The purpose of eXtensible Business Reporting Language (XBRL)is to make certain parts of SEC filings and other business documents machine readable.Ideally,the automated data gathering that XBRL enables would allow for more sophisticated analysis by regulators,analysts,and investors.

The SEC,under former Chairman Chrisher x,mandated that this global standard for exchanging business information be adopted by publicly traded panies beginning in 2010.

Since my research firm focuses on gathering financial data directly from filings,I have a strong interest in the progress of XBRL.We currently gather all the financial data ourselves because none of the data providers can supply either the quantity or quality of data that we need.If XBRL uld supply all the data we need,it would make my business much more efficient.I am a big fan of XBRL and would like to see it sueed.

As of this year,all panies are required to submit their annual and quarterly reports in XBRL.As one might expect,we eagerly examined their filings.Our nclusion:XBRL is rife with issues and not usable.

In order for XBRL to serve as a substitute for manual data gathering,it must be 100%reliable in terms of presenting the rrect information.XBRL is not worth the trouble if you have to go back and verify all the data manually anyway.

We did not expect XBRL to be 100%reliable in the first few years of its implementation,but we hoped by this time that it would be reliable at least for the easier data points like the financial statements.Instead,we found that a large number of panies were not able to get even the simplest data points rrect in their 10-Q filings.

The “total shares outstanding”is one of the easiest data points to scrape manually from a regular 10-K or 10-Q filing.That data point shows up in the same place and in the same format for nearly every 10-K or 10-Q filing in the universe.The bottom of the first page will have the number of shares outstanding and the date on which the shares were unted (see an example here).A filing that gets this wrong is like a basketball player that can’t find the basket.How can you rely on them to do anything else right if they can’t execute such a simple task?

Early in our analysis,we found errors so egregious and so often that we realized further analysis was not worthwhile.The errors involved both nflicting and wrong numbers and dates.nflicting means the XBRL filing had different data than the text or HTML version of the filing or the header file from the SEC.Wrong means the data was inrrect or missing in all areas.

The data was not just off by a little bit.As you can see in Figure 1,the date uld be months off,and in one case even over a year off.

Figure 1:XBRL Errors for the Date for Shares Outstanding

Figure 2shows that share unts were sometimes off by millions or even missing entirely

Figure 2:XBRL Errors for Shares Outstanding

Don’t think that only smaller panies have these issues.Exxon Mobil (XOM)and Verizon (VZ)both had nflicting or wrong data as well.

It appears that no one is checking XBRL tags to make sure they are rrect.The SEC has responsibility for enforcing XBRL but does not seem to nsider it a priority.Right now,enforcement is so lax that many panies with inrrect XBRL tags don’t even realize they’re making mistakes.

This nonchalance surprises me a great deal.Based on a report on disclosure transgressions that I prepared for the U.S.Senate Banking mmittee in 2009,the SEC is clearly not able to review in meaningful detail every filing submitted by panies.Their processes are almost entirely manual and based on word documents and letters to panies.From what I gathered back in 2009,the SEC had no database for analyzing and paring financial data.

The SEC should wele XBRL as a way to manage and analyze the mountain of data they need to evaluate.If they ntinue to allow blatantly wrong information,however,it bees dead weight that plicates the process for filers and adds no value for regulators and investors.

The potential utility of XBRL as a tool for regulators to fight fraud and investors to better analyze panies makes its numerous flaws that much more of a shame.I can only hope that the SEC realizes the value of XBRL and makes a mitment to ensuring the auracy and validity of XBRL data.In the meantime,thousands of disclosures on which the investing public relies flow through the SEC with very little to no review.

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