What You Need to Know About XBRL
By the end of the first quarter of 2013, the SEC will reach an important milestone—substantially all public companies will have filed an XBRL exhibit to the 10-K with a complete set of XBRL tagged financial information. However, many might be unaware of their responsibility for these exhibits.
So, what is the responsibility of your CEO, CFO, and Board? For large accelerated filers, if the XBRL exhibits contain materially inaccurate or misleading information, they are subject to the same liability provisions as the related official filing. For all other filers, these liability provisions will become effective the earlier of Oct. 31, 2014 or 24 months (e.g., Aug. 9, 2013, for calendar year end accelerated filers) after the XBRL exhibits were first required to be submitted. Although the CEO and CFO certifications are not required to cover the XBRL exhibit, an SEC staff interpretation is clear that filers are required to consider disclosure controls and procedures with respect to XBRL data.
Moreover, two recent reports underscore why your CEO, CFO, and Board need to pay attention to these controls and procedures. A survey released by the Financial Executives Research Foundation in November 2012 clearly shows that the process for preparing XBRL-tagged financial information is improving. Nonetheless, respondents to the survey expressed concerns about the cost-benefit proposition of the XBRL mandate, resource availability, exposure to SEC comment letters, and legal liability. Two weeks ago, the Center for Excellence in Accounting and Security Analysis at Columbia University published An Evaluation of the Current State of XBRL and Future of Interactive Data for Investors and Analysts, a report on its survey of and in-depth discussions with investors and analysts. This report expressed the significant concern that investors and analysts have about the about quality of the data in the XBRL filings.
Despite this and other concerns, the report, in part, concludes “the analysis of companies will continue to be based off increasing amounts of data that are structured and delivered to users in an interactive format.” To assist you, your CEO, CFO, and Board, WebFilings has created an easy-to-use one page overview, XBRL: Risk and Responsibility. In addition, we recommend that you download and review the AICPA publication, Principles and Criteria for XBRL Formatted Information. Finally, remember, even if you’re using a third party to prepare your XBRL exhibit, you must consider whether the disclosure controls and procedures over the preparation of the XBRL exhibit are designed and maintained appropriately. Need some support? We are here to help you with your financial reporting. Use the resources available from the WebFilings Professional Services team, and contact us anytime with questions or feedback.
About the Author
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.