This Week in XBRL: Improving Quality of Submissions

In a continued effort to educate on the development of XBRL technology in industries such as financial services (and beyond), Merrill Corporation will share articles and columns published on the topic.

To continue our discussion on feedback on the XBRL filings already submitted to the SEC, we found a very good piece by Brad Monterio, the chairperson of the XBRL Committe of the Institute of Management Accountants, sharing his thoughts on the initial filings and suggestions moving forward. His points as far as improving quality were particularly notable:

We all remember Ford Motor Company’s slogan – the same applies to XBRL filings. Granted, the SEC has modified the liability provisions that will not penalize companies for errors in their XBRL filings until after October 31, 2014, but why wait to make sure everything is accurate and high quality? Set top quality standards for your XBRL documents from day one. Regardless of the moratorium on errors, the SEC, and the rest of the market for that matter, is watching nonetheless.

How can you improve the quality of your XBRL submissions?

1. Be diligent in your tag selections. This is one of the most important parts of the workflow. The SEC has published interpretive guidance at http://XBRL.sec.gov that can help you in selecting the right tags. Software applications for XBRL data conversion available today also include interfaces that help you select the appropriate tags from the U.S. GAAP XBRL taxonomy. Make sure that whichever application you use, the latest XBRL taxonomy is being used.

2. It’s preview time. Take advantage of the free viewer available on the SEC website to see what your filing will look like. This will help to identify potential problems before submission. Several commercially available viewers are also available in the market.

3. Validate, validate, validate. In addition to selecting the correct tags, you need to ensure that your submission is technically valid. Errors in filings are already being watched – don’t become another statistic. Use a validation engine from one of the software providers or the one available from the SEC in its test-filing tool.

4. Don’t be negative. Understand the differences between the HTML rendering of your filing and the actual XBRL documents. A common problem plaguing filers in the past is the inclusion of negative vales in the filing. Although some values may be shown as a negative item in a rendered version of the data (e.g., revenue may be shown as a negative number on the printed page), in many cases that item should not be shown as a negative vale in the XBRL document. See the SEC staff observations for some guidance on this issue.

5. Thoroughness is next to godliness. As year-two requirements come into play for you (i.e., detailed footnote tagging) or as you review subscripted text areas in financial statement disclosures, make sure you are complete and thorough in tagging all items. Monetary values, percentages and other types of numbers expressed in the statements need be tagged in both string form and as amounts. For example, a fraction (“one-third”) or a ratio (“four to one”) must be tagged appropriately.

Beyond Mr. Monterio's thoughts on quality, his statement regarding timeliness of troubleshooting will hopefully not fall on deaf ears for those companies not immediately worried about fixing potential errors.

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