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Merrill rporation recently posted an interview with Mike Willis from the SEC’s Office of Structured Disclosure,in which he touches on a number of ics,including data quality,enforcement,and the use of XBRL data for analysis.Read the interview.
Mike Willis is Assistant Director of the SEC’s Office of Structured Disclosure.He oversees the design and implementation of technological processes and tools that support the SEC’s use of structured data,such as XBRL-tagged financial information.Mr.Willis moved to the SEC in 2015after many years as a partner at Pricewaterhouseopers,where he worked on process enhancements involving standards-based architectures,both within the firm and for clients.He has also held several positions at XBRL International,including founding chair,chair of its steering mittee,and chair of its board of directors.Dimensions spoke with Mr.Willis on the SEC’s growing use of the XBRL-tagged data submitted in rporate financial disclosures.
Q：Before you joined the SEC,you worked in the private sector as an expert in acunting and financial reporting,including XBRL.What led you to aept the position at the SEC?
This is something I have wanted to do for a long time,as I am passionate about process enhancements enabled via supply-chain standards.This role provides opportunities:to work on policy matters that enhance the leverage of the Inter and structured data for analytical insights;to enhance the transparency of pany disclosures so that the wave of Baby Boomer retirees –and I am in that boat –may more effectively make better informed investment decisions;and to apply my market experiences.
Q：You head one of the SEC’s specialized offices,the Office of Structured Disclosure (OSD),within the Division of Enomic and Risk Analysis (DERA).What does your role entail?
OSD works with the divisions and offices within the mmission to assist in their respective roles and responsibilities.We listen closely to others to understand their needs and find related opportunities to leverage structured data for analytical purposes.OSD develops,implements,and enhances analytical capabilities.We also assist with rulemaking where structured information would enhance required disclosures and reuse of information for analytical purposes.We do risk assessments via proactive,persistent monitoring and ad hoc analysis.
This role provides a great opportunity to work with a very talented group of professionals:data scientists,CPAs,developers,enomists,analysts and attorneys –a very diverse group of skills.We also engage market-standards bodies and nsortia relevant to structured disclosure ics.Overall,we try to increase awareness of the benefits from the use of structured disclosure in the market.
Q：You undoubtedly had an impression of the SEC before you joined it.Now that you are on the inside,how does the reality of the SEC differ from your prior impression?What has surprised you about the SEC?
The first thing would be the mitment to structured disclosure.In the last 18months,ten rules with structured data ponents have been proposed or adopted,which is a clear sign of momentum –and that was not previously obvious to me.
Send,I thought I would be answering the “why”question:Why structured data?I find that I am answering the “how”question:How can we use it?How can we leverage it?
Third,I also thought that no one was using XBRL.I was stunned at the level of use for a broad range of analytical purposes.Your readers are probably aware of the recent XBRL subscription service RFP and award.There are roughly 150people in the Division of Enomic and Risk Analysis,and many of them use the ‘as reported’XBRL structured disclosures almost daily.mmission Staff regnize that data quality is an important issue.With increased use of XBRL,the awareness of data quality increases.
Moreover,I used to think that few in the mmission paid much attention to ment letters or e-mails,when in fact the exact oppo is true.Those items carry significant weight,and your readers are enuraged to make their opinions known.Rest assured that those letters are read.
Q：You use the term structured data instead of XBRL.Is that the term XBRL advocates should be using?
Different information types may dictate different types of structure.XBRL is a language designed for business information,and sometimes that may not be specifically on point.For example,other types of standardized languages may be used for different information types:FpML and FIXML were recently proposed for security-based swap data.Broadly speaking,various standardized languages can enable structured disclosure;and thus,the more general term structured data.
Q：Do you think people understand the ncept better if you say structured data?
It is somewhat like asking your mom whether she likes using HTML.My mom would say:“No,I don’t know what HTML is,but the Inter is really great.”It is more important that we talk about the process implications rather than the technology.The process implications reflect benefits that are very useful,from a st,transparency,analytical,timing,and quality perspective.
Q：Since joining the SEC,what new insights and perspectives have you acquired on the quality of XBRL data filed with the SEC?
