The Securities and Exchange Commission can mandate use of XBRL technology for financial reporting all it wants. Ultimately, however, the investing public must take one key action to make companies’ investments in XBRL worth all that time and money.
They must trust that XBRL-tagged numbers work.
That’s where validation—the art of confirming that, yes, all the data in a company’s financial statement really are what XBRL says they are—enters the picture. Without it, a company’s XBRL software might tag inventory numbers incorrectly and they appear on investors’ computer screens as property, plant, and equipment. Or deferred revenue is described as depreciation, or ...