XBRL for Mutual Funds – Reviewing XBRL-Tagged Data

We are 71 days away from the effective date of the XBRL ruling – requiring all open-end mutual funds to file the Risk/Return Summary section in XBRL format as an exhibit, as well as publish the XBRL files to the fund’s website (when one exists).

This week, we will continue our discussion of the functional steps of XBRL. As we mentioned last week, there are three (3) functional areas impacted by this ruling – tagging, filing and publishing. This week, we will cover some additional steps within the“tagging” phase.

Once you have completed the “on-boarding” process, your teams should have experienced the technology and process that will be used during ‘live’ production and should be comfortable moving forward. Whether you are tagging the data in-house or using an external vendor, it is important to remember that the accuracy of the data and corresponding tags is still yours. Therefore, you should always review the XBRL-tagged data before filing with the SEC and publishing to your fund’s website.

Native XBRL Language

So, the obvious question exists: Because XBRL is not intended to be read by humans (but rather for computers), how does one review the XBRL-tagged data? The answer is by simply letting a computer read it and present it back to you in such a way that you can read it.

As an example, software can isolate the tag and then show you the content that will be included within that tag. For example, the SEC’s “alfalfa” example shows the following tags and corresponding data:

(rr_distributionandservice12b1feesoverassets) 0.28%
(rr_otherexpensesoverassets) 0.13%

By using XBRL software to visually align the tags in a separate column from its respective data, this is one of many ways that a system can organize the XBRL-tagged data in such a way that it is easy for you to read, review and provide feedback. 

What should also be included in the review of the XBRL-tagged data is the method to capture changes, questions, etc. This method should be constructed in such a way to expedite the review, feedback and approval steps, as opposed to a manual review process – which would include routing a file to the appropriate people who need to review and provide feedback. A systematic, controlled approach with built-in flexibility will ensure a complete and accurate review of the XBRL-tagged data.

What a web-based solution should do is act as a “gatekeeper” for compiling all feedback as well as reconciling the differences and making the appropriate changes.

For example, Sara logs into the system at 7 AM and makes three comments and requests one change. At 9 AM, Tom logs into the system. If he had not seen Sara’s comments, then he would have repeated 2 of Sara’s 3 comments and missed the change. Instead, he reviews her feedback and takes no additional action. In the end, the process serves as its own "gatekeeper" as the technology allows each user to see the feedback of others.

Once your team has reviewed and approved the XBRL data, the next steps are filing and publishing, which we will discuss in the next week’s post.

As we have said previously, maintaining compliance with respect to XBRL will be one part technology, one part process and one part human expertise. This is why, at Merrill Corporation, we have developed not only a XBRL-solution based on solid technology and processes, but also the Merrill Compliance Services Team to navigate funds through the compliance waters, from the discovery process through “going live."

As always, our overall message is that the time to prepare is now. Don’t be caught off guard and start the on-boarding process approximately 30-45 days before the beginning of the year. This will allow you to understand your tagging and publishing needs well in advance to make the proper business decision. Being prepared is the key to a successful transition to XBRL.

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Merrill Corporation is proud to offer XBRL Complete, a suite of services that meets - and has options to exceed – the mandated requirements for XBRL for mutual funds. For more information, please click here or call 866-367-9110.

XBRL for Mutual Funds: Best Tagging Solution is Solid Mix of Technology, People and Process

The countdown is now down to 79 days from the effective date of the XBRL ruling – requiring all open-end mutual funds to file the Risk/Return Summary section in XBRL format as an exhibit, as well as publish the XBRL files to the fund’s website (when one exists). To continue our XBRL blog series outlining the different aspects of the mandate, this week, we will move beyond the basics of XBRL and begin our discussion of the functional steps.

There are three functional areas impacted by this ruling:  tagging, filing and publishing. In this edition, we will focus on the implementation or “on-boarding” process to setup your funds leading up to the tagging process.

Like the title of this post says, the key to a successful tagging solution involves a solid mix of technology, people and process. In the end, your solution will only be as strong as its weakest link. For example, if you have the best people using shoddy technology surrounded by a weak process, then the time and effort to produce accurately tagged XBRL data will become increasingly difficult, if not impossible.

A solid technology solution will utilize a systematic, controlled approach with flexibility. With a systematic approach, you can tag your funds utilizing a “one-to-many” method for those funds that have similar information and tagging structure, versus tagging each fund independently.

As a direct result of the Summary Prospectus ruling that went into effect in January 2010, the Risk/Return Summary section has six (6) standard sections that are expected to be presented in a prescribed order. Because there is a known, expected set of information in the Risk/Return Summary section, the taxonomy (dictionary) or elements (tags) is a concise set of tags – enabling technology-enabled solutions built to support it. However, because there will be occasions when tags will need to be customized, it will be important for your technology to also be flexible. An audit trail to track any changes including who, when and why a tag was changed will be important. By using the appropriate technology, you can be assured that your tags are correct the first time and every time.

Once you have the right technology to tag your funds, you need to make sure that the people running it understand the ruling, the technology itself and everything about the taxonomy and selection of the appropriate tags. Subject matter experts will be an integral component in the process.

Lastly, tying it all together will be the process that surrounds the technology and is used by the subject matter experts to tag your funds’ data in XBRL. If the process is precise, then the three parts should integrate seamlessly.

It’s a good idea to be begin the on-boarding process approximately 30-45 days prior to the “go-live” date of your first funds impacted by the January 1, 2011 XBRL ruling adoption date. Fund complexes and fund administrators are preparing now since they have larger numbers of funds and want to be ready in advance of the approaching holiday season at the end of the year.

Merrill has developed a synergistic mix of technology, people and process as part of our Merrill XBRL Complete solution. We ensure that the overlapping content from your EDGAR filing to your XBRL filing match by retrieving data directly from the SEC. So, we begin with “golden data” as it is data that has been filed and accepted by the SEC. From there, our technology has a solid audit trial to track who made each and every change to the tags, when and why. Additionally, our Merrill Compliance Services Team expert team understands the details and nuances of the ruling, as well as the taxonomy and application of it, so if questions or concerns arise, we have the knowledge on how to address them (which includes having a direct line of contact with the SEC if the question is not clarified by the ruling itself). This workflow represents the basics of our process in preparation for the mandate.

In other words, we are ready for your funds today.

Our overall message is that the time to prepare is now. Understand your tagging and publishing needs well in advance to make the proper business decision because being prepared is the key to a successful transition to XBRL. Maintaining compliance with respect to XBRL will be one part technology, one part people and one part process. This means that selecting a partner for this endeavor will necessitate finding the ideal match that encompasses all of these components. For this reason, Merrill Corporation spent time not only developing a XBRL solution based on solid technology, but also a team of experts and processes to navigate funds through the compliance waters, from discovery through “going live."

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Merrill Corporation is proud to offer XBRL Complete, a suite of services that meets - and has options to exceed – the mandated requirements for XBRL for mutual funds.

For more information, please click here or call 866-367-9110.