governance, whose August 2009 issue is entirely devoted to XBRL. His specialties are continuous auditing, XBRL, and governance.

For a technology that is designed to increase the transparency of information, there is much that is still opaque about XBRL itself. Even as the firms that make up the overwhelming majority of market capitalization in the US begin reporting to the SEC using XBRL for the first time, fundamental questions remain about the demand for interactive data and how investors and others will make use of it.

Just a few weeks ago at an XBRL panel at the American Accounting Association annual meeting in New York, Bob Laux of Microsoft, which in early 2002 became the first technology company to report their financials in XBRL, said “I would love to know why it was that so few firms joined the voluntary filing program (VFP)." As Glen Gray noted in his talk XBRL: Solving Real World Problems:

Despite the potential benefits of XBRL only 137 companies (out of over 10,000 filers) participated in the SEC’s voluntary filing program (VFP). Less than 1% of the banks required to use XBRL for quarterly call reports to the FFIEC are also participating in the SEC’s VFP. XBRL adoption appears to be sitting on the edge of the chasm between the early adopters, who are tolerant of the issues associated with new technology and are less concerned about near-term ROI, and the majority of the potential market, who are more sensitive to costs, ROI, and ease of use.

Contemplating the low levels of participation in the VFP, Bob asked plaintively "What does that say about XBRL?"

What, indeed.

One is tempted to dismiss such questions about the VFP as obsolete now that XBRL is mandated, but that may be too facile. The fact of the matter is that XBRL is marketed as so self-evidently beneficial at so trivial a cost (“chickenfeed” is how Bob described the cost of the approximately 24 person-hours that he said it took Microsoft to tag its latest reports, down from 180 hours in the first year), so widespread in the efficiencies it would generate throughout the information value chain, and so clearly going to reduce the cost of capital for reporting firms, that people should have lined up around the block demanding XBRL. In fact, some of the original pioneers of XBRL, such as Eric Cohen, have mixed feelings about the government mandate for tagging, since they had always envisaged XBRL adoption as arising naturally as a market-driven phenomenon.

However, as Professor Gray points out, even as US banks have built up a deep familiarity with XBRL — given the early decision by the FDIC to require tagging of call reports — the bottom line is that almost no banks took the (what presumably would have been for them a trivial) extra step to also tag their financials. There is clearly something going on here — fear of litigation, lack of knowledge, lack of interest — that was not envisaged.

And demand is not the only unanswered question about XBRL. Take assurance: the SEC does not require it (as yet), but it does not discourage auditors from looking at tagged documents. On the other hand, for reasons best known to itself, the SEC does not allow the audit opinion itself to be tagged!

Of course, one can make the market efficiency argument for not mandating that mandated XBRL statements have a (mandated) audit opinion and, instead, letting the market decide the value of such statements, with firms providing voluntary assurance if they judge it warranted. But the contradiction between having to mandate XBRL statements because the market isn’t demanding them and then leaving assurance to market forces is fairly obvious. 

While the position of firms on assuring XBRL reports may change as their two-year safe harbor provision expires, even if assurance proves desirable, the question remains about how that assurance will be provided. Ironically, here the apparently low cost of preparing XBRL statements works against their assurance. If it takes Microsoft only 24 person-hours to tag their reports, realistically how many audit hours will they be willing to pay to provide assurance for them? And even 24 hours may be an outlier, with Phil Moyers of Edgar Online claiming that, with his automated tagging approach, a typical firm’s statements can be processed in no more than 8 to 10 hours.

Contrast that with the elaborate framework Professors Alex Kogan and Raj Srivastava have come up with for aligning XBRL assurance with standard audit practice and their argument that no current proposal for auditing XBRL instance documents is consistent with auditing standards. Will audit firms be able to come up with an expedited low cost audit procedure for XBRL documents (i.e., low enough relative to the expected cost of repeated XBRL tagging that may be no more than a few tens of thousands within a few more years)?

