Avoiding Common Errors of XBRL Implementation

Abstract

EXECUTIVE SUMMARY * All public companies with filing periods ending on or after June 15, 2011, will be required to submit financial statement documents in XBRL format to the SEC as part of three phases, which started with large accelerated GAAP fliers with fiscal periods ending on or after June 15, 2009. The move is expected to provide greater transparency and quicker dissemination of financial information. * Although attestation is not required, CPAs can expect to be involved in XBRL document preparation. * Companies made a variety of errors in XBRL submissions during the SEC's Voluntary Filing Program and in the initial mandatory Form 10-Q submissions in 2009, suggesting that the difficulty of complying with the SEC's XBRL submission requirements has been underestimated. * CPAs can expect the greatest challenges in the first year when coding the four basic financial statements in detail and in the second year when coding the financial statement notes in detail. * This article describes the significant errors that have been most common, and it identifies the resources and strategies that CPAs can use to eliminate errors in XBRL submissions. ********** [ILLUSTRATION OMITTED] Following three years of voluntary XBRL submissions, the SEC's mandatory requirements for XBRL financial report submissions began phasing in June 15, 2009. As with any new process, companies can easily underestimate the challenges posed by this complex reporting technology and make mistakes along the way. This article describes common errors appearing in Voluntary Filing Program (VFP) Forms 10-K that continue to occur under the SEC's mandatory Form 10-Q submissions and discusses how they can be prevented. CPAs can use this information to develop expectations about the challenges of XBRL document preparation and of performing agreed-upon procedures engagements. It is especially important for companies to be aware of these potential errors, because the errors occur not only in filings prepared in-house, but also in filings prepared by third-party financial printers. Regardless of who prepares the filings, the company is ultimately responsible for the documents' accuracy Despite the prevalence of these errors, significant improvements have been made in XBRL creation tools, the U.S. GAAP Taxonomy and in software validation tools. In the future, we expect many companies to integrate XBRL and their automated accounting information systems (AIS) enabling the AIS to directly produce the XBRL instance documents and eliminating many types of errors. However, almost all companies currently prepare XBRL documents using a bolt-on process that follows the traditional preparation of financial statements in ASCII or HTML format. This manual data transformation process is a significant source of the errors we observed in XBRL documents. METHODOLOGY To gain better insight into the challenges new filers faced, we examined the filings of the first 22 U.S. companies that submitted relatively complete XBRL-formatted 10-K financial statements in 2006 as part of the SEC's VFP. As part of a major research initiative undertaken at North Carolina State University examining issues related to XBRL financial statement documents, we examined the XBRL documents and compared each to the original Form 10-K. We noted differences in amounts, signs, presentation, labeling, classification, etc. To examine how accuracy improved with experience and with the intervening improvements in XBRL software and the XBRL U.S. GAAP Taxonomy, we repeated our examination in 2008 for the 11 companies that filed XBRL 10-K documents continually from 2006 to 2008. We base our discussion on these results and the preliminary observations of the SEC staff regarding errors identified in the submissions of XBRL 10-Q reports of the first registrants (approximately 500) required to file XBRL documents for the second and third quarters of 2009. …

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