Thursday, April 19, 2007

XBRL--Coming Soon to a Client Near You

At the Society of Business, Industry and Economics conference I attended early this week (see Monday's post), Dr. Ernie Capozzoli of Kennesaw State University (an up-and-coming accounting program in the Atlanta area), who is working on the SECs XBRL project in the 0il-and-gas area, updated those attending on the progress. Dr. Capozzoli believes that the SEC will mandate XBRL in the next 1-3 years (presumably meaning for publicly-traded businesses) and that the IRS is also looking at XBRL for corporate and other business returns--tax people are NOT off the hook. He indicated that the SEC (and perhaps American Accounting Association as well) would be doing seminars on XBRL and that Professor Skip White of Delaware had a monograph on the topic. Advantages claimed for XBRL included greater consistency in reporting transactions, reduced error rate and greater timeliness.

I do not foresee mandating of XBRL in a presidential election year, but certainly 2009 could see required use of this language. I strongly encourage all CPA firms with any publicly-traded clients to start preparing for XBRL in earnest now; at the same time, even semi-small CPA firms should have at least one or two people taking CPE on XBRL--the need may be less immediate but eventually XBRL is likely to affect in some form all but the smallest CPA firms.


Blogger Bob said...

On May 11 the Financial Times reported:

"The US Securities and Exchange Commission is to formalise a new rule that aims to improve and simplify the way investors receive financial information on stocks, bonds and mutual funds.

"Christopher Cox, SEC chairman, said yesterday the rule would require all companies to report financial information in XBRL, or "extensible business reporting language".

"The new format will make all data interactive, making it possible for investors to go online and easily compare information filed - including financial reports, company prospectuses and facts and figures on a mutual fund's risk, expenses and strategy."

There have been similar reports in the past that turned out to be premature, but the FT is usually a trusted source on these matters. I'm eager to see an official announcement, however.

Bob Schneider
Data Interactive (Hitachi's XBRL blog)

12:05 PM  
Blogger jehnavi said...

XBRL enabled analytical applications for their persistent analysis of company submissions. The incremental capabilities enabled by XBRL are provided in two areas: 1. incrementally more correct, timely and accurate data available for analysis from the company XBRL submissions that was previously available via traditional reporting / parsing processes; and 2. collaborative modeling and analytical capabilities provided by the formula standardization.

3:45 AM  

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