It’s possible, but let’s not forget that Congress expected that it would take a typical firm no more than 90 minutes to comply with Section 404 of the Sarbanes Oxley Act, as opposed to the billions of additional revenue that it generated for the audit firms. The fact is that in the litigious environment of the US, no auditor will sign off on an entirely new statement with only the brief examination that low cost allows, while it is equally unrealistic for firms to pay more to assure a document than they pay to prepare it.

What these examples indicate is not that there is a fundamental problem with XBRL as a technology, but that it is now much more than a technology. It is becoming part of the fabric of US business life and hence subject to all the forces and pressures that occurs in business, from resistance to change to fear of litigation.

The latter may be the biggest hurdle that XBRL will likely have to overcome if it is to fulfill its promise, as evidenced by the tale of the extension tags. As far as the VFP is concerned, a very large proportion of tags were extensions. The story is apparently that lawyers recommended to filers that existing terminology from the firm’s financial statements be retained as an extension rather than allow even small changes in order to use an official taxonomy item. And there is much more use of extensions today than one might expect given that the current taxonomy has over 14,000 tags.

What is interesting is that this “better safe than sorry” argument was never apparently countered by the case that better tagging would facilitate better comparisons with peer firms and a more favorable reaction in the capital markets. Perhaps the latter argument will come to the fore as more firms file in XBRL, and the SEC is clearly pushing firms harder to stick to the standard taxonomy. But this example clearly demonstrates that predictions about how tagging will work in practice cannot be made on a purely technical basis alone, and hence, many more unexpected outcomes are to be expected as the mandatory program kicks in.

Perhaps the reality is that managers simply do not perceive tagging in the way that the IT specialists who have made it a reality do. One more story: academics have repeatedly pointed out that many of the VFP filings did not even do something as basic as validate, and often contained many other easily detectable technical errors. Hopefully, these problems will decrease with more experience and the SEC previewer feature will greatly help filers submit only valid instance documents (though the fact that the SEC felt obligated to offer a previewer in the first place is quite telling). But the question is why filers made such elementary errors in the first place, when voluntary filers most of all are surely driven by expectation about the net benefits of XBRL. Perhaps “good enough” is about as far as managers are willing to go with tagging and see no reason to give it a higher priority. That would disappoint many of the advocates of XBRL, but it is perhaps a realistic assessment of where tagging fits into the already overfull agenda of today’s CFOs.
 
With the SEC mandate for XBRL coinciding with the tenth anniversary of the birth of the standard, it is worth asking where tagging will be going over the next decade. Will it become the new language of business, as the AICPA put it in a recent publication, or will XBRL be ubiquitous in the way PDF is today: part of the plumbing of business infrastructure, essential certainly, but also unremarkable. Success may actually mean that it is both, but we should have no illusions that the road from here to there will be smooth just because we have a taxonomy that is 2.1 instead of 1.0. It is time that XBRL be seen by users, regulators, academics and preparers as a business practice, with all the complications and unknowables that this implies, and finally put aside the illusion of the technician, i.e., that if you build it they will come.

Written by Bob Schneider     Posted on  August 19, 2009

Because Hitachi Data Systems hosted the XBRL Technology Workshop & Summit, my objectivity may be justifiably questioned if I sing its praises. But the event, presented by XBRL US, was much more interesting than I had thought it would be.

My expectation was that most of the conference would be highly technical and interest only developers. Instead, the wide-ranging presentations illustrated both the breadth and depth of XBRL’s potential, as well as the significant challenges ahead for implementations.

Paul Wilkinson did an outstanding job of blogging the conference proceedings on July 28,  29, and 30,  and slides of many presentations have now been uploaded to the XBRL US site. Re-reading Paul’s comments and the slides, I experienced the alternating sensations of exhilaration and concern I had while listening to the speakers. 

On Day One, Campbell Pryde, Chief Standards Officer of XBRL US,  discussed the development of US taxonomies. What enormous progress has been made in the three years since the SEC awarded funding for the first US GAAP taxonomy! (Someone asked Campbell in another venue: With 17,000 elements in the GAAP taxonomies, why would anyone think of adding an extension?)

