It appears that one of Chairman Cox's top priorities is the use of XBRL; here is a speech he gave last week on the topic (and here is another speech he gave recently). The SEC's XBRL pilot has been in operation since April - and in that 6 month period, a total of 19 filings have been made in XBRL. I believe there's a reason for this: the technology is complex and the payoff for a company that dabbles in it is small (at least right now), so that no one wants to invest in creating even an XBRL test filing.
Chairman Cox is absolutely right in his concern that the SEC is behind the curve regarding the use of technology to give examiners a jump on where to focus their resources, but I'm not convinced that widespread adoption of XBRL will be the big breakthrough that helps solve that problem. Plus I believe it will take quite a while to get most companies over the XBRL hump (EDGAR was not built in a day; it took roughly a decade until full implementation).
From what I understand, there perhaps are other quicker - and cheaper - ways for the SEC to leverage automated analysis. For example, the SEC could buy data and create analytics based on XBRL data; there are multiple XBRL providers already and some can convert financial statements into XBRL almost on the fly. So the SEC could do what the FDIC has already accomplished - create a templated report that every company has to file and this template could have XBRL behind the curtain. Just my ten cents...
Monday, January 09, 2006
The SEC's Focus on XBRL
Broc Romanek Editor of TheCorporateCounsel.net
November 15, 2005
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Adoption hurdle can be overcome by making the technology implementation simple and straightforward, an approach embraced by one XBRL vendor HQd in London. Once the volume of XBRL data reaches a meaningful threshold, data aggregators and their data consumers will begin to use it as the de factor standard whether it is mandated or not and eventually the market will value a company negatively if it does not provide XBRL data. The internal value prop. however, remains somewhat dubious and challenging for early adopters to accept.
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