XBRL Panel Says Don't Put Off Planning, Take Responsibility
June 27, 2009
FEI Summary

Panelists speaking on "XBRL and the SEC Mandate" at the Maryland Association of CPAs (MACPA's) Maryland Business Expo on June 16, 2009 advised the audience not to put off planning for the implementation of XBRL, and to take responsibility for the information, even if tagging will be outsourced to a third party. 

Panelists included David Blaszkowski, Director of the SEC's Office of Interactive Data. Blaszkowski was joined by two panelists from companies that had participated in SEC's XBRL Voluntary Filer Program, Ken Kelly, SVP and controller, McCormick and Company, and Bob Laux,  Senior Director of Financial Accounting and Reporting at Microsoft Corporation, as well as Louis Matherne, Director, XBRL Services at Clarity Systems Ltd. Matherne.  The panel was moderated by Eric E. Cohen of PricewaterhouseCoopers. Cohen and Matherne were among the founders of modern-day XBRL, (working for Cohen Computer Consulting and the AICPA, respectively at the time) as noted in this history of XBRL (see June, 1999).

[NOTE: Panelists Kelly and Laux are active members of FEI, serving as a member and alternate member, respectively on FEI's Committee on Corporate Reporting (CCR). CCR and FEI's Committee on Finance and Information Technology (CFIT) have been following developments and submitted comment letters to the SEC on XBRL. FEI's research affiliate, the Financial Executives Research Foundation (FERF), has published numerous reports on XBRL and technology developments; visit FERF's online bookstore.]

At the Maryland Business Expo panel, Blaszkowski gave an overview of the SEC's requirements for XBRL reporting, which are being phased in over a three year period, beginning now with the largest companies that file with the SEC in U.S. GAAP, thereafter phasing in smaller companies and foreign filers that file with the SEC in IFRS.

Kelly noted that his company, McCormick and Company, has provided two XBRL voluntary filings, and were preparing for their first mandatory filing. He noted his company has some time to prepare for their first mandatory filing as they will not be in the first wave of the largest companies required to report using XBRL.

He advised, "don't put it off till the last minute [i.e. when XBRL becomes mandatory for your particular sized company]; familiarize yourself with it; make sure you take responsibility [for the information contained in the tags] and that you understand what's in there." He added that when detailed tagging (e.g. of footnotes) becomes mandatory, the tagging exercise will become "a lot more data intensive." 

Kelly also noted there is "a good debate going on," in terms of how much benefit XBRL will bring to companies that are required to provide information in XBRL format. "I think XBRL is a good thing," said Kelly, in that "it will give analysts and companies the ability to compare to peers." However, aside from the ability to use XBRL for peer to peer comparisons, he noted, "Where the disagreement is: I don't see much benefit internal to the company."

Laux noted that his company, Microsoft, started using XBRL even before the SEC's Voluntary Filer Program was available, and then joined that program.  "Now we will take a step back [from the Voluntary Filer Program] and no longer tag MD&A" said Laux, as they implement the requirements for the mandatory program. He added that Microsoft will begin reporting in XBRL with their fiscal first quarter (3rd calendar quarter) this year. One of the benefits to Microsoft, noted Laux, was they were able to use XBRL to populate information in the "investor central" section of their website.  

He added that while he initially heard that a majority of companies would do the XBRL tagging in-house, he was "seeing a large amount of people going external and outsourcing" the XBRL exercise, at least initially. He advised people to think about how XBRL may potentially benefit them in other areas of reporting such as reporting to the IRS or other federal agencies.

Laux also advised companies to have a 'project plan' e.g. in determining 'extensions' or customized tags for items not currently in the existing taxonomy, "be careful you don't have five different people doing extensions tags, there has to be some consistency in the way you do extensions."

 Matherne noted that his company, Clarity Systems, was "out there helping registrants implement" the SEC's XBRL requirement. Noting "it's not nearly as mysterious or different as it seems," he said a key point was to "follow a very deliberative process, whether implementing XBRL in-house, or outsourcing." This process includes, said Matherne, element selection, mapping, and building the extension taxonomy.  He emphasized "Get the mapping done first before you start doing extension work."

Key considerations, advised Matherne, include: "How this will impact your processing - adding to your system, or integrating with your system; how will you control it, and leveraging expertise of those who have been spending a lot of time in this space." He added, "Personally, I am an advocate of doing as much as you can internally."

During the Q&A that followed panelists' prepared remarks, a question was raised about the SEC reviewing XBRL filings and communicating errors to the filer. Blaszkowski noted "all the error codes are published [on the SEC website] and there is a rich set of FAQs" on the SEC website as well. See SEC's Spotlight on Tagged Data and XBRL Initiatives for EDGAR.

Another question related to acceptance of XBRL information given the limited liability (vs. full liability) aspects under the SEC's XBRL rule.  Blaszkowski responded that there was a great deal of investor interest in having access to and using XBRL-generated information.

Kelly noted, "I will tell you as a Chief Accounting Officer, that data needs to be correct."

Matherne observed, "Some comments [e.g. in articles in the press] were recently made about the accuracy of the Voluntary Filer Program [vs.] where we are now." In response to those claims, he noted,  "The Voluntary Filer Program was voluntary - part of an experimental program to get us to where we are today."

Blaszkowski closed, "At the SEC, we will review XBRL filings to see what works well, what's not," adding, "we are committed to taking your calls and emails ... and will feed back information in comments shared with you."

Additional highlights from the Maryland Business Expo can be viewed at www.mdbizexpo.com. FEI Baltimore Chapter was an association sponsor of the program; FEI Baltimore Chapter President Don McConnell greeted people at the FEI booth in the Exhibit Hall, and participated in the Expo's opening ceremonies with MACPA leadership and other association sponsors.

Prepared June 28 by Edith Orenstein, director, Accounting Policy Analysis, Financial Executives International (FEI). This summary does not reflect FEI opinion unless specifically noted above.