At the same time, Campbell’s discussion of the use of 2008 versus 2009 GAAP taxonomies as well as FASB Accounting Standards Codification evoked Matt Kelly’s admonition in his post on the SEC mandate: “Adoption not only requires some specific vow of action; it requires maintenance, day in and day out, and that can be hard to deliver.”

Makoto Koizumi’s talk reminded me of the excellent series of posts by Kobayashi Toshinori on the XBRL implementation at EDINET, and the strong participation by Japanese companies of its voluntary filing program. Koizumi noted, however, that there is no immediate plan to introduce XBRL for footnotes. The SEC’s XBRL mandate requires only limited tagging of footnotes, not the deep tagging that had originally been envisioned. And as Amy Pawlinkci has discussed, there are no immediate plans to allow US companies to tag the MD&A either.

In both the US and Japan, therefore, tagging for the foreseeable future will be mostly for the primary financials. Is that sufficiently ambitious to demonstrate the value of XBRL and gain the support of the investment community? This question was put in relief by the presentation of Darrell Heaps of Q4 Systems: he has talked to many Investor Relations Officers (IROs), and few see what XBRL does for them. On the other hand, the transformation of the “investor web” that Darrell described from only static corporate websites to dynamic social media (Twitter, wikinvest, Seeking Alpha, etc.) creates exciting possibilities for a data standard with the capabilities of XBRL.    

For me, the key message of Convergence of Taxonomies for Financial Reporting, a group presentation led by Josef McDonald of Ernst & Young, was that XBRL for IFRS is driven by the individual IFRS standards, while US and Japan GAAP taxonomies are hybrids of standard-driven and market-driven elements. This difference accounts for the lack of industry taxonomies in IFRS, and why US GAAP taxonomies are much more highly developed than those of IFRS. The good news is that, looking out toward a time of convergence in accounting standards using XBRL tagging, the world’s leading taxonomy creators are closely cooperating on international taxonomy development.       

The presentation on XBRL and corporate actions given by representatives of DTCC, SWIFT, Citi, and XBRL US was extremely exciting. Their slides demonstrated the labyrinth that corporate actions data must navigate to be fully disseminated, a process involving multiple stakeholders including issuers, filing agents, custodians, stock exchanges, and investors. As described in their excellent conference backgrounder, once the Corporate Action XBRL Taxonomy being readied by XBRL US is completed:

Issuers (or their agents) will be able to create their press release, prospectus or letter of transmittal in XBRL format, clearly indicating the market, event type, security type and whether the offer is mandatory or voluntary. All of the information that the issuer has “tagged” or identified within their document will be “machine readable” and can be extracted, searched on and consumed by the stock market, custodian, depository, transfer agent and, ultimately, the investor. Because the taxonomy is developed following the ISO 20022 standard, the data will be available in a familiar format to all users.

In my opinion, this raises a couple of questions: Doesn’t capturing key data points from text-based documents like press releases and prospectuses present the same sort of difficulties that have slowed tagging of financial statement footnotes? And with an overhaul of financial regulation in view in the US and other jurisdictions, won’t corporate action taxonomy maintenance be unusually difficult for the next few years? Regardless of these challenges, corporate actions seems an especially ripe area for the application of XBRL.

Steve Wright of Salesforce.com Foundation spoke about data in the social sector. Steve discussed the inadequacies of using a currency like the dollar for measurement of costs and benefits in the social services marketplace, and described initiatives for deriving better yardsticks for more effective measurement of social impact. Efforts like PULSE/IRIS for creating financial, operational, and social impact metrics can be effectively leveraged through XBRL reporting.  

I agree entirely with Steve on the futility of using dollars to evaluate returns on social investment. The challenge, which Steve recognizes entirely, is coming up with better measures. The concerns I have are data quality and assurance.

