More than a decade ago, it was clear that conceptually, extensible Business Reporting Language, known as XBRL, was the wave of the future for financial reporting. Many in the field agreed with this view and were enthusiastically supportive of the efforts to develop a taxonomy for reporting financial data using XBRL, an open source standard for communicating and exchanging business information between systems.
At some point in the early part of the XBRL journey, it was also strongly believed by some that structured data could do much more--that structured business information truly had the promise to:
* Enhance significantly the efficiency and effectiveness of regulatory oversight;
* Increase the transparency of an entity's financial performance and, therefore, the entity's accountability to its constituents; and
* Reduce regulatory burden by automating the creation of regulatory reports and eliminating the submission of redundant information to multiple agencies.
Where the SEC XBRL Mandate Is Today
Today all public companies, with the exception of foreign private issuers, have completed the phase-in of the U.S. Securities and Exchange Commission (SEC) mandate to submit XBRL-tagged financial data as an exhibit to the HTML filing. Nonetheless, XBRL has fallen short of realizing the benefits that structured data could provide.
Craig M. Lewis, director and chief economist of the SEC's Division of Economic and Risk Analysis, has touted the importance of XBRL for the accounting quality model, dubbed "RoboCop" by the press (a data analysis software tool that the SEC is designing to detect false or misleading financial statements and disclosures). However, the SEC staff's limited use of XBRL-formatted data to date has had at best, minimal impact on regulatory efficiency and effectiveness.
Moreover, during the transition period, the staff of the Division of Corporation Finance has not yet taken action to require filers to fix the number of errors that persist in the XBRL instance documents filed with the SEC--the quality of the data will affect the efficiency and effectiveness of the RoboCop tool. External users of the data also would like to see action in this area.
XBRL has also had limited impact, if any, on transparency and accountability. Some might say with more time, XBRL will achieve the promise of enhanced transparency and accountability. Companies have been filing XBRL-formatted data with the SEC for eight years. Yet there is limited use...