XBRL in-source, out-source, or in-between.

• Author: Rohman, Lou
• Position: STRATEGY

Many corporate filers are currently evaluating the best approach to preparing their U.S. Securities and Exchange Commission (SEC) disclosures in HTML and XBRL. A common misperception is that a company must prepare XBRL files either wholly in-house (such as with a web-based solution) or outsource the work completely to a service provider. This view oversimplifies what is really a continuum of choices between those extremes. The key is to find the optimal balance between internal and external XBRL resources.

Find Your Company's Best Approach

When the SEC first required companies to submit XBRL exhibits with their periodic financial reports, filers generally relied on outside expertise from service providers to prepare XBRL documents. Companies now prepare their own XBRL filings, although others choose to engage outside parties to produce XBRL documents or help with XBRL preparation. The availability of disclosure management software, which lets a filer produce traditional EDGAR HTML and XBRL documents from the same platform, has accelerated the trend toward do-it-yourself XBRL.

For every filer, finding the optimal approach to the preparation of XBRL disclosures is crucial. Why does the preparation approach matter? The safe harbors for XBRL are gone, and most filers now bear full liability for mistakes in their XBRL disclosures. Moreover, producing high-quality XBRL data is not just a compliance exercise. Ensuring accurate financial disclosures in XBRL is a matter of pragmatic, market-driven importance for any company that prepares SEC filings --as vital as the accuracy of traditional EDGAR filings. Precise use of XBRL is essential for a company's communications with the financial markets.

Yet filers continue to make XBRL mistakes, which may not only expose them to scrutiny from the SEC and Congress, but may also result in inaccurate financial data that misleads investors or alienates analysts. In many cases, errors persist because the companies making the mistakes have not found the optimal approach to preparing their XBRL documents.

The XBRL Preparation Continuum

The corporate approach to XBRL preparation ranges along a continuum of differing levels of involvement. Filers generally are one of three basic types: insourcers, outsourcers, or hybridizers.

INSOURCERS: These companies use their own staff and resources to map, tag and review their XBRL disclosures. The staff gains technical XBRL knowledge from various sources, including seminars...