Skip to main content

XBRL: Phase 4

SEC Reporting
XBRL—More important than ever to the SEC’s mission
3 min read
Published: February 22, 2013
Last Updated: April 25, 2023

With the three XBRL phase-in periods behind us, we are now in what I call, Phase 4. The initial concerns about XBRL compliance have faded and for most companies, it was not as bad as they had feared. Phase 4 is the period in which companies invest in improving internal XBRL competency, seek to become more self-sufficient, and where meaningful consumption of computer-readable data begins. XBRL compliance has become fairly routine for most large accelerated filers (Tier 1 and 2 XBRL filers).

Tier 3 filers began detail tagging last summer and are in process of drafting their first detail XBRL10-Ks. The SEC has indicated that they are reviewing XBRL filings and will issue comment letters for deficient filings. Additionally, the limited liability periods have expired for Tier 1 and Tier 2 filers and will expire this summer for Tier 3 filers. In other words, XBRL filings are subject to the same standards and legal liability as other SEC filings.

The recent Financial Executives Research Foundation (FERF) survey, SEC Reporting and the Impact of XBRL, indicated across the board, that companies plan in 2013 to increase both the number of individuals with XBRL competency on their reporting team as well as the XBRL competency level of the team.

This indicates an appreciation of the SEC’s focus on improving the quality of XBRL filings. In Phase 4:

  • Registrants will focus on improving the quality of XBRL filings and streamlining the compliance process.
  • Investor reliance on XBRL data will begin to occur in earnest when the quality of filings improves (or the market perceives that XBRL data is broadly reliable). The quality of filings will start to significantly improve when the SEC delivers on its promise and extensively comments on and rejects deficient XBRL filings. Tough love is essential for many SEC registrants to take the XBRL reporting process seriously.
  • XBRL consumption tools will become available which will start to enable the promise of computer-readable financial data.

A sizeable percentage of large accelerated filers have taken full responsibility for XBRL filings by increasing internal competency and moving to disclosure management solutions. However, Tier 3 companies, which typically have smaller reporting teams and tighter budgets have generally taken a different path. A large percentage of these smaller reporting companies have outsourced the tagging of the financial information to very low cost, off-shore XBRL solution providers with limited experience. The commitment to internal competency and responsibility along with the migration to more experienced and competent XBRL solution providers are the keys to increasing the quality of the filings.

How long Phase 4 will last is uncertain and depends on:

  • The extent of market consumption of XBRL data.
  • The SEC’s commitment to use computer-readable financial data to drive improvements in efficiency and effectiveness.
  • The political commitment to transform business and regulatory reporting and enhance transparency by using structured, computer-readable financial data.
The end of Phase 4 will be signaled when:
  • The SEC kicks off the process to expand the XBRL mandate to include earnings releases on form 8-K, MD&A, and perhaps the business sections and proxy statements.
  • The public discussion regarding assurance on XBRL reports will increase, but regulators will not mandate such assurance until meaningful market reliance on XBRL data occurs.

What’s in Phase 5? Phase 5, if and when we get there, signifies that the promise of XBRL has begun to be realized in a meaningful way. Compliance rates along with the quality of data will be high and consumption of XBRL data will have become the norm. XBRL compliance will have become routine for registrants, but don’t get too comfortable. Expanded XBRL requirements (8-K, MD&A, proxy, business section, audit requirement, etc.) are on their way.

To view the Financial Executives Research Foundation (FERF) survey, SEC Reporting and the Impact of XBRL, click here.

You May Also Like

Online registration is currently unavailable.

Please email events@workiva to register for this event.

Our forms are currently down.

Please contact us at

Our forms are currently down.

Please contact us at