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XBRL makes steady advances

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Jul 14, 2017

On July 14, 2017, Accounting Today released an article discussing how Extensible Business Reporting Language (XBRL) is starting to become more widely used, thanks to the SEC’s rules requiring the use of XBRL in financial filings in recent years and a new rule requiring XBRL for foreign issuers.

XBRL technology uses a data-tagging format that is supposed to make it easier for investors and analysts to compare financial information across companies and industries. Problems with the technology and the inconsistency of the tags used by companies have limited XBRL’s usefulness to many investors, however.

Lou Rohman, vice president of XBRL services at Merrill Corporation, said “The group has issued three sets of rules now and approved them. Now our focus is going to go into topical areas of disclosures, such as the cash flow statement and stock-based compensation disclosures. We’re focusing on how we can get people to tag those consistently and do it error free. We’ll provide rules and guidance.” He believes the quality of the XBRL filings has been improving but still isn’t ideal.

The SEC’s proposal for Inline XBRL could potentially expand the usability of XBRL for auditors and investors. “It’s not a final rule,” Rohman cautioned. “It’s still being discussed. The interesting part about that is the audit requirement. The paper-based financial statements and the XBRL-based ones were separate, so the auditors audited the traditional HTML paper-based financials and they would say we have not touched the XBRL. Now the two are combined into one document, so the auditors in some respect have to say, ‘I audited this piece but not that piece of the same financial statement document,’ which is kind of odd to see. We’re watching that to see if there will ever be an audit requirement for XBRL tagging. Technically the legal liability for XBRL is the same as the legal liability for traditional paper-based financial statements that are issued.”

Review the article on Accounting Today's website.

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