Lessons from the XBRL frontlines

Those folks over at McCormick & Co. are pretty cutting-edge.

Case in point: The SEC is requiring 500 of the largest public companies to file their financial statements via XBRL, a data-tagging language that helps companies electronically communicate their business and financial data. The mandate begins with 10-Qs filed after June 2009. The rest of the public-company world will be rolled into the mandate in phases over the next two years.

But Ken Kelly, McCormick's controller and senior vice president, decided not to wait.

Kelly is no stranger to breaking new ground in financial reporting. He has also served on a task force that gave input to the Financial Accounting Standards Board and the International Accounting Standards Board about a proposal that could fundamentally change and expand the content of financial statements.

This time, he led McCormick through a voluntary XBRL filing so that the spice giant could identify potential XBRL-related issues and address them as early as possible. He shared his story in a recent episode of "FEI TV," an online video series that tackles issues of importance to the profession. Among the highlights:

• McCormick's XBRL project involved two stages. The first involved "block tagging" the financial statement footnotes, usually at a rate of one tag per footnote. The second came after the initial adoption and involved "a more detailed tagging within footnotes and the other disclosures and schedules that are required by the SEC," Kelly said, "so it delved into many more taxonomies per each of those footnotes rather than one tag per footnote."

• Kelly opted to go with an outsourced solution -- a great solution given McCormick's size. Still, he cautions others who outsource their XBRL function to make sure they understand the process and vet the tagging process clearly. "Make sure you fully understand not only what (the vendors) did, but what they didn't do," Kelly said. "What other alternatives did they have in the tagging process and why did they select the ones they did?"

So why did Kelly decided to tackle the XBRL challenge before he was required to do so?

"This will be of great value in the marketplace in the future," he said. "We'll be getting data that's more interactive than it currently is, and I think that's a good use of resources for investors."

There are a ton of other choices to make as you consider your XBRL options. This earlier blog post, featuring a presentation by XBRL co-founder Eric Cohen and XBRL International Chair Mike Willis, takes a closer look at some of those choices.

What are your thoughts about XBRL? Let us know, then check out these related resources:

• Virtual workshop examines reality of XBRL
• Competing to find XBRL solutions
• XBRL International
• XBRL U.S.
• SEC resources
• IASB resources
• The ABCs of XBRL: Here's what it can do
• XBRL case studies
• Demonstrations of XBRL in action
• More demos: Microsoft | Edgar Online | Rivet Software Crossfire | Google OneBox
• XBRL taxonomies
• Six Steps to XBRL (from the Journal of Accountancy)
• ROI on XBRL (from the Journal of Accountancy)
• Improved Business Process through XBRL
• Benefits and uses for business

Comments

[William (Bill) P Magee CPA from Texas]

I recently read an article in Business Finance magazine which suggested that within the next 2 years the major software reporting tools companies, including Business Objects/SAP, Cognos/IBM, and Hyperion/Oracle, will facilitate the XBRL tagging of data that are stored in enterprise systems. There will still, however, be the need to manually tag data not stored within the enterprise management system.