However, constant revisions to the taxonomy can make the tagging process a full-time job for in-house staff, which has its own costs. Bleier, for example, believes he is saving money by having four people on his finance team handle the tagging, but says he is "leery" of code changes that may come while his staff tries to get a head start on footnotes. "If we get a good bit of [the footnote tagging] done between now and second quarter next year and [then] there [are] more changes, that would be a big bump in the road," he says.
There is plenty of room for errors, even aside from the technical ones, as one study by professors at North Carolina State University found. Eileen Taylor and co-authors Jon Bartley and Al Chen analyzed the 2006 10-Ks for 22 voluntary XBRL filers, checking the data-tagged version against HTML versions. They counted 121 instances in which a negative number was entered as a positive, or vice versa. There were 142 cases of missing items, and other items were duplicated 112 times. While much has evolved since then, Taylor says many such errors persist in the recent filings she has looked at. "Nobody's doing a great job," she says.
Can't Start Soon Enough
So what can finance executives do now to lessen the pain? "My recommendation is that people get involved as far in advance as practical," says Bleier, whose company also ran into last-minute software glitches despite months of preparation and a test filing last year.
One piece of good news is that "the software is improving every day," according to Neal Hannon, former director of financial-reporting technologies for the Financial Accounting Standards Board who is now consulting with software firms on XBRL applications with the Gilbane Group.
Coming down the pike are more features, like the ability to compare your company's tag choices with those of competitors. Longer term, software that can recognize word patterns in unstructured text may help speed the tagging of footnotes and other prose.
Regardless of which path a company chooses to get its data tagged, though, there is no escaping the responsibility of validating the data, as Zimmer discovered. Finance staffers must ultimately make sure that the XBRL tags match both the current taxonomy and the underlying 10-Q or 10-K before it goes off to the SEC, or risk rejection. A typical validation process might involve running a filing through the software's own checks and balances, then having a financial printer validate it independently before it goes to the SEC.
Unfortunately, while correct tagging solves one compliance problem, it may reveal a host of others. "The SEC will definitely use XBRL to discover non-XBRL problems more quickly," predicts Hannon. "The technology can help them spot a problem in a few days rather than a few months."
Alix Stuart is a senior writer at CFO.
Some Pain, but Plenty of Gain
Most finance executives accepted the Securities and Exchange Commission's mandate on XBRL with something of a groan, but not John Stantial, assistant controller at United Technologies Corp. (UTC). Not only was he glad for the mandate, he says, but "I would have been happier if it had happened five years ago." Since 2004, Stantial has been working to integrate XBRL into UTC's filings in hopes of more easily pulling data from disparate systems within the $58 billion conglomerate.
Thanks to a clear vision and an early start, UTC has evolved a system that uses Clarity FSR software to tag the data within the company's Hyperion financial-consolidation suite, which can then generate XBRL-coded filings, as opposed to spitting out a filing and then adding the XBRL tags as a last step, which is what most companies do. "If you view this exercise as nothing more than a governmental reporting requirement, you've really missed the boat," he says. Already, switching to a more bottoms-up approach has streamlined the company's reporting process, he says, and shaved 5% to 10% off the time it takes to compile a filing.
ERP vendors are also racing to make their products XBRL-friendly. Both SAP and Oracle have partnered with UBMatrix, an XBRL-tagging software firm, to offer clients XBRL tools (at an additional cost) that are compatible with their consolidation systems.
Few companies have followed UTC's model, however. Nonetheless, Stantial insists that XBRL can go "from being a necessary evil to being something that can benefit every company, but you need to make that transition in mind-set first." — A.S.
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