For example, in this blog post on Change.org, Steve posits an organization in Dakar working to decrease disease by building urban sanitation stations. Assume that the metrics created accurately reflect social impact. What biases do the data collectors have, how are they reflected in the data, and what kind of assurance can be performed on data in such an environment? But regardless of these concerns, Steve’s work is representative of yet another area outside external financial reporting to which creative minds are seeking to exploit the rich potential of XBRL.   

It was extremely encouraging to hear from the young Japanese interns at XBRL US. Their work on topics like formulas, extensions, and corporate actions was all the more impressive for having been accomplished in two weeks (some of their slides looked like they would individually take two weeks to prepare).
 
I was a bit disappointed, however, to hear little mention of accounting in any of their work, and the absence of any American interns engendered the usual worry of whether US schools were producing kids with these kinds of skills (and if they are, where were they?). But I know that XBRL US  must have been delighted to have their contribution.   

The last session was on Database and Business Intelligence, which included presentations from UBMatrix,  Morningstar,  Informatica, and Oracle. I wish Morningstar no ill; but if data aggregation (a chunk of Morningstar’s business) is supposed to wither away with the waxing of XBRL, shouldn’t their people be a lot more unhappy than they seem to be? Homi Byranji of Reuters seemed similarly unworried in his presentation at the London Investment Professionals Conference  last year. If their demeanor is anything to go by, XBRL doesn’t doom the data aggregators.

Finally, I have often wondered why bloggers reporting from a conference will end with a mundane personal note that could only be meaningful to a small group of readers. I now understand why they feel compelled, as in my case, to say how great it was to match faces to the names I have admired over the past three years, and to have the opportunity to thank guest writers in attendance for all their hard work on behalf of the blog (Neal Hannon and Ashu Bhatanagar deserve special mention). I also know that this summary has only discussed half the presentations, and has done justice to none. If any speaker would like to follow up their talk with a blog post, please contact me. 

Written by Joanne Locke     Posted on August 10, 2009

Joanne Locke, senior lecturer at the University of Birmingham (UK), is a member of the International Accounting Standards Committee Foundation’s XBRL Advisory Council. Her current research focus is the trend toward global standardization of business information.

"Where are the missing masses?" is a question that social theorist Bruno Latour poses for sociologists. It also a useful query for the XBRL community: What happened to the large numbers of users that were expected to demand "interactive data" and create the critical mass for its adoption? As Todd Neff wrote in Compliance Week, "Investors and analysts have since celebrated this regulatory milestone [the SEC mandate of interactive data] with an extended, gaping yawn." XBRL is being adopted by regulators and stock exchanges regardless of the lack of interest, while claiming that investors are the key beneficiaries.  

I want to tackle two broad questions: (1) Are retail investors (the masses) important? and if so, (2) What is needed to provide them with interactive data that is useful for them?

Are Retail Investors Important?
The SEC has emphasized the need to protect retail investors through interactive data’s potential for improved accessibility and transparency. Investor protection is part of the SEC’s mission and EDGAR was old and in need of updating; however, very little is understood about how individual investors use company reports for investment decision making. Indeed, the little evidence available suggests they mainly don’t. So if the purpose is to provide protection by increasing the efficiency of the capital markets by turning retail investors into an "army of regulators" as David Roth in his Wired article suggests, I think the effort is misdirected.

Recently, attention has returned to the role of investment funds and other institutional investors in active stewardship and governance oversight of the companies in which they invest. A study that will soon be published by the ICAEW, Digital Reporting Options for Europe, shows that the proportion of the capital in the UK and US markets provided by institutional shareholders is steadily rising. In the UK, Sir David Walker has recently released a report on governance in banks which takes this view and echoes earlier calls for institutional shareholder responsibility. Given that professional investment analysts working in this sector already have access to sophisticated databases that provide data directly for their investment decision models, interactive data does not provide them with any significant enhancement.

