Given the amount of data that must be tagged and the compressed filing time frames for public companies, XBRL tagging is having an adverse effect on reporting cycle times and review processes. At least that’s the view of the Committee on Corporate Reporting at the Financial Executives International.

Committee Chairman Loretta Cangialosi is appealing to SEC Chairman Mary Schapiro to amend certain XBRL requirements. Cangialosi reminded Schapiro that the committee has raised concerns with the SEC before about the filing time lines and cost-benefit issues related to detailed tagging of footnote information.

True, the SEC has engaged in extensive outreach with preparers, users of financial statements and XBRL service providers, she acknowledged. But the problem hasn’t gone away, she said. There’s just too much data to tag with too little time to properly tag it all and meet filing deadlines, she contends.

“Whether this activity is performed internally or outsourced to third-party service providers, the commitment of resources is significant and the effect on reporting cycle times and review processes has been adverse,” she wrote to Schapiro.

Whether companies perform the tagging in-house or outsource it to third-party service providers, companies are struggling with the reporting cycle times and review processes. “Based on current trends in the volume of disclosure provided in registrant filings, we expect this effect to become more pronounced and costly in the future,” she wrote.

Cangialosi contends only a fraction of the tagged information is actually used by data aggregators and other financial statement users. Instead, those users are primarily interested in tagged information in the basic financial statements, with only a small subset looking at the detailed tagging of specific footnotes.

“We estimate that roughly 75 percent of the volume of XBRL tagging is not actually used by investors and yet the tagging of the entire data set is contributing to delays in filings and diffusion of data preparation and review efforts across the registrant population,” she wrote. Just have a look at the number of hits on corporate websites, Cangialosi contends, where the average is in the single digits.

The committee is calling on the SEC to develop a more focused approach to detailed tagging that limits its application to the core financial statements and the standardized, comparable footnote data that is used by analysts and investors. The group also hopes to see the SEC develop a way for registrations to efficiently and effectively submit a single filing that incorporates XBRL information instead of requiring companies to continue to file both in HTML and XBRL. Cangialosi also calls on the SEC to exempt wholly owned subsidiaries that qualify for abbreviated disclosure rules from detailed tagging, especially when considering their data is consolidated to a parent company’s financial statements.

A group of academics studying XBRL acceptance have determined investors are warming up to using XBRL-enabled technology to do their research and make investment decisions.

In their study of the effects of exclusive technology choice on the analysis of financial information, a trio of accounting professors found that 66 percent of nonprofessional investors chose XBRL-enabled technology to complete a financial analysis task because they perceived it would reduce the time it would take for them to complete the task.

The 34 percent of nonprofessional investors who chose spreadsheets over XBRL-enabled technology said they preferred it because of prior experience they had using that technology. No one in the study chose document exchange software, such as PDFs, to complete the task.

The authors – Diane Janvrin of Iowa State University, Robert Pinsker of Florida Atlantic University, and Maureen Francis Mascha of the University of Wisconsin-Oshkosh – said the findings are important because recent evidence suggests investors are slow to adopt XBRL-enabled technology despite regulatory mandates that require companies to submit their financial statements in XBRL.

The study notes that some U.S. companies see the XBRL submission requirement as a compliance exercise, not one that provides any further benefit to the company itself. That suggests XBRL and its underlying technology may be under-utilized in terms of providing increased efficiency, increased reusability, and increased transparency of reported data, the authors said.

Acknowledging some limitations to their study, the authors said participants had only three reporting technology options to choose from, but in real life they likely have others. The experiment assumed a cost-free investing environment, and it failed to take into account that nonprofessional investors in the real world likely would have to purchase XBRL-enabled tools, while PDFs and spreadsheets are probably right at their fingertips. The study also assumed the nonprofessional investors would have a basic working knowledge of the underlying format of financial statements, which is probably not the case for all nonprofessional investors.

The authors say the results of their hypothesis testing provide evidence that nonprofessional investors are drawn to efficiency in performing tasks necessary to make investing decisions, and that means they are more likely to choose XBRL-enabled technology. However, they point out that the study suggests acceptance of the technology, not necessarily usage. The authors recommend future study that would further zero in on other factors or variables that might drive investor use of XBRL-enabled technology.