With the 12/31 filing season all wrapped up and mpanies fast preparing for their 3/31 submissions, the ic of valuation for participation in the SEC XBRL mandate rears its ugly head.  General nsensus previously was that once a mpany was “valued” and knew what XBRL group it was in, it uld move on and not worry about revisiting the ic.  While true in one regard (valuation dropping), it’s not true in the other (valuation rising) and it’s the latter that will cause mpanies a bit of problem.  Let’s examine both scenarios.

Scenario #1 – Valuation Decrease: A mpany, once in an XBRL mandate Group, stays in the mandate Group, even if its valuation falls below that of the given mandate Group.

Example:  A 12/31 mpany that was over $5bln in valuation as reported 12/31/2008 (as of 6/30/2008) and thus is in “Group 1″ of the XBRL mandate falls to $3bln in valuation for 12//31/2009  (reported as of 6/30/2009).  Given the decrease, it would seem that the mpany uld s providing XBRL since they are no longer in Group 1 since their adjusted valuation puts them in Group 2 of the mandate which mmences quarterly filings on/after 6/15/2010.

Verdict:  This mpany must ntinue providing XBRL to the SEC even though its valuation dropped them out of Group 1.  I call this the “Cement Shoes” aspect of the XBRL rule:  Once a mpany starts providing XBRL documents to the SEC, they must ntinue providing XBRL documents regardless of valuation decreases that cause them to switch from one mandate Group to another.

Scenario #2 – Valuation Increase:  A mpany not currently submitting XBRL documents to the SEC that sees its valuation increase to a level of an already-submitting mandate Group is subject to a “rapid aeleration” feature and forced to submit XBRL documents effective the next quarterly reporting period.

Example:  A 12/31 mpany that had a valuation of $3bln as reported 12/31/2008 (as of 6/30/2008) and thus was not a member of Group 1 sees its valuation increase to over $5bln as reported 12/31/2009 (as of 6/30/2009).  It would seem that since the initial Group 1 valuation period had passed, the mpany is still on track to file XBRL as part of Group 2 for their first quarterly period on/after 6/15/2010.

Veridict:  The increase in valuation causes the mpany’s XBRL mandate status to aelerate to Group 1 effective 12/31/2009 and force the mpany to pick up the tagging schle of Group 1 mpanies acrdingly.  In the case of this 12/31 mpany, the mpany has to provide its 3/31/2010 Q1 to the SEC at Year 1 tagging level, and its 6/30/2010 Q2 (and all future submissions) at Year 2 Notes detail tagging level. This mpany ends up being on what I call the “Rapid Fire” XBRL submission plan where the mpany does only a single filing at Year 1 tagging level and then moves immediately to Year 2 detail tagging.

Although Scenario #1 causes disappointment amongst mpanies thinking they can get out of filing XBRL tied to the a valuation drop, Scenario 2 causes mplete fear and apprehension for those mpanies that see their XBRL submission schle aelerated…and for good reason.  We’ve already seen a number of mpanies hit by this rule, and I expect the same thing to happen a year from now as mpanies that were not Large Aelerated Filers beme one (assuming but not limited to 12/31 year ends).

If you’re not sure about the impact Scenario #2 on your mpany, send an email to ask-oid@ to nfirm.  No time like the present to nfirm what amounts to be some potentially bad news.