Patience with repetitive, simple errors in XBRL filings is wearing thin at the Securities and Exchange Commission.
Companies that are still new to the XBRL process are protected by limited liability as they get up to speed with filing financial statements in the interactive data process, but that applies only to companies that are making an honest effort, said Susan Yount, a staff member with the Office of Interactive Disclosure at the SEC, at a national regulatory conference of the Securities and Exchange Commission. “Limited liability applies only to filers who make good faith efforts to comply with the rules and who promptly correct errors when they are made aware of them.” she said.
Yount said the SEC so far has collected 35 million financial facts in 63,000 separate filings by 10,000 filers since it first required the largest public companies to begin submitting XBRL data under a three-year phased approach. Still, she said, the SEC hasn't yet had its first look at detail-tagged 10Ks for about 7,000 public companies, or 80 percent of all filers. “We expect to get our first look at the complete data set in early 2013,” she said, after the third and final tier of companies begin submitting their 10-Ks with detailed tags.
The SEC has acknowledged the learning curve is steep for companies that are learning to use the U.S. GAAP Taxonomy to select from among some 15,000 elements to describe each detail in their financial statements. Still, even companies that have been using XBRL for some time are making some common errors despite the SEC's call through its observations and frequently asked questions for companies to fix simple mistakes, she said. Mistakes are most prevalent in creating custom extensions where tags would be a better choice or in expressing positive numbers as negatives and vice versa. However, companies also make smaller mistakes simply in providing wrong numbers or making problematic typos.
Suzanne Morsfield, director of research at Columbia University, said errors pose a big obstacle to more widespread investor and analyst acceptance of XBRL. Morsfield is putting the finishing touches on research into how analysts and investors use XBRL formatted data and why many prospective users are still on the sidelines. “They have widespread skepticism about the reliability or usability of the data,” she said, in part because they see how commonly it contains errors. “It harms their ability to analyze your companies accurately.”