This Week in XBRL: Compliance Among Last Concerns of CEO’s and CFO’s

Earlier this month, researchers at Compliance Week came upon a 2011 Forrester white paper in which “business decision makers” were asked to rank their primary concerns for the upcoming year. The universal thread that connected decision makers’ responses was a general lack of concern for compliance and government regulations.

“When Forrester asked business decision-makers from North American large enterprises to list their company’s top priorities for the coming year,” the report states, “complying with government regulations and requirements was an uninspiring 10^th on the list.” This put compliance well into the lower half of a list of 18 concerns which also included

• Grow overall company revenue
• Acquire and retain customers
• Lower the firm’s overall operating costs
• Improve your customer relationships and
• Expand into new geographic markets

It’s clear that growing revenue and acquiring customers should be top priorities for CFO’s – and indeed, both options ranked in the top three choices – but CFO’s should also be aware of how significant a concept like compliance is in those areas. Noncompliance can lead to massive fines, loss of license, and countless hours of lost time, so there is no reason for CFO’s and other executives to be so dismissive of it.

Other surprising statistics from the report showed that a total of 50% of executives had no plans or interest in pursuing software designed to regulate and monitor compliance. Strangely, the report also showed that up to 58% of executives lacked confidence in their company’s ability to handle compliance challenges in three key areas: technology, processes, and people.

What do you think are the take-aways from this kind of information? It seems counter-intuitive for executives to accept that their company is unprepared for compliance, but that they don’t consider it to be an area of concern. Are executives poorly informed about compliance risks? Do they lack a fear of reprisal? Tell us your thoughts in the comments below.

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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: “We’ll Make it Better, the Second Time Around”

For filing publicly-held companies, XBRL has become an unavoidable part of financial reporting. Filers have had varying opinions ofthe tagging language, but the real question is whether or not XBRL has actually succeeded in simplifying the reporting process. Seeking the answer to that question, FERF asked members of Financial Executives International to report on the language’s ease of use during their second filings. The FERF survey found responses from 321 executives at 300 different companies.

Here are some of the survey’s answers, as compiled by CFOWorld and a FERF press release.

• 85% of large accelerated filers found their second use of the language to be “somewhat or significantly easier” than their first.
• 90% of Tier 3 filers and 72% of large accelerated filers reported that XBRL slowed their process by one or less than one day.
• 6% of the largest filing companies use outside help during peak reporting, and 22% of the smallest companies do so.
• XBRL was considered the ‘biggest bottleneck in reporting function’ by 4% of small companies, and 45% of large companies. Alternatively, 26% of small companies felt that the review process was the biggest bottleneck, where only 16% of large companies agreed.
• 40% of Tier 1 and Tier 2 companies felt that XBRL had some significant impact on their ability to report efficiently.
• Of those, the majority felt that XBRL tagging and slow turnaround from XBRL printing/service providers held them back considerably.

So there is good news and bad news from FERF’s survey. Nearly half of reporting companies still see XBRL as a major hindrance to their financial reporting, and many are having problems with their outsourcing solutions.

More optimistically, nearly every company agrees that XBRL is getting easier to use. More importantly, Merrill Corporation is still here to help. As financial experts, and masters of XBRL, we have solutions in place to simplify, accelerate, and analyze your XBRL tagging process. We have been working on the cutting edge of XBRL reporting since 2009, in partnership with XBRL US and the Consortium of Filing Agents and Software Developers. Contact us for more information on XBRL Solutions.

Title adapted from lyrics for ‘Step by Step’ written by Jesse Fredrick and Bennet Salvay.

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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 Can Open Data Do for Us?

In the financial sector, among many others, experts all seem to be pushing XBRL use onto the government. We’ve already looked at some of the most obvious business benefits to the language, but there is more to it than that. As it turns out, government adoption of XBRL has far-reaching benefits to the everyman business-owner. Over on the Huffington Post, crisis management specialist W. Stephenson has come up with a list of obvious benefits XBRL could bring to government offices.

Stephenson’s article is well-worth reading, as he explores a number of benefits that other XBRL writers may have overlooked. This week, we’ll look at a few of his points, and provide our responses to his opinions.

“[XBRL] could radically reduce government costs by increasing inter-agency cooperation…”

As much as we write about the efficiency of XBRL, it really can’t be stated enough times. And, in this case, the concept really includes a whole bundle of benefits. Open, standardized data and reporting means a reduction in errors, a reduction in redundancy, and a reduction in cooperation barriers. There are very few aspects of agency documentation that wouldn’t benefit from such a system.

“Reducing the cost to businesses of complying with government regulations is a key concern…”

When the Netherlands approved a Standard Business Reporting initiative in 2007, the cost of business compliance dropped 25%. A move toward more government data API’s, on a city or state level, could be a step in the right direction, and according to ‘API Evangelist’ Kin Lane, it is already happening. “All of us API and data guys have all been screaming for city, county, state and federal government to open up their data via APIs for years now,” Lane says in a recent blog. “In 2011 I would say many government officials listened, and opened up almost 100 government APIs…”

“…opening the data to the public means that individuals…can fill the gap…”

An interesting topic that Stephenson brings up is crowd-sourcing. He argues that transparent reporting could give citizens and business owners an opportunity to spot potential improvements that government employees are too busy to notice. If government data isn’t being presented in a way that is easily readable for the average business owner (if it’s being presented at all), it can be exceedingly difficult for that owner to suggest improvements to the system. With government offices reporting data in a single format, such as XBRL, we can get closer to a unified system of discussion and improvement.

“…smart officials realize that public confidence must be earned through transparency.”

At the end of the day, business owners and citizens want to know what their tax money is going toward. Published XBRL reports would make that knowledge public, which could hopefully dispel some of the public’s current mistrust.

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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.