of non-accelerated filers are facing a mountain of work in the coming weeks to file
financial statements with detailed XBRL tags, the interactive data system now
required by the Securities and Exchange Commission for all public companies.
are more prepared than others to meet what may become grueling deadlines. “It
looks like a tidal wave,” says Darren Peterson, vice president of product
management at EDGAR Online.
SEC first began requiring the largest public companies to submit all their financial data
under XBRL, or eXtensible Business Reporting Language, in 2009 to begin
building a repository of information that investors could easily search and
sort. It requires companies to identify each piece of data in their financial
statements with distinct tags that are mapped to accounting standards and
reporting requirements, enabling a new level of visibility and analysis to financial
fiscal periods ending after June 15, all public companies must include XBRL tags
not only for the primary data on the face of the financial statements, but also
for the detailed information found in all footnotes to the financial
statements. Under a three-year XBRL phase-in, nearly 7,000 non-accelerated
filers got their first taste of XBRL tagging in 2011. But experts say the
additional tagging required in 2012 represents a significant increase in time
and effort needed to meet the requirements.
a rule of thumb, it's five to 10 times the number of facts and details you have
to deal with,” says Mike Sellberg, managing director for WebFilings, a
financial filings solutions provider.
agrees the workload has dramatically increased. “The number of tags from the
primary financial statements to the footnotes can be 10 to 100 times,” he says.
“The point, really, is that the level of detail is quite different. It's
Baden, vice president and chief customer officer at Host Analytics, a financial
applications provider, says non-accelerated filers are nervous about what's
ahead. “It's like the days of Sarbanes-Oxley,” he says. “They're scared to
death.” He says the firm recently helped one small company sort through 79
pages of footnotes, producing “hundreds and hundreds” of tags.
biggest challenge is resources,” says Matthew Snyder, vice president at
Cinedigm Digital Corp. “Just having the time to make sure this is done
is some good news for companies that are facing their first-ever detail tagging
exercise. Although it's new to the companies themselves, service providers have
been down this path already with the 1,500 or so accelerated filers that were
required to imbed detail XBRL tags in financial statements in 2011 or 2010.
“It's more, but it's not different,” says Peterson. “We've been through this
process a couple of times now.”
“The biggest challenge is resources. Just having the time to make sure this is done properly.”
Cinedigm Digital Corp.
addition, the software has improved, says Campbell Pryde, CEO of the consortium
XBRL U.S. that is helping driving XBRL adoption. “It's a lot easier to do it
than it was two years ago,” he says. The service providers have the process
down and know what to expect.
bad news, however, is that service providers are slammed with the sheer volume
of activity. “The industry as a whole is definitely resource constrained,” says
Sellberg. “There's no doubt about that.” He says he's heard of service
providers that are turning away customers or accepting new accounts only when
they commit to long-term contracts. Some smaller service providers are
reportedly offshoring the tagging process to firms outside the United States,
says Host Analytics is advising its customers to allow 30 days after financial
statements are complete for tagging. That could present a problem, since non-accelerated
filers have only 45 days from the end of a period to the filing deadline. “That
puts a lot of pressure on companies if they have to have their filing ready 30
days ahead,” he says. “That's what's really got people so scared.”
Valpey, a partner in the national SEC department at accounting firm BDO USA,
says that in some cases third-party providers are taking about five days to tag
financial statements after they are reviewed by auditors, compressing the time
auditors have to spend on those reviews. “There is a bit of a resource issue
out there for third-party service providers,” she says. Companies and outside
providers alike are struggling to find enough people with the kind of XBRL
knowledge needed to complete the process.
Below are SEC answers to frequently asked questions regarding detail tagging:
Question F.1 (formerly Question 37)
Q: Should the formatting of footnote tables that result from tagging at Level 4 match exactly the format presented in the original HTML/ASCII version?
A: No. There is no requirement that facts tagged at Level 4 render in such a way to match the formatting in the original HTML/ASCII version. For example, the axes may be reversed in the XBRL table structure from that presented in the original HTML/ASCII version and there may be blank cells in the XBRL table structure where "-" appear in the HTML/ASCII version. In addition, facts appearing within the same footnote in the original HTML/ASCII version may be incorporated into the table structure for tagging purposes.
Question F.2 (formerly Question 40) (Updated 1/3/2012)
Q: Does the EDGAR Filer Manual rule 6.8.6 limiting the use of company-specific elements apply to tagging at Levels 2, 3, and 4?
A: Yes, but see the clarification in Question E.20.
Q: EDGAR Filer Manual rule 6.8.6 prohibits the use of company-specific or period-specific information in element names. Does this apply to all item types?
A: EFM 6.8.6 applies to elements with item types other than ‘domainItemType.' Elements with other item types, including (but not limited to) monetary, percent, integer, shares, per share, string, or text block item types, should not include company-specific or period-specific information in the element name. Domain members may include company-specific or period-specific information in the element name.
For example, filers should not create a monetary element with the name “AcquisitionOfDefCo” or “FourthQuarterAdjustment.” However, they may create a domain member with the name “AbcSegmentMember.”
times are better for companies that opt to work in XBRL during the reporting
process rather than waiting until they've completed the financial statements to
then bolt on the tagging as an added step, says Sellberg. At Rivet Software,
Steven Posey says the company is working ahead as much as possible to select
detail tags based on pro forma financial statements. Companies are asked to
review the tag selections and provide comments to ease the way into final
tagging of the complete financial statements. “We're finding companies are
lagging in completing that review,” he says. “These are smaller financial
reporting departments, so it is taking longer to get through the review.”
resource crunch has folks like Cinedigm's Snyder considering bring the job in-house.
“It's very difficult to do this in-house when we are already resource
constrained,” he says. ”But I have questions about whether the third parties
out there have enough resources to service our XBRL needs.”
says he sees a fairly even split between the companies that are outsourcing the
entire tagging process and companies that are doing it themselves but seeking
some outside support. “A lot of it relates to the complexity of their
document,” he says. The longer and more complicated the 10-Q or 10-K and the
more disclosures it contains, the more likely a company is to rely on outside
help, he says. He also sees a range of readiness on the part of smaller
companies to tackle the process. “Certainly there are companies that are more
prepared than others,” he says. “It kind of depends on the kind of company you
are working with. The more focused you are on outsourcing, the more
procrastinating you're willing to do.”
Salmore, senior manager at consulting firm MorganFranklin, offers some
straightforward advice. “Don't wait to start,” he says. “It's never too early.
Don't underestimate the effort it will take.”
“We've tried to tell people the three most
important rules are be proactive, be proactive, and be proactive,” Sellberg
says. “No matter what route you're going, the clock is ticking. There is still
time to be successful, but you can't wait too much longer.”