XBRL: Two views from the frontlines

Few people are disputing the theory behind XBRL's role in financial reporting. Better, more accurate, more timely information -- who could possibly argue with that?

Beyond that? Time will tell.

"XBRL will make (financial) information that much easier to find, that much easier to use, that much easier to understand," said David Blaszkowsky (pictured), director of the SEC's Office of Interactive Disclosure. "That, in turn, will enable the issuer and investor to be able to make better decisions and make our market a richer and more effective place."

Blaszkowsky, on hand at the 2009 Maryland Business and Accounting Expo to talk about XBRL and the SEC's corporate-filing mandate, said a recent voluntary XBRL filing program offered plenty of lessons for companies that are just getting started on the road to XBRL.

Most of those lessons are found on the SEC's online XBRL resource page in the forms of FAQs, taxonomies, podcasts and webcasts.

One of the companies contributing to that knowledge base is McCormick and Company. The Baltimore-based spice giant has gone through a couple of voluntary XBRL filings, and Ken Kelly says the experiences have proven XBRL's worth in the financial reporting arena.

"It's one of those things whose time has come," Kelly, McCormick's senior vice president and controller, said at the Expo. "For the marketplace, it's the right place to be and a good project, and I think it will bear fruit into the future."

Among Kelly's lessons:

• Get started now. "Don't wait until it's creeping up to you on a quarterly filing," he said.
• Plan your strategy. "Make sure you have a good, thought-out plan as to how you're going to do this, when you're going to do it and what the steps are, and then execute that plan," said Kelly.
• Outsource with care. "Make sure you have the right accountability and responsibility for that filing -- that you don't just abdicate responsibility for what's in that filing to an outsourced provider," said Kelly. "They can be very helpful. At the same time, they don't know your company like you know your company."

Beyond financial reporting, though, Kelly said the jury is still out on XBRL. Many are touting XBRL as a boon to internal operations as well, but Kelly isn't sold ... yet.

"Maybe I just haven't seen enough of it, but I don't see it being a big add-on internally to a company managing its business," he said. "I think it's a great thing for portraying our company outside to our shareholders and investors. ... Other people see (improved internal operations) as an expectation. I don't hold that as an expectation."

• Watch the video interviews with Blaszkowsky and Kelly in their entirety on our MDBizExpo Live! site.

Regardless, XBRL is making a name for itself outside corporate America. A recent post highlights Nevada Controller Kim Wallin and her efforts to incorporate XBRL into her state's operations. I spoke with Wallin on the phone from the 19th XBRL International Conference in Paris; that conversation will be at the center of an upcoming post.

Stay tuned ...

Comments

[Wendy Fox]

Kelly's third point is absolutely right--while you may be able to outsource XBRL tagging, you can't outsource compliance.

(Topic covered in this blog http://blog.rivetsoftware.com/?p=434)

[Peter Boritz]

Filers have a number of options in meeting compliance to the XBRL mandate. They can do the filing in house or they can outsource it. The in house approach has the advantage of full control. However, few businesses have expertise in SEC filings, much less XBRL. With outsourcing, you review reports, but you still have no control over what is actually represented in the instance documents and their extensions that will be sent to the SEC and there is minimal audit ability or SOX compliance management. Perhaps the best approach is a hybrid of the two. Perform the work in house with the consultation of a filing agent who has expertise in SEC and XBRL filings.