VideoAlix Stuart, CFO.com | US
August 14, 2006
- More XBRL and Less SOX 404
Significant enhancements in financial reporting are implemented over substantial time periods and not in a year or two. Typically guidance is developed and implemented over reasonable time periods depending on the situation. I have been following the XBRL Project for five years and it has progressed very slowly but when done it will provide significant financial reporting benefits to investors and financial analysts at a reasonable cost. The standardized commercial banking system now files XBRL Quarterly Call Reports with the FDIC in which data mining is just beginning to occur in the public domain.
I think investors would have been served better had SOX 404 implementation by the SEC been done on a more reasonable time basis with much better guidance and included a significant testing period. Two years later the SEC and PCAOB are finally getting close to decent guidance.
So far, the primary beneficiaries of the SOX 404 implementation have been the public accounting firms who have had the responsibility of reporting material weaknesses in internal controls to Audit Committees for over a decade.
In effect, the fox has been paid huge bucks to guard the hen house. Most if not all financial restatements are made after a public accounting firm has signed an opinion on the original financial statement presentation. Yet, most of the articles blame the Company's staff and accounting controls for financial reporting errors. In many cases, two accounting firms don't agree on presentation of complex financial reporting situations.
As you might observe, I am for more XBRL and less SOX 404.
Posted by Robert Briscoe | Aug 15, 2006 4:21 PM ET
