What should I do? XBRL is gaining acceptance throughout the business reporting community. The XBRL consortium developing the taxonomies required by many web enabled reporting processes has completed a great deal of work.
Acceptance and implementation of this new standard is driven by heightened emphasis on financial reporting requirements such as those described in the Sarbanes-Oxley Act.
Executives, financial reporting process owners and IT professionals should consider the following points when developing an implementation strategy for XBRL.
Five topics for discussion
- Identify business-reporting areas that could benefit from XBRL
- Based on the information provided by this site, would the company's business reporting functions benefit from XBRL?
- Is the company considering publishing financial information on the web?
- As the company or its disclosure review committee assesses its financial reporting disclosure controls and procedures required by the Sarbanes-Oxley Act and new accelerated filing deadlines by the SEC, will XML/XBRL facilitate meeting this regulatory requirement?
- Are there areas where additional disclosure of financial or non-financial performance indicators would increase the shareholders value of the company or help differentiate the company?
- What is the status of the respective industry for XBRL business reporting?
- What are the business reporting requirements of our third parties and information supply chain?
- Determine whether your current ERP or other financial applications are XBRL enabled
- Are the organization's financial systems — i.e., those (SAP, Great Plains, etc.) capable of generating XBRL instance documents?
- When does the vendor expect to be XBRL compliant?
- What level of setup will be required to configure each software application?
- What ongoing maintenance is required for each software package to keep in sync with changes in accounts and or the XBRL standard?
- Identify a pilot reporting process and assess whether XBRL should significantly:
- Improve the quality/accuracy and timeliness of the reporting
- Enhance the efficiency and effectiveness of acting on the data (for example, if it will reduce risk)
- Reduce preparation and processing efforts (e.g., publishing, distributing)
- Shorten user time spent reading, comprehending, analyzing financial data
- Check XBRL.org for the appropriate taxonomy required by the pilot
- New taxonomies are under continuous development. Ensure that the tags needed by the pilot are available prior to moving forward
- Determine whether or not to move forward with an XBRL pilot project
- What is the estimated ROI for implementing the changes being considered?
- Is the taxonomy required by the pilot ready? Will additional tags need to be developed?
- Does the company have trained resources that understand the taxonomy and refine it if needed?
If the company decides to move forward, it should complete a project charter, implementation plan, etc. In addition, management should consider independant verification of its instance documents to provide assurance to third parties that the information is complete, accurate, reliable and timely.
As companies review their business reporting disclosure controls and procedures and comply with the new filing requirements of the Sarbanes-Oxley Act, XBRL may become a tool to facilitate and restore business reporting and communicate the value of the company.