Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi Consulting Corporation XBRL: Walter Hamscher’s Speech at the Rome XII Conference
Written by Bob Schneider Posted on May 28, 2010
When Walter Hamscher talks, people listen – or at least they should. The presentations by the Manager, Technology and Taxonomies in the SEC’s Office of Interactive Disclosure (OID) are uniformly informative, entertaining, and, not infrequently, eye-opening.
His speech last month at the Rome XII conference was no exception. Standing in for OID Director David Blaszkowsky — who, like many others, was unable to attend because of Europe’s (literally) ashen skies — Walter made the following useful observations. (Let me add his caveat that the opinions he expressed are his own and not those of the SEC or his colleagues at the agency.)
(1) The vast majority of questions the SEC receives from companies on the interactive data mandate have “absolutely nothing to do with XBRL…it’s not about tags, line items, presentation linkbases, etc…” Instead, because of the mandate’s complicated phase-in schedule and its nuanced rules on when and what companies must file, managers are mostly asking “How does this affect us?” To reduce the confusion, he recommends that regulators adopting XBRL produce simpler phase-in rules and publish them well in advance of implementation.
(2) About 1,400 XBRL filings have been received, including annual reports (about 500 thus far), quarterly statements, “a few” registration statements, and an “increasing number” by foreign companies using US GAAP. Altogether, the filings represent about 500,000 data points, a “tremendous explosion” in the amount of data available to SEC analysts.
(3) Walter noted that, while most of the attention has focused on company filings, major parts of the XBRL mandate affecting investment companies (mutual funds) and Nationally Recognized Statistical Rating Organizations (NRSROs) have yet to go into effect. So while there is a feeling among some that the SEC’s XBRL implementation efforts have “quieted down,” in reality, they continue in full gear. (Interestingly, XBRL filings done by NRSROs won’t be received by the SEC; they will only be posted on their websites.)
(4) The OID is no longer part of the SEC’s accounting area, but rather a section of the new Division of Risk, Strategy, and Financial Innovation. As such, it is now within the broader scope of the SEC’s data collection activities, providing information to the agency’s economists, analysts, statisticians, etc. Walter observed that, while during the Bush years the emphasis was on the market, in the new Administration, there’s much greater stress on “what can the agency itself do with the data.” Overall, he thought the OID’s new position in the SEC’s organization chart, with the information customers it now serves, was “a very good idea.”
(5) At several points, Walter indicated that the SEC mandate was proceeding smoothly, and that it’s absolutely possible to have a data repository system that accepts XBRL data with extensions. He said that when people are disdainful of the SEC’s XBRL data, it’s because there’s only three quarters’ worth, which would satisfy no financial analyst.
(6) About 20% of companies are now doing their own tagging, as opposed to using a service provider. This move toward in-house processing has been “faster and earlier than expected.”
(7) In Walter’s view, the first filing of a company of XBRL data is hard. It’s a novel experience and an awful lot of tagging decisions have to be made on a taxonomy that is very large and very granular.
(8) XBRL filing is changing traditional financial statements. Data that may have originally appeared in a few tables in the traditional financials can sometimes be consolidated and better represented in XBRL by using a single table. In turn, the company may decide to use that single table next time for the traditional financials. Overall, XBRL is helping to reduce text and narrative in the traditional statements.
(9) The quality of thought going into XBRL statements is high. Walter finds it encouraging that, informally, early filers are mentoring later filers. In addition, working groups are expanding the number of tags for certain industries, like oil and gas.
(10) The voluntary filing program (VFP) was of tremendous benefit, allowing the agency to get feedback throughout the information supply chain. Within government, the VFP helped to smooth the path of implementation.
(11) Walter is “very excited” about Inline XBRL and the promise it holds for improving presentation of financial information. He is “very heartened” by its acceptance by HMRS, the UK taxing authority.
(12) Great strides are being made by the International Taxonomy Architecture Working Group, comprising Japanese (EDINET), American, (US GAAP) and European (IFRS) members, in coming up with a common architecture.
Walter’s speech, along with those of the other keynote speakers, can be found at the XBRL website. At least for me, the files worked erratically, and I had difficulty in moving to specific parts of his presentation (thus the absence of time stamps in the above points, for which I apologize). But try to listen to Walter’s talk (preferably in IE, which seemed to be a better browser option than Firefox). It will be an extremely well spent half hour.