This Week in XBRL: For and Against XBRL Adoption

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.

Though it has already become an industry standard, there is still some debate surrounding the value of XBRL reporting. This week, two headlining articles made their way around the web, providing alternate views of the reporting system.

Federal Contractors Opposed to XBRL

The House Oversight and Government Reform Committee, chaired by Representative Darrell Issa, has come to the conclusion that federal agencies are still relying on outdated, manual financial reporting, and it is costing them time and money. Among these agencies are the Department of Veteran Affairs, and Homeland Security. Both departments use legacy financial assistance systems and manual processes. Describing the current reporting structure, FierceGovernmentIT.com had this to say, “Manual process are ‘inherently problematic’ since they're slow, inefficient, expensive, and conducive to human error.”

However, federal contractors have been opposed to the adoption of XBRL reporting, despite these obvious inefficiencies. Issa’s committee is supporting legislation that would require those contractors to switch to XBRL reporting.

Issa is sponsor of the Digital Accountability and Transparency Act, or DATA Act, a bill that would among other things legislatively institutionalize a spending monitoring board modeled after the Recovery Board. It would also create a single, government-wide reporting system, with all financial reporting to be done in eXtensible Business Reporting Language, or XBRL, an XML-based metadata schema. The XBRL requirement has proved unpopular particularly among federal contractors, who would have to also adopt it. Many say XBRL is cumbersome and would be a financial burden (FierceGovernmentIT.com).

XBRL to ‘Repair the Last Mile.’

Outside of government conflicts, XBRL has been widely adopted and enjoyed by corporate entities. The reporting method provides a much-needed way to remove the strain, the time, and the financial burden of manual closing procedures.

Things started to gel about three years ago when the SEC began requiring the largest corporations to use XBRL when filing information. Mark Lelyo, Executive Director of Corporate Financial Systems at Time Warner Inc., had this to say about the arrival of the XBRL mandate: "We had an added incentive to find a solution" to the slow and tedious financial reporting process…

…Time Warner claims internal consumers of its financial statements have since gained increased confidence in the accuracy and quality of its financial reporting. Process automation has helped ensure the consistency and integrity of numbers and associated text on a repeatable basis.

Financial institutions and corporate businesses nationwide are extolling the virtues and benefits of XBRL, but federal contractors still insist that the system is too big of a burden to bear. It’s clear that opinions will continue to waver on the issue of this tagging system, but for those that are ready to adopt the future of financial reporting, Merrill Corporation is here.

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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.