The most obvious is that the SEC Staff care about quality and that their interest increases along with their use of the data.One of my first tasks upon joining the mmission was to prepare an analysis using XBRL data for one of the Senior Officers in another division.About five minutes after I sent the analysis,an e-mail came back to me with a question:“Is this number rrect?”I called him and said:“Yes,that number is exactly what the pany reported.Of urse,it cannot possibly be rrect,but that is what the pany reported.”The blunt insight for your readers:with increasing use of XBRL data es increasing awareness of XBRL errors.
My prior market experience has included first hand enunters with XBRL-data errors including:negative values;scaling problems,with panies reporting values in the quadrillions;pany-specific extensions for basic ncepts such as cash and cash equivalents;the lack of any structured disclosure where it is clearly required;the use of improper dates that do not align with the pany’s reporting;the inappropriate use of axis extensions when suitable options are available in the US GAAP Taxonomy;and others.
The data quality issues can both inhibit use of the data and result in analytical errors.For example,there are vendor bots parsing real-time XBRL web-service feeds and dynamically publishing articles based on panies’structured disclosures.Some of those articles are either humorous or misleading,or both,when the bots produce stories based on inrrect data.
Q：What is the SEC doing to improve XBRL quality?Will the SEC ntinue to be proactive?
Let me first step back and provide a broad perspective.Data quality issues are a fact of life;even prior to any structuring of pany disclosures,there were plenty of quality issues in pany paper and ASCII formatted reports.Balance sheets that did not balance,missing disclosures,amounts that did not tie out,and many other basic quality issues that we still see today.
Steps being taken by the SEC to improve XBRL quality.
1 Focusing on data-driven regulation
2 Developing data quality tools
3 Working with the FASB on US GAAP Taxonomy enhancements
In general,there is a focus at the mmission on data-driven regulation,and the use of structured data will ntinue to increase as a result of that focus.And,as I noted before,as the use of data increases,so does the awareness of quality.In 2009,the SEC Staff started publishing its observations on data quality ics –negative values,unnecessary extensions,etc.Those ics are still problematic in pany reports today.Your readers should “stay tuned”for more Staff Observations.
We are developing data quality tools,including some open-source tools that we think will be useful in helping preparers identify quality issues.We also ntinue to study and evaluate the use of pany-specific extensions and their effect on the usability of structured disclosures.In 2014,the SEC Staff published an assessment that highlighted the use of custom extensions by filers of different sizes.Again,stay tuned for more on data quality ics.
We are also working closely with the FASB on enhancements to the US GAAP Taxonomy,in an effort to simplify and remove ambiguities in the taxonomy.Further,we recently updated the rendering engine and began publishing warning and error messages as part of the EDGAR filing process.While these are not 100%data quality validation rules,filers that enunter these errors or warnings would be wise to s and check whether the disclosures in question are properly structured.
We wele your readers to send ment letters or e-mails (StructuredData@),or just call us on ics relevant to XBRL data quality (202-551-5494).
Q：Is the SEC Staff calling issuers about problems with the XBRL tagging in their filings?
The Staff may reach out to the pany in cases where they bee aware of material XBRL reporting errors.That may happen more frequently than some of your readers might perceive is the case.
Q：Is the Staff calling just about XBRL or about other things as well?
It depends on the situation,it can be both –and it can be just about XBRL.
Q：Does the Staff also include feedback on XBRL in ment letters to issuers?
Yes.How the Staff municates will vary –letters,phone calls,office visits.Some of those may or may not be as public as others,but munication is ongoing.The pany is responsible for the quality of its reports.It is not a great idea for a pany to rely on ment letters from SEC Staff and/or third-party vendors to identify quality issues that may exist in the pany’s own structured reports.
Q:In the recent past,the SEC has broadly issued staff observations,updates to filer practices,and even “Dear CFO”letters on XBRL quality and usability.There have not been any of these in the past year or so,but will there be more in 2016?
I cannot nfirm or deny any future “Dear CFO”letters.I would enurage your readers to stay tuned.
Q:How is the SEC using XBRL data internally?
While the word on the street may be that the SEC is not using XBRL,that is simply not true.