It may be that despite the regulator rhetoric about benefits to retail investors, that this is not actually the key argument. It may be that we simply believe that it is a citizen’s right to have the potential to access the best data that can be provided if they so choose, as Bob Schneider argued in this post. This approach is attractive from the point of view of the power of the internet to create something closer to "level playing field" and "democratization" for individuals. But it is equally important to consider the hyperbole used about the potential effects and carefully evaluate the cost/benefit, the regulatory structures for controlling the tagging, and how the data will be audited. These are critical questions.

What Is Needed to Provide Retail Investors with Interactive Data in a Useful Format?
If we take the view that improved access to data is an investor’s right, then how do we ensure that the functionality provided by interactive data doesn’t actually mislead and confuse less sophisticated retail investors?  

Experimental research undertaken as part of the Digital Reporting Options for Europe project compared user decision making and perception using PDF statements and an XBRL-tagged presentation in an Excel spreadsheet that included key ratios calculated automatically. The results show that investors tend to view ratios automatically calculated from the tagged data as more "accurate" than their own calculations based on cutting and pasting (or retyping) from the PDFs. They relied on them without questioning the basis on which they were calculated.

The experiment consisted of two companies’ accounts. The problem in this example is that the automated calculation does not take into account that the financials, both prepared in conformance with IFRS and accurately tagged, were not comparable because one company had internally generated intangibles and the other had purchased brands. This fundamental difference between the two companies results in a different accounting treatment that renders the financials not directly comparable (footnote information must be integrated to adjust the figures). This is just one of many possible examples where even where companies comply with the requirements, comparison is not straightforward.  

I can hear XBRL proponents saying, "Yes but that’s a problem with accounting that exists today." Yes, that’s true – but it may be exacerbated with interactive data. The "slicing and dicing" and automated processing of data removes the retail investor further from the chance of integrating this information, which is at least presented in the context of the whole report using PDF. Automated calculation makes it easier to focus on the ratios and presenting them side by side gives the appearance of direct comparability. Unless the software and portals that are designed for retail investor use are carefully structured to provide support to improve the quality of decision making, we risk providing not a simple tool, but a simplistic one, that misleads. As researchers have noted, this problem is magnified many times if the tagging isn’t accurate or the company creates unnecessary extensions.

The challenge ahead is to provide a careful, objective evaluation of what interactive data can and can’t do for retail investors. To safeguard investors and deliver the potential benefits – regulators, software vendors, investment advisors, and academics – will need to take responsibility to ensure that the mechanisms by which interactive data are disseminated and analyzed are fit for purpose in the hands of the intended user. So far, the SEC has taken the view that it is not the appropriate body to guide the development of such tools, leaving it to the market. But unleashing interactive data without balancing guidance and appropriate tools may end up hurting the investors it was intended to empower.

Written by Gary Purnhagen      Posted on  August 5, 2009

Gary Purnhagen has more than 20 years’ experience in helping firms in diverse industries meet document processing challenges, including SEC disclosure. His past experience has included responding to the SEC’s EDGAR program, use of the Internet and other digital media for information dissemination, and most recently the evolving use of XBRL for financial reporting. He is an independent consultant assisting firms in embracing innovation and responding to the SEC’s XBRL mandate.

In an ideal world, properly formatted XBRL files should render using the various software packages on the market matching the presentation of the HTML or PDF version of the same information. Unfortunately, this is not the case. Today, depending on which rendering software you use, how you code the XBRL file, and to what level of detail you present, you could have discrepancies between the rendered XBRL files and the HTML or PDF.

XBRL proponents (and I count myself as one) will say this is a result of the original intent of XBRL and is a problem that is being addressed by initiatives such as Inline XBRL. All true. The original intent of XBRL was to create a format for computers to understand the content and context of business reporting information. It was hard enough to get the formatting correct for the computers to be able to understand this information and so the focus was not on addressing the rendering issue.

Inline XBRL essentially allows the XBRL file to be wrapped up in HTML, presenting the XBRL tagged information in HTML. The browser, presenting the HTML coding ignores the XBRL coding. The Inline XBRL in practice is still a year or two away.

