The snail’s pace of progress in shifting financial statement data from static to digital may be getting a boost with recent regulatory efforts, but proponents had better get a move on if they want to convince critics to hold on a little longer to see the real benefits.

The migration of financial statement data to the digital realm has been stymied for years by lackluster regulatory direction that gave companies little inspiration to invest in producing quality digital data. The Securities and Exchange Commission began requiring companies to provide their financial statement data not only through traditional regulatory filings but also through a separate XBRL exhibit that tags each bit of data in a way that makes it searchable and sortable as never before.

The largest public companies went first, learning the XBRL system and furnishing their financial statement via the new digital platform in 2007. Through a three-year phased process, smaller companies had until 2009 to begin complying. In the first few years for all companies, the information was not even subject to the full liability associated with regulatory filings, and it has never been subject to an audit.

The SEC took it slow intentionally to give companies plenty of time to master the new technology. XBRL renderings look dramatically different from traditional filings, which led to a long period of learning and adjusting to not only a new method, but also a new look.

The ramp-up process gave companies two separate methods for submitting their financial statements, with only the traditional filing audited. The SEC issued guidance occasionally to point out errors in XBRL submissions, but never took a stick to persistent problems. With errors and inconsistencies rampant in the data, investors and analysts held fast to relying on the traditional filings to meet their information needs.

“The thing it won’t resolve is the tagging of financial data across companies is inconsistent.”

Mike Starr, VP for Government and Regulatory Affairs, Workiva

Investor uptake of digital financial statement data has been abysmal based on a poll by the CFA Institute, an association of financial analysts. As recently as mid-2016, when the CFA Institute surveyed a targeted sample of its 25,000 members globally, 55 percent said they were not aware of XBRL, and 35 percent said they were aware but not current. “That’s 90 percent,” says Mohini Singh, director of financial reporting policy at CFA Institute. “That’s horrible.”

To be fair, says Singh, a little less than half of survey respondents said they get their data from third-party providers, many of whom get their data from XBRL and put it through their own scrubbing process before circulating it to users. “I think a lot of people are using the data without knowing it because they are getting it from data providers without knowing its source.”

Still, says Singh, it’s become clear over the past several years that data quality has hindered the movement to greater use of digital data when it comes to financial statements. “Companies are not using XBRL as a communications platform for investors,” she says. “They’re doing it as a compliance exercise.”

Now the Securities and Exchange Commission, even as it awaits the arrival of three new commissioners to fill empty posts, is proposing a change to the filing process that offers some potential to move the needle on data quality. The SEC has proposed requiring all companies to combine their two separate filings into a single filing using “inline XBRL,” a process that already exists as an option whereby companies tag data in the traditional document so both the digital rendering and the static rendering are contained in the same exhibit.


We are proposing to require the use of the Inline XBRL format for the submission of operating company financial statement information and mutual
fund risk/return summaries. The proposed amendments are intended to improve the data’s quality, benefiting investor, other market participants, and other data users, and to decrease, over time, the cost of preparing the data for submission to the Commission. The proposed amendments would also eliminate the requirement for filers to post InteractiveData Files on their websites and terminate the Commission’s voluntary program forthe submission of financial statement information interactive data that is currently available only to investment companies and certain other entities.
Comments should be received by May 16, 2017.
Comments maybe submitted by any of the following methods:
Electronic comments:
Use the Commission’s Internet comment form
Send an e-mail to Please include File Number S7-2-03-17 on the subject line; or
Use the Federal eRulemaking Portal ( Follow the instructions for submitting comments.
Source: SEC.

Not only is the process more efficient for companies, but it also promises to address errors and inconsistencies that have resulted from having dual processes that have very different appearances, one of which is scrutinized by auditors while the other is not. “The best solution to this problem is inline XBRL,” says Singh. Inline XBRL will produce a single document that’s readable both by machines and by the human eye. “A lot of the errors you see today, we believe, will go away.”

That’s true, but only to a point, says Mike Starr, vice president for government and regulatory affairs at Workiva, which provides filing technology and solutions to companies. He’s also a former deputy chief accountant at the SEC. He’s a fan of the SEC’s proposal to require inline XBRL because for companies that don’t rely on outside providers to do their XBRL tagging for them, the use of inline XBRL will assure the printed financial statement and the digital tagging will be consistent.

“The thing it won’t resolve,” says Starr, “is the tagging of financial data across companies is inconsistent.”

Companies use the GAAP Taxonomy to determine how to tag each piece of data in financial statements. The taxonomy is something like a dictionary, defining each piece of data distinctly, so a piece of data tagged by one company using a given element in the taxonomy is directly comparable across capital markets with all other companies using that same element. When companies encounter instances where they believe a piece of data is so specific that no element in the taxonomy accurately describes it, they can use extensions, or custom elements of their own making, to describe the data.

Early on in the submission of XBRL filings, company use of extensions was rampant, leading taxonomy developers and regulators to various means to try to narrow use of extensions and point companies to better use of appropriate tags to drive greater comparability. That’s an area that still needs more work, in Starr’s view.

“You’ll see companies use standard elements where another, for the same information, will use an extension,” says Starr. “Absent guidance that directs them otherwise, they will continue to tag financial statements the way they always have.”

In addition to his role at Workiva, Starr is a board member at XBRL US, a consortium working to drive digital data technology, and he chairs the XBRL Data Quality Committee. The committee is working on various initiatives it hopes will continue to drive greater consistency, which proponents hope will drive greater use of an acceptance of digital financial statement data.

With legislative measures already floated in recent years to exempt some companies from filing financial statements in digital formats—not to mention the current political environment calling for regulatory rollbacks—proponents face a ticking clock to prove the benefits of XBRL.