One way the SEC uses XBRL data is for enomic analysis.When an analysis is looking across all SEC panies –and I repeat that:all panies,from the largest to the smallest –that is when the XBRL data is very useful.Some data aggregators may focus on the largest filers.When we need an answer that vers all panies,XBRL data is the only game in town for assessing information from the entire set of rporate filers.
Text analytics and sentiment analysis also use XBRL structured disclosures.The reason is that textual-analytical engines are wildly more effective at analyzing structured disclosures when they know what they are looking at versus attempting to nsume and analyze an entire unstructured report.
In general,given the focus on data-driven regulation at the mmission,the use of structured data ntinues to grow.That is a useful backdrop as to why the mmission is looking to enhance analytical capabilities.
Q:Are your analytical tools now using XBRL data?
Yes.Our analytical applications and dashboards use various sources of data,including XBRL,to paint a plete and clear picture.Our analytical platforms have evolving features and capabilities as we ntinue to find new ways to leverage XBRL structured disclosures in support of the mmission’s mission by listening to the needs of the Staff.
Q:Does the SEC’s Division of Enforcement use XBRL data?uld XBRL-tagging errors ever be egregious enough to involve the Division of Enforcement?
I am aware of individuals in Enforcement who do use XBRL structured disclosures to inform their activities,but I cannot ment on what Enforcement may or may not do.If I were a preparer,I would not want to be a case study based on a structured data error that might mislead any potential user.
Q:What is the arrangement that the SEC now has with Calcbench to use its XBRL data tool?How do the different SEC divisions use that tool?
The arrangement was to procure an XBRL subscription service that enables the SEC staff to use XBRL data in its regulatory work.I cannot ment on what mmission Staff in various divisions do with this XBRL subscription service;but your readers should know that it is being used.
Q:Does the SEC plan to replace more of the information that it now purchases from third-party vendors with tools that nsume and analyze XBRL data?
Again,I cannot ment on our future use of data aggregators and data feeds.I have heard representatives from various data aggregators ment that they are interested in panies resolving data quality issues so that they can begin to inrporate the XBRL disclosures in their data feeds.Those ments reflect market interest in improving data quality.
Q：The SEC has been adding requirements for structured data to many of its newly proposed rules and form types.Are there plans to expand the XBRL requirement to filings beyond financial statements?
I would point you to the recently proposed executive pensation rule on pay versus performance,which was the first foray of structured disclosure into the arena of proxy disclosure.The mmission makes these decisions,and I cannot ment on what the mmission may ultimately decide to do or not do.
Q：Will a structured data ponent be nsidered for all new SEC disclosure regulations?
I do not know.What I do know is that the OSD team is growing and is very busy.Given the recent history of proposed and adopted rules including structured disclosures,it certainly seems like there is Staff and mmission awareness of the benefits of structured disclosures.
Q:Any examples of ways in which the SEC is trying to further the use of XBRL?
Enhancing quality is a key method for increasing use.As an example,the rendering engine with its published warnings and errors messages identifies potential quality problem areas.These are not 100%data quality validation rules,but your readers should pay attention to them.
We have talked about inline XBRL as an effective way to present disclosures so that potential errors are more obvious.The SEC Staff is currently developing remendations for the mmission’s nsideration to allow filers to submit XBRL data in inline as part of re filings rather than filing XBRL data in a separate exhibit.The use of the inline format will help to improve the quality of structured disclosures,ease filer burden,and facilitate additional Staff review.Staff is also working to enable the suessful implementation of inline capabilities within EDGAR to aept inline filings under any prospective inline-filing program.
We periodically meet with data nsumers and aggregators to better understand the data quality issues that impact their use and analysis of structured disclosures.We receive feedback from those groups,including that the “Dear CFO”letters were a very effective munication and cation vehicle.
There is evidence of market demand in the use of XBRL structured disclosures.We publish financial statement data sets,we make the data available via web services and RSS feeds,and we monitor traffic on the entire web.The XBRL data feeds are in the four of all download traffic from the mmission’s web.That is pretty reasonable evidence of demand for XBRL structured disclosures.
Q:What is the SEC’s involvement with the XBRL US Data Quality mmittee?How does it view the Data Quality mmittee’s activities?
We have met with the XBRL US Data Quality mmittee and with other market groups and participants that are interested in structured disclosure and quality issues,and we plan to ntinue to meet with those groups.We are generally in favor of any efforts that strive to improve data quality,and we monitor all developments in that space to look for potential ways to improve what we do.
