Investors may not be interested in XBRL yet… but the SEC is going to be using it to police your financials.
The newest article in Forbes by Janet Novack is an excellent synopsis of the SEC’s new accounting-fraud task force and their upcoming “RoboCop” Accounting Quality Model. It has absolute correlation to the importance of quality XBRL. We’ve discussed that before, but in context of limited liability ending in October.
“Check your work.” When asked how companies can minimize the risk that their company is flagged, Mr. Lewis responded succinctly: “I would say check your work.” Because RoboCop is an automated system looking for oddities, it is unable to account for mistakes made. This is particularly important because the AQM relies on the newly-mandated XBRL data which is prone to mistakes by the inexperienced. Sloppy entries could land your company’s filing at the top of the list for close examination.
Adopt Accounting Polices Similar to Those in Your Industry Peer Group. A large part of RoboCop’s analysis involves comparison of accounting choices among industry peers. Because there are many industry-specific regulations, companies across an industry tend to make similar accounting choices. When a company diverges from this path, RoboCop rings the alarm bells.
Here is the full article.
Once your company’s XBRL liability grace period ends, your XBRL files have the exact same material error liabilities as your traditional EDGAR HTML files. Resistance is futile. Oh, sorry. Wrong cybernetic-human-pop-culture reference.
What is your XBRL workflow? Tell us here.
Have a great day.