This Week in XBRL: What Are the Real Benefits of XBRL?

Over the past several weeks, we have been broadly discussing the benefits of XBRL, and the SEC’s campaign to sell corporations on them. However, it's about time to discuss what those benefits actually are. Today, we’re going in-depth, and laying out exactly why XBRL is a diamond in the rough.

Benchmarking

Among the most obvious of XBRL benefits is the ability to compare your company’s data easily with that of your competitors. You can analyze numbers from “suppliers, customers, shareholders, stakeholders…” and more, all with the tools already in your possession. There is really no reason not to make use of filings for this purpose.

Risk-Analysis

We’ve already pointed out how big Governance, Risk, and Compliance (GRC) is going to be in 2012, and XBRL filings can help shine a spotlight on your company’s weak links. To quote David A. Frankel’s December 12th interview, “[GRC] across the enterprise is a huge issue for companies right now -- and the solutions all revolve around harnessing intelligence from the data they and comparable companies are producing with their filings.”

Transparency

As we’ve stated above, and as Frankel says many times throughout his interview, the biggest single benefit of XBRL is providing companies with a tool to better investigate themselves. The penalties for GRC failings can be severe, and companies with usable XBRL data will be able to maneuver out of their paths before it is too late.

Unfortunately for many companies, the real benefits of XBRL won’t become clear until they approach the language with open arms and a critical but open mind. “Complying with SEC disclosure mandates does not necessarily yield useful results,” Frankel says, “just compliant filings.”

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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.

This Week in XBRL: FERF Study Gathers XBRL Opinions

A recent study from the Financial Executives Research Foundation (FERF) presented data on the opinions of 300 public companies in regards to XBRL reporting. The reported concerns are very much in line with what one would expect, with efficiency and liability being the among the most common. Below, we’ve pulled some of the most significant pieces of data from the report.

• The most complicated parts of the XBRL process, according to Tier 1 companies, are education and the review process.
•  Legal liability remains the biggest concern for most companies, with cost-benefit in a close second.
• Most of the responding companies are skeptical that investors are actually using XBRL data.
• Companies are currently focused on improving the efficiency of the tagging process, and are concerned that they lack the resources to complete the process on time.

The report also found that companies have varying opinions based on their size.

• Larger companies are more concerned about presenting two different sets of data (HTML and XBRL) to investors than small companies are.
• Smaller companies are less concerned about auditor involvement.

Perhaps most interestingly, as pointed out in this Data Interactive synopsis of the report, the spread of methods that Tier 1 companies are using to handle XBRL reporting is vast.

Among companies that outsourced the process, 15 percent spent less than 40 hours on XBRL, 31 percent spent 41 to 80 hours, 12 percent spent 81 to 120 hours, and 32 percent spent more than 120 hours. The numbers aren’t significantly different for companies that handled the XBRL process internally: 8 percent spent less than 40 hours, 31 percent spent 41 to 80 hours, 23 percent spent 81 to 120 hours, and 38 percent spent more than 120 hours.

It may be discouraging to see such opposition to XBRL reporting, but we have confidence that the SEC’s efforts to promote the benefits of XBRL will take hold among reporting companies.

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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.

This Week in XBRL: December Headlines

It’s that time of year again: snow is falling, the wind is crisp, and corporations are asking tough questions about the future of finance reporting. XBRL has been at the top-of-mind for many finance industry analysts, and that means a lot of great news and discussion for the language. Here are some of the highlights.

XBRL As a Boon, Not a Burden.

As Ben Cole, at Tech Target, points out, the coming of XBRL wasn’t celebrated by everyone. “If you were to ask filers, some might say the fact that the SEC is mandating XBRL-tagged filings is a hardship, as they have the burden of the costs for compliance,” he says in this week’s article, How the SEC's XBRL Tagging Mandates Can Help Your Bottom Line. He interviewed XBRL supporter David A. Frankel, who responded by pointing out the intrinsic benefits of XBRL, including a greater understanding of your company’s risks, and the power to take better, more profitable risks in the future. Click here to read the full interview.

Finding Larger Uses for XBRL.

