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Beyond Compliance: The Benefits of XBRL

XBRL-tabletData is the next great commodity resource. The equivalent of all the data that existed up to 2003 is now generated in two days, and 90% of the world’s total data was created in the last two years alone. Now comes a powerful new form of data, one that speaks the language of business. By the nature of its format, XRBL, or eXtensible Business Reporting Language, brings transparency to business information so investors can analyze data more easily and make informed investment decisions.

XBRL also has the potential to help investors, financials aggregators, governments, the SEC and other federal agencies find relevant needles of insight in gargantuan haystacks of financial data — in a matter of minutes. More than 9,500 companies are now required by the SEC to submit quarterly XBRL files that include tagged financial statements, as well as detailed data in footnotes. Since the SEC has mandated XBRL-formatted financial statements, nearly 80,000 XBRL submissions have been filed; it’s one of the most successful regulatory compliance initiatives to have been launched.

With the SEC’s “grace period” for limited liability on XBRL files in its final days, the SEC crackdown is coming. There is more XBRL-related activity at the SEC this year than we’ve seen since the start of the mandate back in 2009. And in this period of transition, accuracy and compliance have become more critical than ever. To avoid SEC scrutiny, it’s essential that your SEC XBRL financial filings are accurate and fully compliant. Even companies that outsource the tagging need XBRL knowledge to internally review files and vet their quality.

Understanding what is considered an error in SEC XBRL financial filings starts by understanding how to use the U.S. GAAP taxonomy and XBRL footnote tagging rules. With more than 20,000 tags related to the taxonomy, there is an enormous volume of data to handle and an even bigger responsibility to get the content right. The endgame here is to provide companies’ financial information in a transparent and easily accessible format—with data translated into the same language.

There is a tremendous opportunity for firms that take the lead in XBRL fluency, whether in attracting new business or educating clients and other firms on the requirements within a consulting role. Of course, on an individual level, XBRL is more than a component of financial reporting. It’s a transferable skill that opens up career opportunities at a time of critical demand. The newly developed XBRL U.S. GAAP Certificate Program serves as an ideal and comprehensive tool for that purpose.

Ami Beers, CPA, Senior Technical Manager - Business Reporting, Assurance and Advisory Services and XBRL, American Institute of CPAs. Ami is responsible for providing information, tools and resources that enable members to provide valuable business reporting, assurance and advisory services. This includes building awareness and understanding of XBRL and supports the AICPA XBRL Assurance Task Force.

Tablet image via Shutterstock

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