The Securities and Exchange Commission has made XBRL (eXtensible Business Reporting Language) filing mandatory for publicly traded companies. Beginning June 2009, XBRL filings were mandated for companies worth $5 billion or more. XBRL filings for other public companies will be phased in over the next two years.

So, how's it going so far?

It’s a bit early to tell, but a recent Reuters article that quoted a study (by three North Carolina State University professors) on XBRL financial reporting expressed concern about how prepared companies are to post their financial data accurately when using XBRL. The authors of the XBRL reporting study observed, “Results of a comparison of XBRL filings to Forms 10-K reveal multiple errors in signage, amounts, labeling, and classification. These errors are serious because since XBRL data is computer-readable, users will not visually recognize the errors, especially when using XBRL analysis software.”

Transparency is the new black, and computer-based data is the medium by which organizations become transparent. Unfortunately, data management in the typical enterprise is not up to the task, which should leave executives worried about covetous fines and the potential of unpleasant jail sentences. The Reuters article observed the following.

Companies from 3M Co (MMM.N) to Dow Chemical (DOW.N) to Comcast Corp (CMCSA.O) filed documents containing various problems that the study's authors worry will undermine XBRL's credibility among the people it is intended to help.

“I think companies are underestimating the time and complexity of tagging the statements,” said one of the authors, Eileen Taylor.

The study, which covered documents submitted for the 2006 fiscal year, including omitted amounts, inaccurate values and inaccurate labeling of various numbers.

Microsoft Corp (MSFT.O), for example, reported two dollar amounts in millions instead of billions because of a data entry error, and Dow Chemical tagged some figures with incorrect dates that then affected other years' data, the study said.

“These are big errors that you would never accept,” Taylor said. “If you were hand-keying, you might notice them.”

The authors of the study note, “Companies currently have reputational and (limited) legal incentives to file accurate documents; however, expiration of the current safe harbor provisions creates a strong incentive to provide reliable and accurate XBRL filings.”

From what I can see, enterprises will have increasing regulatory motivation to get their data management houses in order. Watch for more Burton Group guidance on this in the future.