Common XBRL Misconceptions

Common XBRL Misconceptions
...and the facts that reveal the truth

www.DisclosureNet.com | Copyright © 2013 DisclosureNet™
2
Since mandated in 2009,
XBRL has caused confusion and
uncertainty in ﬁnancial reporting.
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?

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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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? ? ?

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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

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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…

10
…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 offers
access to precedents and searchable
XBRL taxonomy and tags.
XBRL
</>

14

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Outsourcing XBRL tagging is the best option.

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What’s the
reality
?
???
?
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? ? ?

17
Outsourcing has many disadvantages, meaning
in-house XBRL tagging is the favorable choice.
XBRL
</>

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Why?

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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

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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
</>

21
Other negative implications include
Security issues
Poor reporting
work processes
Higher risk
for errors
Longer turnaround
times & potential
for late ﬁlings

22
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??
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? ? ?
So what now?

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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

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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

25

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XBRL makes companies too transparent.

27
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What’s the
reality
?
???
?
?
? ? ?

28
“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

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Why?

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

31
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? ? ?
So what now?

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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:
20,000shares/day
135,000shares/day6
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

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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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? ? ?

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They are.

38
?
??
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? ? ?
Why?

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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

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??
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? ? ?
So what now?

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Companies need to focus on reducing
errors by making a stronger effort 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

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Looking for a quick, easy way to pull information from XBRL filings?
Contact us.
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Common XBRL Misconceptions

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