common xbrl misconceptions - certent · common xbrl misconceptions...and the facts that reveal the...

Common XBRL Misconceptions

...and the facts that reveal the truth

www.DisclosureNet.com | Copyright © 2013 DisclosureNet™

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Since mandated in 2009, XBRL has caused confusion and uncertainty in financial reporting.

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the SEC’s XBRL grace period ends.

It’s time for organizations to focus on XBRL compliance and learn the truth about common XBRL misconceptions.

October 31, 2014

On


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XBRL Misconception #1


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When unsure about which standard tag to use, create an extension tag.


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?What’s the

reality?

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Extension tags are overused.

One study reveals that

22.2% of reports from the financial industry use them.1

1 Columbia Business School Center for Excellence in Accounting and Security Analysis. Democratizing Transparency. New York: 2010. http://www4.gsb.columbia.edu/filemgr?file_id=7216992

http://www4.gsb.columbia.edu/filemgr?file_id=7216992


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Why is this problematic?


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It undermines XBRL’s primary goal to make it easier for analysts and investors to compare companies…


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…and:

Subjective extension tags leave more possibility for error, meaning extra costs for the filer.


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So, what now?

Extension tags will remain, but filers should apply them with discretion.


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More extensions

more manual labor & higher costs.

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Align filings with XBRL best practices.

One Solution:

Source in-house software that o�ers access to precedents and searchable XBRL taxonomy and tags.

XBRL</>


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Outsourcing XBRL tagging is the best option.


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?What’s the

reality?

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Outsourcing has many disadvantages, meaning in-house XBRL tagging is the favorable choice.

XBRL</>


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Outsourcing is more expensive.

costlier than filing XBRL documents in-house.2

XBRL</>

30%

2 Gartner. Financial Statement Production Solution Increase Market Penetration. Stamford: 2010. http://www.gartner.com/id=1466426

http://www.gartner.com/id=1466426


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XBRL</>

And…It shifts accountability from the filer to the outsourcer.This leaves room for errors and doesn’t allow for internal XBRL proficiency to grow.

XBRL</>


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Other negative implications include

Security issues

Poor reporting work processes

Higher risk for errors

Longer turnaround times & potential for late filings


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When it comes to in-house vs. outsourcing, the numbers speak for themselves…

In 2012, 50% of large accelerated filers chose to bring the tagging in-house.3

3 LogixData Analysis of XBRL Vendors and Their Market Share for 2012 and 2011. 13 Feb, 2013. http://www.logixdata.com/blog/bid/143011/Analysis-of-XBRL-vendors-and-their-market-share-for-2012-and-2011

http://www.logixdata.com/blog/bid/143011/Analysis-of-XBRL-vendors-and-their-market-share-for-2012-and-2011


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….this is a ~25% increase from the year before.4

4 LogixData Analysis of XBRL Vendors and Their Market Share for 2012 and 2011. 13 Feb, 2013. http://www.logixdata.com/blog/bid/143011/Analysis-of-XBRL-vendors-and-their-market-share-for-2012-and-2011

http://www.logixdata.com/blog/bid/143011/Analysis-of-XBRL-vendors-and-their-market-share-for-2012-and-2011


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XBRL makes companies too transparent.


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?What’s the

reality?

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“XBRL in no way requires a company to change how, what, or when to report financial information. It does not provide more data than standard financial statements.”5

5 XBRL US. XBRL US GAAP Taxonomy Preparers Guide. Washington: 2008. http://xbrl.us/Documents/PreparersGuide.pdf

http://xbrl.us/Documents/PreparersGuide.pdf


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Filers report the same information, but XBRL presents it in a computer readable format to make it more digestible.

XBRL


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Filers should remember:

XBRL reporting is for the benefit of investors. Using it won’t put you at a competitive disadvantage.


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For Example - Radyne Corporation

Company’s trading averages before XBRL adoption:

After XBRL adoption:

20,000 shares/day

135,000shares/day 6

6 PR Newswire. XBRL for the IRO: Benefiting from Interactive Data. PR Newswire Association LLC: 2011.http://promotions.prnewswire.com/rs/prnewswire/images/WP_XBRL_Benefiting_from_Interactive_Data.pdf

http://promotions.prnewswire.com/rs/prnewswire/images/WP_XBRL_Benefiting_from_Interactive_Data.pdf


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SEC penalties for XBRL non-compliance aren’t a concern.</>

XBRL


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?What’s the

reality?

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They are.


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After this date, penalties for XBRL noncompliance will likely become harsher.

the SEC’s XBRL grace period ends.

October 31, 2014

On


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…of those filings, 5,000 problems were identified.7

Last year, 1,400 XBRL filings were submitted to the SEC…

7 XBRL US. Avoiding Common Errors in XBRL Creation. Washington: 2010. http://xbrl.us/research/documents/avoidingerrorswhitepaper.pdf

http://xbrl.us/research/documents/avoidingerrorswhitepaper.pdf


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???

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Companies need to focus on reducing errors by making a stronger e�ort to learn XBRL inside and out.

XBRL


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Taking responsibility for XBRL reporting now will mean a decreased risk for harsher SEC penalties after the grace period ends.


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Read this: Find out what’s up and coming for XBRL this year. Read our whitepaper XBRL Trends to Expect in 2013

Print this: Or see who comes out on top – in-house or outsourced XBRL solutions - in this XBRL Cup Infographic

Resources

http://go.disclosurenet.com/XBRL-Trends-to-Expect-in-2013.html

http://go.disclosurenet.com/The-XBRL-Cup.html

http://go.disclosurenet.com/The-XBRL-Cup.html

http://go.disclosurenet.com/XBRL-Trends-to-Expect-in-2013.html


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