XBRL Mandate to Transform Global Financial Reporting
The SEC is calling for companies that file using U.S. GAAP and have a worldwide public float over $5 billion to provide XBRL-formatted financial statements beginning with fiscal periods ending December 15, 2008, according to AccountingWeb.com. The report adds that the remaining companies using U.S. GAAP will be phased into the XBRL program over the course of the next two years. This specific new technology for financial disclosure, also known as eXtensible Business Reporting Language, involves computer “tags” similar to the bar codes used to identify groceries in the supermarket. According to the SEC, the tags uniquely identify individual items in a company’s financial statement so they can be easily searched, downloaded, reorganized, and put to any number of other comparative and analytical uses.
New concepts like XBRL and enhanced business reporting are making real changes in the way business is being done. These major financial reporting developments are critical issues facing financial, legal, risk, audit and compliance officers at publicly held companies. Right now, corporations must add the infrastructure and strive to meet the filing requirements of the SEC. As a result, executive search firm, A.E. Feldman, reports that accounting jobs are opening up for Audit Managers and senior-level professionals with expertise in the preparation and maintenance of financial, accounting and statistical reports. Securities lawyers must also prepared for the transition to XBRL reporting.
XBRL is a language for the electronic communication of business and financial data which is transforming global business reporting with the promise of greater efficiency and improved accuracy. The technology is being developed by an international non-profit consortium of approximately 450 major companies, organizations and government agencies, according to XBRL.org. Right now, implementations of XBRL are growing rapidly around the world.
Filing in XBRL format requires a fundamental shift, reports AccountingWeb.com. Simply put, the report states that, “Companies are no longer creating documents. They’re creating data, which is a very different process that demands companies modify longstanding practices.”
There are approximately 15,000 XBRL tags. On average, the financial statement for a mid-to-large cap company contains about 4,000 data elements, according to AccountingWeb.com.
The SEC reports that as of February of this year, three dozen companies, representing more than $1 trillion of market value, already joined the Commission’s test group, agreeing to voluntarily submit their annual, quarterly and other reports with interactive data. These companies include PepsiCo, General Electric, Microsoft, 3M Company, Alcoa, Altria Group, Ford and Lehman Brothers.
The reason for the XBRL push: making the sophisticated tools to analyze financial data available to the average investor and making the job of analyzing companies cheaper and easier. According to the SEC, the interactive data involved in XBRL pinpoints all of the facts and figures trapped in typically dense financial documents, allowing investors to immediately extract and compare the information.
A.E. Feldman’s accounting division is constantly researching industry trends and developments. To learn more about these issues or inquire about existing and future opportunities in accounting, the lines of communication are open. Contact A.E. Feldman’s President, Mitch Feldman and the firm’s cutting edge accounting recruiting team here.
