XBRL is designed to create interactive financial statements, giving the financial mmunity a standard way to publish, search and analyze financial statements. 

At this point, you have probably heard about XBRL requirements, but may be unsure about what it is and how it will affect your anization or clients.

As we approach the end of the first year in the three phases of mpliance, the next round of public mpany filers needs to prepare because the deadline is rapidly approaching.

What is XBRL?

XBRL stands for “eXtensible Business Reporting Language” and is a web-based de designed for mpanies to share business and financial reporting information in a standardized format. This makes it easier to mpare financial information across various anizations.

Instead of financial information being reported in a static format, such as in a printed document, each data item is tagged, allowing it to be used interactively. XBRL can improve an anization’s financial reporting auracy and efficiency because the data can be tagged at its source, while also increasing mparability across anizations.

Who is required to mply?

Essentially all public mpanies and foreign private issuers are required to mply with the XBRL requirements. However, the specific deadlines for mpliance depend on the size of the anization. For instance, the first phase applied to large aelerated filers with a public float in excess of $5 billion and applied to their first quarter ending after June 15, 2009. The send phase is applicable to all remaining large aelerated filers for their first quarter ending after June 15, 2010. Phase three applies to all remaining public mpanies for their first quarter ending after June 15, 2011.

What is required for mpliance?

For all mpanies, mpliance will be in two phases. In year one, each mpany will be required to tag each line of their financial statements and will “block tag” the notes to the financial statements. Block tagging nsists of labeling an entire note (i.e. Acunting Policies) with a single tag, without tagging individual items within the note.

In year two, all numbers in the notes and schles must be individually tagged, including tables. For the initial filing in years one and two, the XBRL submission can be filed up to 30 days following the submission of the EDGAR filing. All subsequent XBRL filings must be submitted with the EDGAR filing.

First XBRL filing: Key steps

Knowledge assessment. XBRL implementation should begin with a mpanywide discussion to assess the current level of XBRL knowledge within the anization. To address any knowledge gaps, the mpany should obtain training from outside experts or internal staff with sufficient knowledge about XBRL. XBRL US (http://www.xbrl.us), the anization established to support the implementation of XBRL in the U.S., also offers a variety of XBRL resources on its web, as do many of the large public acunting and nsulting firms.

Implementation approach. XBRL implementation can be done with either a self-service or full-service approach.

The self-service option nsists of purchasing a software package and performing all implementation steps internally. The full-service option nsists of outsourcing some or all of the XBRL implementation responsibilities to a third-party service provider, while the mpany mainly reviews the outputs. 

The self-service option may provide significant moary savings and allow for more ntrol over the process. However, there are significant internal labor sts associated and software training required and the implementation and quarterly filing procres.

With the full-service option, mpanies can rely on the expertise of the service providers and can significantly rce internal labor sts. However, the mpany will lose some ntrol over the overall process. For example, the mpany will need to budget in required lead time for preparing the XBRL documents.

Pitfalls to avoid

Insufficient cation or training. Be sure to take full advantage of the several resources available to help close any knowledge gaps. It is critical to invest the time needed to properly understand the XBRL requirements and deadlines and how they impact your anization.

Poor planning. Properly implementing XBRL will take several months of planning and preparation. It is also remmended that you test file your XBRL filing at least one quarter prior to the deadline. Failing to properly acunt for the internal labor hours uld result in significant delays and poor data quality, and switching to a full-service provider midstream will yield a significant increase in sts.

Long-term outlook. Look beyond initial mpliance and nsider the long-term implications of decisions made during the implementation process. Failing to do so uld create headaches or unexpected sts later. Look forward to the mpliance requirements for year two and beyond, and nsider which option (full-service or self-service) is nsistent with the mpany’s long-term goals for XBRL mpliance.

Start it up

It’s clear — XBRL is here, and it’s time to get on board. These tips should help you get started, and don’t fet to visit http://www.xbrl.us for in-depth information on implementation. With a clear understanding of the purpose and uses for XBRL, proper planning and a mprehensible, workable plan, you should be on the road to XBRL suess.

James P. Davis Jr., CPA, CITP, is a senior acuntant with lby and . PLC in Chesapeake. He specializes in IT nsulting.. He sits on the Virginia Society of CPAs (VSCPA) Editorial Task Force. ntact him at jdavis@lbycpa.m.

Haven S. Pope, CPA, CFE, is the manager of financial reporting at CarMax Inc. (http://www.carmax.m), in Richmond. sits on the Virginia Society of CPAs (VSCPA) Editorial Task Force. ntact him at haven@hjpope.m.

Note: The opinions expressed are those of the authors and not of the authors’ employers.