The SEC talks XBRL (part 1)

Parsing the data: While Inline XBRL reporting may allow for more streamlined filing, XBRL data has already opened the door to faster and better analytics for companies and investors alike. We discussed the latest developments with five experts – as well as with a representative of the SEC, Mike Willis, assistant director of the US Securities and Exchange Commission’s Office of Structured Disclosure, for his views on the hot-button issues surrounding XBRL.

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Vintage question > XBRL is currently being used primarily for SEC quarterly filings, but do you think it holds possibilities for broader applications in accounting and financial data gathering?

SEC > XBRL, and structured data in general, holds potential possibilities across a broad range of disclosures. The CFA Institute paper “Data and Technology: Transforming the Financial Information Landscape” seems to concisely address this question: “Broader and deeper use of structured data across all reports in their entirety would bring about untold efficiencies and transparency for all users.”

Vintage question > Some groups, such as The Data Coalition, have been critical of the SEC’s implementation of XBRL, arguing that the Commission has been lax in its enforcement of data quality and slow to improve the system. How do you respond?

SEC > In a program as far-reaching and complex as the SEC’s accelerating number of structured data rules, there are plenty of improvement opportunities. The staff have issued Dear CFO letters, provided observations on quality error types, directly engaged filers, and are seeking to improve the quality of structured disclosures in a number of ways, including: Rendering engine:

The updated rendering engine now publishes warning and error messages as part of the test filing and filing processes. While these are not 100% data quality-validation rules, these messages are intended to highlight scenarios where the disclosure structures are inconsistent, inappropriate or simply suspicious and deserve attention prior to filing. Registrants should pay close attention when they receive one of these messages.

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Inline XBRL Viewer: The SEC’s exemptive order now enables voluntary iXBRL submissions. iXBRL is an effective method of presenting disclosures so that potential errors are more obvious, and the open-source Inline XBRL Viewer provides several tools to enhance data quality, including:

  • Data quality filters – filtering for specific metadata is useful in identifying common data quality related topics, including negative values, missing calculation links, company-specific extensions, scaling, incorrect reporting-period dates, and others.
  • Topical search – search reported disclosures using the taxonomy references to the FASB Codification, the Inline XBRL Viewer identifies disclosure “topics” (rather than just words) contained in the report.
  • Dynamic indexes – search and navigate directly to specific tagged disclosures and line items at every level, as well as indexes for data quality filter results.
  • Meta-data detail “pop-ups” – identifying attributes, definitions, labels, references and calculations for each structured disclosure. One software vendor has already adapted this feature to include trending and peer group data charting for the selected elements using the open-source inline viewer’s source code.

Market engagement: Staff periodically meets with data consumers and aggregators to better understand data quality issues impacting the reuse and analysis of structured data. Some feedback we have received that may be useful to enhance quality includes:

  • “Dear CFO” letters are an effective communication and education vehicle;
  • Enhanced guidance on extensions, including examples, would be useful;
  • Relationships between company-specific extensions and base taxonomies would facilitate automated consumption of company structured reports containing extensions.

We are also encouraged by the market data quality efforts of the XBRL US Data Quality Committee and their development of open source data quality rules. Staff review: Structured company reports are reviewed by staff for quality topics. Outreach occurs most frequently via phone calls to discuss these quality topics.

In addition to these steps, the increasing staff use of the structured data via the Corporate Issuer Risk Assessment (CIRA) dashboard, Financial Statement Query Viewer (FSQV), Internal Inline Viewer, and text analytics highlights data quality issues across a broader range of internal users, thereby enhancing data quality relevance.

* The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. Therefore, the views expressed here are my own, and do not necessarily reflect the views of the Commission or other members of the staff of the Commission.

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