By William Gienke, Corporate Director of Technical Market Intelligence, Jefferson Wells  from

The U.S. Securities and Exchange Commission (SEC) proposal to require publicly held companies to file financial statements using eXtensible Business Reporting Language (XBRL) is coming to fruition quickly. During a recent speech, the SEC's chief accountant, Conrad Hewitt, said he expects the full commission to vote on the final rule by the end of 2008. In the SEC's current proposal, the largest companies must "tag" the main part of financial statements using XBRL for periods ending on or after Dec. 15, 2008, while all other public companies have a lag time of one to two years. At this point, XBRL compliance calls for companies to tag financial statement data with a finance-specific set of codes for filings in the initial year. In the following year, detailed footnote elements also will need to be tagged. The easiest way for public companies to implement XBRL is to outsource the tagging to their current financial statement publisher. Outsourcing XBRL, however, simply increases a company's cost of compliance, while in-sourcing enables it to meet the SEC requirements and experiment with the technology to generate additional business benefits that could pay for the compliance effort....read the full article at from

Instead of increasing reliance on spreadsheets or expanding technology infrastructure to move data and generate reports, XBRL leverages simple Web-based technologies to build a single source of contextualized data that can automatically identify, locate and sort specific financial information. Often, client and business information is spread across various applications in the enterprise, fragmenting management's view of customer and other business-related data and forcing users to move data between multiple applications, databases and spreadsheets. According to the research firm Gartner, Inc., based in Stamford, Conn., XBRL can enhance both internal and external reporting when it is implemented beyond reporting disclosure and used to integrate financial data across all business applications and segments.

Crunching the numbers: a financial value scenario

Companies can enhance reporting without making a significant incremental investment in technology infrastructure by leveraging an in-house XBRL effort. Most stand-alone XBRL tools are relatively inexpensive. They include features that support compliance and incorporate reporting tools to provide better access to the data. XBRL is not a silver bullet, but it can augment the financial closing and reporting process and other projects, such as a move to a single-instance enterprise resource planning software system or data warehouse.

For example, take a company that generates specific client and billing data reports. As management requires new and additional information, the cost to produce these reports will likely increase. To generate the client and billing data required to increase account penetration and sales, the company plans to implement a data mart and dedicate additional resources to provide data management support. The annual cost to generate this data will double over the course of a year. If the company chooses to expand XBRL beyond the current SEC requirements, it could use the data tagging to its advantage and avoid most of the annual costs for warehousing and reporting in the future. Using contextualized data would allow the company to address the increased reporting requirements and implement enhanced reporting one year earlier than in the original plan. This use of XBRL expands the company's return on investment to cover the cost of the tool and positions the company to leverage this approach to other data elements.

Simply put, it's not cost-effective to buy a new car when all your old car needs is new tires. XBRL is a cost-effective solution to gain additional "mileage" out of existing data without implementing an additional technology infrastructure. The organization gets the data it needs to manage and improve the business while reducing the cost to manage the data.

The compliance environment of the future

Chief financial officers, directors of financial reporting and controllers all need to efficiently and effectively meet SEC reporting requirements and improve the information flow to internal stakeholders.

The SEC, through the development of the interactive data electronic applications (IDEA) tool to replace EDGAR and the 21st Century Disclosure Initiative, has signaled that form-based reporting, including the 10-K and 10-Q, will possibly disappear within a three to five-year time frame and be replaced with more rapid filing of smaller data sets. For example, the SEC could require companies to file top-line revenue within five business days after the close of a quarter with other data due at 10 days, 15 days, etc. Companies need to prepare for near-real-time releases of data.

Rapid filing will be possible once XBRL is implemented, since XBRL enables direct linking to data and eliminates the exporting and importing of data. XBRL also enables direct linking to current data, which dynamically refreshes the information. And, unlike form-based reporting in which each spreadsheet compounds the data management effort, XBRL allows data to be reused, reducing security and control risks. Tacking XBRL on the end of a spreadsheet-driven closing process does not prepare an organization for the increased speed and transparency that will likely be required in the near future.

Leveraging XBRL

This dynamic technology accomplishes more for a company than fulfilling a filing requirement. XBRL tools can provide finance staff with a centralized data source that reduces the number of spreadsheets and the time users spend developing queries and managing data. Increased user self-reliance also frees IT time to focus on other strategic initiatives.

Organizations need to be able to analyze, manipulate and act on the information in their portfolio of business systems. The implementation of XBRL in-house is a great opportunity, not only for companies to control the XBRL tagging effort, but to learn and explore the different ways this technology can provide a coherent and aggregated view of business data. Once established, employees and leadership will have the ability to make quicker and better decisions to drive the business.

About the Author

William Gienke, CPA, is the corporate director of technical market intelligence for Jefferson Wells. In this role, Bill oversees the monitoring of new and emerging legislation, regulations and trends to create relevant and timely guidance for Jefferson Wells clients and staff. He also supports the development of services that improve finance and internal audit operations. Bill can be reached at 414-319-3400 or via email at william.gienke@