Let’s pause for a moment and look at the need to render XBRL. At this point in the adoption of this new evolving technology the primary need for rendering XBRL is to allow a company to review the XBRL coding to assure that their XBRL files accurately reflects their financials as reported. Today, the best way of doing this is to render the XBRL financials and ensure that they match up with the HTML or PDF format, which was signed off by management.

The software available for preparing XBRL all can render XBRL coding to some degree, although proper valid XBRL coding at times will not render correctly. These problems can be alleviated at times by arbitrary changes in the order of codes. This requires that the preparers spend time attempting to get around the rendering “bugs” to allow proper rendering for review by the company’s management for assurance purposes.

If this was not enough of a problem, the preparers have to contend with the SEC’s Viewer, which could have its own problems with a correctly formatted XBRL file. So now, the preparers are forced to begin experimenting with the code to get around the rendering problems with the SEC Viewer.

Furthermore, while the SEC’s rules call for the rendering of the XBRL file to agree as closely as possible to the financial statements, there are real limitations to the SEC’s Viewer. For example, it seems that the SEC’s Viewer cannot handle identifying balances as Audited or Unaudited. The solution for many filers has been to ignore this crucial piece of information — in other words, compromise the quality of information in order to improve rendering. Rendering problems also occur when dimensions, which allow for multidimensional presentation of information, are used.

Again, these problems are a reflection on the current state of the emerging technology and will eventually be addressed. However, for the time being, they are causing great concern for the filing community at large. There is no magic bullet for the problem today, although awareness by the filing community of these limitations will help in a rational response to it.
 

Amy R. Pawlicki is Director – Business Reporting, Assurance & Advisory Services and XBRL for the American Institute of Certified Public Accountants (AICPA). She is responsible for building awareness and understanding among the AICPA membership of XBRL. This is the second installment of a two-part interview; the first part covered questions 1 through 6.

7. It may not be widely known that the AICPA played a crucial role in the launch of XBRL more than a decade ago. Could you describe how the AICPA was instrumental in inaugurating the data standard?  

Back in 1998, AICPA member Charlie Hoffman brought the XBRL concept to AICPA’s New Technology task force.  As quoted in a history of XBRL that the AICPA has just released titled The story of our new language: Personalities, cultures, and politics combine to create a common, global language for business: “Hearing Charlie Hoffman’s presentation on a new technology that would allow separate systems to share financial data in real time on the Internet, the team moved quickly to fund more prototypes and to make a business plan.”  

From that time forward the AICPA has supported the development and adoption of XBRL through the work of various committees and task forces, and through the establishment of XBRL International, Inc. (XII) and the XBRL US jurisdiction which was originally housed under the AICPA committee structure. In 2006, the XBRL US jurisdiction became an independent legal entity. Since then, the AICPA has remained actively engaged in XBRL US, and in XII, leveraging our communications channels and the intellectual capital contributed by our members to support the successful implementation of XBRL.

8. For decades accountants have been challenged to understand new information technology. Do you see XBRL as just one more piece of IT that accountants need to be familiar with, but not know in great detail? Or will XBRL require, at least for some accountants, a more in-depth, technical understanding? How might this vary among the different areas of accounting, e.g., financial reporting, internal auditing, external auditing, etc.?

The most important skill set accountants bring to the table with respect to XBRL is their strong knowledge and understanding of financial reporting. This is because tagging data is the equivalent of classifying data in company financial statements and footnotes, and it is critical that the “tagger” be intimately familiar with financial reporting when tagging financial statements, or with whatever subject matter they are tagging.  

