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Dear SEC, Let's Correct the Errors in XBRL Filings

SEC Reporting
Is my XBRL accurate?
4 min read
Mike Starr
Vice President, Governmental and Regulatory Affairs
Published: October 22, 2013
Last Updated: April 25, 2023

A recent article in the September 2013 issue of Interactive Business Reporting (iBR) entitled, “Engaging the Stakeholders,” said that the Division of Economics and Risk Analysis (DERA) takes comments seriously from filers to make tagging financial data easier.

It further explained how iXBRL, or Inline XBRL, could make tagging the data easier and that input from industry groups has resulted in improvements to the data. Unfortunately, the article failed to address what the SEC staff intends to do about the thousands and thousands of tagging errors, including unnecessary extensions, in XBRL filings.

The SEC staff needs to send a clear, unequivocal message to filers that tagging errors are unacceptable. If it is important to tag the financial data, it is important to tag it correctly in every aspect.

We are confident that the staff in DERA understand that:

  • Many filers, in the absence of SEC comments requiring the correction of tagging errors in their documents, believe that their XBRL filings contain no errors.

  • Unless the SEC requires revision of XBRL filings containing tagging errors, they are unlikely to get corrected.

  • Because of concerns about the number of errors in the data, investors and analysts, have been, in many cases, unwilling to disrupt their processes for analyzing data to integrate XBRL-formatted data. The Center for Excellence in Accounting and Security Analysis at the Columbia University School of Business earlier this year published “An Evaluation of the Current State of XBRL and Its Use by Investors and Analysts.” Investors and analysts who were interviewed for this study made it clear that they want to use XBRL-formatted data, but are reluctant to do so because of concerns about tagging errors and unnecessary extensions. 

So why did the September iBR article fail to discuss the need to correct these tagging errors?

The article did not address this need because it is not DERA’s responsibility. Staff from DERA does not have the authority to speak on behalf of the Division of Corporation Finance (CorpFin), which has the responsibility for ensuring that filings comply with the applicable regulations.

Furthermore, some staff in CorpFin have questioned the utility of XBRL-formatted data. Officially, CorpFin staff has talked about the need to take a measured, hands-off approach as filers become accustomed to tagging financial data using XBRL. However, that is a specious position. Until the SEC takes compliance with the regulation governing XBRL filings seriously, how would filers know that their filings are non-compliant?

The question about the utility of XBRL-formatted data or, in other words, whether computers will be able to perform review and analysis functions traditionally performed by humans, has been asked and answered. The answer is yes. Today’s technology enables the review and analysis of structured financial data. It opens up the analysis of financial data that previously was accessible to only the privileged few that could afford it.

So why have these regulators been so seemingly reluctant to enforce the regulation governing XBRL filings?

Republicans and Democrats in Congress and the SEC’s Investor Advisory Committee are calling for enforcement. There is no reason for the SEC to continue to accept XBRL filings that contain tagging errors. The staff in CorpFin needs to immediately enforce compliance with the regulation for XBRL filings and require revision of filings that contain tagging errors, including unnecessary extensions.

Taking this necessary initial step to improve the quality of XBRL-formatted data will not require additional resources. It will merely require the staff to act on what they already know about tagging errors.

We acknowledge that the SEC’s proposal to allow filers to use iXBRL is a step in the right direction to reduce the administrative burden of filing multiple documents (e.g., HTML document and the related XBRL files) and might result in the correction of some tagging errors.

Nonetheless, iXBRL is not a remedy. There are many errors that will not be corrected solely by using iXBRL.

Stayed tuned in the coming weeks for our views on what the Commission and its staff can do to make the creation and use of XBRL-formatted data easier.

About the Author
Mike Starr
Mike Starr

Vice President, Governmental and Regulatory Affairs

Mike Starr is Vice President of Governmental and Regulatory Affairs. He previously served as the SEC Chief Accountant’s advisor with a focus on investors’ financial information needs and the role of structured data in meeting those needs. Prior to his work with the SEC, Mike served as Chief Operating Officer for Grant Thornton International Ltd., where he oversaw global strategy and public policy. He earned a Bachelor of Science in accounting from Oklahoma State University (OSU), and in 2010 was recognized as an OSU distinguished accounting alumnus and inducted into the School of Accounting Hall of Fame.

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