As a regulator,our llaboration with market groups is somewhat limited.Your readers should not mistake that limitation for a lack of interest.We are very interested in market efforts focused on data quality.They provide an effective way to learn about data quality ics and priorities.mmunications on quality are not limited to these groups or meetings.We wele ment letters and outreach on quality ics from any of your readers.
Q:Will the SEC run the Data Quality mmittee’s rules?
It may not be helpful for me to attempt to predict the future.What may be of interest to your readers is that in September we updated the rendering/validation engine to enable the application of standardized rules as part of the process for EDGAR test filing and EDGAR filing.The rendering engine allows visitors to EDGAR to view XBRL data as human-readable tables that resemble the classic financial statements.The updated rendering engine is faster;facilitates diagnostic features;and helps filers detect errors before submission,thereby helping to improve data quality.The rendering engine’s warning and error messages are intended to highlight scenarios where the disclosure structures are innsistent,inappropriate,or deserve attention prior to filing.Registrants should pay close attention when they receive one of these messages.
Q:You mentioned inline XBRL earlier.What are the benefits of inline XBRL?
First,inline XBRL enables panies to file a single document rather than two documents,thereby rcing duplicate disclosures and efforts.Send,inline disclosures can be viewed with any Inter browser,and they do not require special XBRL-viewing software.Third,inline XBRL provides a presentation layer for the representation of analytical ncepts.
Let’s explore that last one.Today,many reporting professionals and analysts are basically “texting while driving.”They are supposed to be focused on pany reports,but they are distracted by powerful and useful analytical tools that highlight anomalies,focus on potential errors and risk,and identify disclosure checklist requirements.These may shift the attention and focus of reporting professionals and analysts away from a pany’s reported disclosures and to the tools –hence the “texting while driving”analogy.
Inline XBRL provides a method for representing analytical results directly “on ”of the pany report.Think of inline XBRL as enabling a heads-up display right on of reported disclosures.That heads-up display can be used to represent all kinds of analytical outes,ideas,and resources,including:
˙disclosures that are anomalies;
˙analytical outes directly oriented toward report validations;
˙mathematical validations –where values rencile,add up,and/or where they do not;
˙highlighting risk assessments;
˙highlighting disclosures reflecting higher or lower risk outes when pared to others (e.g.,benchmarking);
˙highlighting potential missing disclosures,an “automated disclosure checklist”;
˙highlighting potential structured-disclosure quality issues;
˙linking specific disclosures to the FASB standards or the SEC regulations or even to the pany’s own policies;
˙linking to training materials or subject-matter experts on a particular technical ic.
Inline XBRL can work to improve report quality and process effectiveness for both preparers and nsumers.There are other regulators currently using inline XBRL internally for exactly these reasons.
Q:What plans does the SEC have to further the use of XBRL data by the public,especially investors and financial analysts?
Sharing knowledge and awareness,as we are doing in this interview,about how we are using structured disclosures to enhance our analytical process and capabilities.
mmunicating our efforts to the munity of preparers,and soliciting their feedback on their use of structured disclosures for their own benchmarking and best-practice reporting/disclosure nsiderations.Meeting with market groups working on data quality,and learning about their efforts and ideas.Meeting with other market participants on how they may use structured disclosures.ntinuing to work with FASB staff on enhancements to the US GAAP Taxonomy.Soliciting market feedback and input on ics related to the use of structured disclosure.
Q:You are at the SEC during a key time in its broad aeptance of XBRL data by the SEC and the public.What do you want the legacy of your time there to be?
I’d love to look back and see that the policies and rules put in place enhanced the leverage of the Inter and structured data for improving analytical insights by investors and others.Realization of broader supply-chain-standardization benefits,
including lower st,greater transparency,and higher quality would be useful outes.Transparency of pany disclosures enhanced to better inform decisionmakers across a broad spectrum of investors,analysts,creditors,regulators,and researchers.In general,reinforce what I said earlier about the mmission’s orientation on data-centric decisionmaking to enhance our primary mission.
中文新闻：SEC对XBRL标记数据的利用日趋娴熟 |