That said, CPA preparers, internal auditors, and external auditors alike should have at least a basic familiarity with the mechanics of XBRL from a technical perspective. Software facilitates the process to some extent, but there are many technical rules to be complied with when tagging in XBRL and when submitting documents to certain bodies such as the SEC, which has written very extensive and detailed guidelines in a new chapter of the EDGAR Filing Manual dedicated to XBRL. Some understanding of how XBRL works from a technical perspective is also necessary to comprehend potential pitfalls. Many people think that XBRL-tagged data is inherently the same as the underlying data from which it is derived, much like turning a Microsoft Word document into an Adobe PDF, and that the data is somehow “inherently accurate.”  This is inaccurate – the data is only as good as the knowledge and skills of the tagger and/or a third party called in to check the accuracy of the tagging, and in the case of financial reporting in particular the required skill set is at the core of the CPA body of knowledge.

For more on this topic, readers may wish to refer to the AICPA XBRL Q&As on what accounting professionals, financial statement preparers, and audit committees need to know about XBRL.  For more detail specifically on what internal auditors need to know about XBRL, I would recommend the paper XBRL: What’s In It for Internal Auditors by Gianluca Garbellotto.  
 
9. How do you view the state of XBRL education for accountants right now? How do you see that changing in the future?

There are many progressive accounting professors out there teaching XBRL, and some have been doing so for many years. I think as XBRL adoption increases around the world, XBRL or at least the concept of interactive data in general will become more consistently covered in the education of accountants. We are starting to get inquiries from more and more professors as to whether there is standard curriculum they can be teaching related to XBRL, and I hope to learn more about what is being done and what is needed at the American Accounting Association (AAA) conference in early August.     

10. With the financial crisis as a backdrop, there has been much discussion of using XBRL for the reporting of TARP, asset-backed securities, executive compensation, and other areas relevant to the financial system. Do you see much chance that XBRL will be adopted for reporting in any of these areas? Which do you see as most promising for XBRLized reporting?

With respect to TARP and asset-backed securities, in his March 11 testimony to the Domestic Policy Subcommittee Oversight and Governance Reform Committee, XBRL US President and CEO Mark Bolgiano explained how “requirements for transparency in TARP funds reporting and oversight can be met using an existing standard [XBRL] that brings a consistent format to data on financial condition, risk, value, and compensation information regardless of sources.” XBRL can be used as a tool after the fact to help unravel the information (or in some cases lack thereof) that underlies the current credit crisis, but more importantly it should be proactively applied on a go-forward basis  to enhance transparency and access to data, thereby helping prevent future crises.  Readers can follow the latest on a bill currently before Congress on this topic.  

11. At the recent Paris XII conference you had the opportunity to speak to and hear from XBRL professionals in many countries. Is there anything that you learned from their experiences that would be instructive for those seeking to adopt XBRL in the US? Do you view the US as a leader in XBRL implementation, a laggard, or somewhere in-between?

I was encouraged to learn more about the diversity of ways in which XBRL is now being applied throughout the world. The AICPA has been and continues to be an advocate of what we call the “broader footprint” – the application of XBRL for reporting streams beyond financial reporting – as we feel this is where the biggest gains will be made in terms of process improvement and enhanced transparency of information.  

XBRL adoption varies greatly around the world, which is not surprising given different needs and different legal and regulatory environments. I think what’s most relevant here is not how one country or jurisdiction is doing vis-à-vis another.  Rather, there are very positive projects going on around the world that illustrate the vast potential of XBRL to be leveraged for process improvements in reporting in all areas of the private and public sectors and at the local, state, national, and international levels.  

In the US to date, this potential is exemplified by pilot programs put in place under the leadership of Nevada Controller Kim Wallin, who foresees the potential for greater efficiency and enhanced transparency through the use of XBRL for tracking grants and other financial information, as well as by the FDIC project for call reporting, and SEC rule-making related to financial reporting and other investment data.  

Internationally, XBRL is being used not only for financial reporting to securities regulators but also to tax authorities and stock exchanges, for reporting in the banking sector, and to standardize business reporting across multiple streams in various jurisdictions. Many examples can be found in the AICPA Journal of Accountancy article XBRL: Who Are the Early Adopters? by Karen Kernan, and on the XBRL International website.