Feds Lead The XBRL Charge

Regulators are pushing banks and financial services firms to use the XBRL standard to report financial data. Public companies are next.

Money In The Bank Regulators say XBRL is helping banks >> Generate cleaner data, including written explanations and supporting notes >> Produce more accurate data, with fewer errors that require follow-up by regulators >> Transmit data faster to regulators and meet deadlines >> Increase the number of cases and amount of information that staffers can handle >> Make information available faster to regulators and the public >> Address issues and concerns in their filings rather than after the fact Data: Federal Financial Institutions Examination Council

The council says XBRL has proven its value: All XBRL-tagged data received from banks was accurate, compared with 70% accuracy before implementation of XBRL, and an analyst who could handle 450 to 500 banks before implementation can now handle 550 to 600 of them.

The next step is to encourage public companies to file their quarterly financial reports in XBRL. The Securities and Exchange Commission began a program to do that last year, but it's "unofficial and voluntary, to give companies a chance to test this out," says Jeff Naumann, enabl- ing technology specialist at the SEC's office of the chief accountant. Only nine companies participated last year, and 20 more plan to join the program this year. The SEC may mandate the use of XBRL, but it hasn't set a deadline, he says.

XBRL can make life easier for regulated businesses. Banks, for example, use XBRL for their FDIC filings and can use it for their SEC financial statements. "Historically, these have been two separate filing processes, and different systems and data formats were used to create the filings," Naumann says. "If regulators use the XBRL standard, it will be more efficient for companies to comply with requirements from multiple regulators."

More tools are becoming available to help companies deploy and use XBRL, Gartner analyst Mary Knox says. Edgar Online last year rolled out its I-Metrix software, which lets companies access XBRL-tagged SEC filing data online within hours of its being filed with the commission. Companies can import the data to a Microsoft Excel spreadsheet, verify information with the SEC by clicking on tagged elements within the document, and analyze business performance by comparing the current data with past filings or filings from other companies.

Text-mining tools for XBRL also are available from a variety of vendors. UBmatrix plans to launch an online platform next month for designing and publishing XBRL taxonomies, the dictionaries XBRL uses.

The push from regulators and vendors will help increase adoption of XBRL. But too many companies are taking a wait-and-see approach and missing out on the benefits that XBRL offers.

Elena Malykhina began her career at The Wall Street Journal, and her writing has appeared in various news media outlets, including Scientific American, Newsday, and the Associated Press. For several years, she was the online editor at Brandweek and later Adweek, where she ... View Full Bio