Ariel Markelevich, Ph.D., CMA. Associate Professor of Accounting, Suffolk University. Co-chair, Technical Working Group, XBRL Advisory Committee, Institute of Management Accountants
Your research focuses on how XBRL is regulated in different countries. How does the U.S. approach compare with the approach in other countries?
The approach of the Securities and Exchange Commission in the United States is to take very little control over the process of converting financial data to the XBRL format. In other countries, regulators are a little more hands-on with the conversion of data into XBRL. Some, for example, might require companies to ask permission to create extensions so regulators can decide whether an extension is truly warranted and decide beforehand which extensions are necessary and appropriate. In Israel, regulators are taking the XBRL conversion completely upon themselves. They take the data submitted by companies in traditional formats and perform their own conversion to XBRL. The United States is not taking such a hands-on approach, choosing instead to make companies fully responsible for the conversion of their financial data into XBRL.
Some companies might prefer to be spared the burden of the conversion process. Are there benefits to performing the conversion?
Yes, there are benefits. In most companies today, financial data is managed in silos, and the people that operate in those silos are not fully aware of how the information they manage is used by other people in the organization. In most companies, the XBRL conversion is managed by finance staff as a bolt-on exercise after the financial statement close to comply with the SEC’s XBRL requirements. The information is used heavily by finance staff, but it’s also used extensively by management accountants for purposes of cost accounting, and likely by many others in various capacities throughout the organization. It would make a lot of sense to integrate the information flow between the financial accounting and managerial accounting staff to make better use of the data in the XBRL format. It is a missed opportunity for many companies.
Ariel Markelevich will discuss these and other XBRL issues during an upcoming webinar Sept. 7.: http://www.knowledgecongress.org/event_2012_XBRL.html