“Since the SEC issued the Interactive Data Mandate in 2009, the focus for companies has been to conquer the learning curve and simply become compliant,” says Accounting Today’s John Swirsding. “…understanding where XBRL goes from here presents companies with a number of new opportunities and risks.”

Swirsding believes that public and private companies can make use of XBRL in three key ways that will lead to a larger, global infrastructure, which he compares to the growth of the internet over the past thirty years. The areas Swirsding sees as the next frontier for XBRL are Legislation, Liability, and Leverage. By utilizing the infrastructures already in place, he argues, companies can reap huge benefits from systems they are already required to know.

FASB Talks XBRL.

At the National Conference on Current SEC and PCAOB Developments on December 6, FASB Chairman Leslie Seidman spoke about international accounting standards and private company reporting.

These are two of the most important issues facing our profession, our capital markets, and our companies, so I think it’s important for us to have a frank, constructive discussion of them… The reason we have accounting standards is to provide information that is useful to existing and potential investors and other users of financial reports in making decisions about whether to provide resources to the company or nonprofit organization.

Seidman explained his views on the two topics, and how reporting structures like XBRL are transforming the world of business and finance. The full transcript of Seidman’s address is here, and is well worth reading.

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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.

This Week in XBRL: What’s Coming Up in GRC?

Compliance 360 and MarketWatch have put together a list ofGRC trends that are likely to affect financial reporting in 2012. The full list is extensive, and worth reading, but we will summarize some of the highlights below, along with some of our own thoughts, opinions, and commentary.

Compliance Proof WillBecome Important.

“Historically, regulators have been satisfied with companies that have implemented compliance programs, but now they want proof that the programs are actually working.” Regulatory bodies have wised up to the fact that having compliance procedures in place, and those procedures actually functioning, are two separate concepts. Analysts predict that 2012 will bring about data and process distillation, which will test the effectiveness of compliance procedures.

GRC to be Used asBrand Strategy.

Compliance failures, ethics charges, and public court battles have become common knowledge in recent years, thanks to improving news and communication technology. As more and more consumers become aware of a brand’s compliance issues, board members will become more and more aware of the impact of their GRC actions. Compliance 360 predicts that smart company owners will promote their strong compliance record as part of a branding strategy.

Analytics Will Riseto the Top.

One of the important secondary features of software and languages like XBRL is the staggering amount of data that is collected and organized during compliance processes. Some analysts think that GRC software can be used for the same purpose, resulting in more effective compliance efforts. “From the board down, GRC users need to see trend lines and correlations to identify and address root-cause issues before auditors come calling. As examples, the additional insight corporations can glean by linking training programs to the types of issues received via a whistleblower hotline, or mining various systems to determine how to change audit plans for the next cycle, can be highly valuable.”

XBRL and compliance go hand-in-hand, and it will be important for any in the financial industry to keep an eye on these developing trends. Early actions can get you a few strides ahead in the compliance race.

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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.

This Week in XBRL: A Bright Future for XBRL

“With Year 3 of the SEC's mandate rolling on,” begins a recent CPA Success article, “nearly all public companies are filing their financial reports via XBRL, bringing us this close to realizing the data tagging language's long-promised potential.” If there is a success story buried in this decade’s financial world, XBRL is the likely hero. The reporting language has already brought efficiency to most of the country’s corporations, and is now quickly gaining a following on a federal level.

CPA Success reports on three signs pointing toward the language’s destiny.

Auditors are starting to pay close attention as they search for ways to help their clients make the switch to XBRL through services like assurance, knowledge-sharing and training.

The MACPA is serving as a case study of sorts for how private companies can use XBRL. In fact, the association has been asked by the Financial Accounting Standards Board to work on a separate XBRL taxonomy for non-profit organizations.

Even governments are getting into the act. The state governments in Nevada and Oregon are setting the pace, and others -- including Maryland's -- are testing the waters to find out if XBRL can boost transparency and accountability at a governmental level.

Of course, with great power comes great responsibility. A host of new regulations and best practices will accompany XBRL into the next few years, and a lot of them, according to FASB chief of taxonomy development Louis Matherne, will rely on CPA’s.

As always, Merrill Corporation will continue to monitor any changes to XBRL reporting best practices, to ensure that our services remain convenient, accurate, and above all else, compliant.

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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.