XBRL 2.0

Digital financial reporting that actually works


XBRL. An extensible business reporting language. Public companies report in a digital format using a common taxonomy. Speed. Accessibility. Economy. Comparability. Sounds really good, right? Well, it could be. Unfortunately, the SEC’s implementation of XBRL is yet another story of a well-intentioned government program that refuses to succeed.

Let’s set aside the fact that ‘extensible’ has come to mean that a company can add new ‘words’ to this business language at any time and for any reason, or for no reason. Standardization isn’t enforced and comparability isn’t achieved. XBRL will never be the default ‘reporting language’ of business until the ‘dictionary’ is controlled.

But there’s an equally troubling aspect of XBRL that undermines its utility. The SEC’s requirements for tagging company data to the US-GAAP taxonomy lack specificity and enforcement. Elements from the banking taxonomy are used by commercial companies. Company ‘duration’ elements are tagged to XBRL ‘instant’ elements. Company-defined relationships among elements are inconsistent with the XBRL taxonomy. Companies routinely redefine standard elements via labeling. And the list goes on.

Here’s an example. Campbell Soup Company has been using an incorrect tag in its XBRL filing for years. It’s decided that ‘Other cash flow from operations’ in its Cash Flow Statement is a good fit for the US-GAAP subtotal Adjustment to Reconcile Net Income to Cash …. And that it’s a good idea to re-label the US-GAAP element that aggregates all adjusments to net income as Other’. A non-subtotal is tagged to a subtotal, a standard element is completely redefined and the user is left to figure it out. This error hasn’t been noticed by the company, nor by Workiva’s filing software (which should flag obvious tagging errors), nor by the SEC’s enforcement division (which should run every filing through robust validity tests).

At AsReported.com, we see exceptions like these every day in our standardization process. They’re a symptom of the loose tolerances accepted by the SEC and the filing software that it spawns. With few rules and limited demand for the XBRL product, companies view XBRL as a compliance headache rather that an investment in more effective communication of financial results.