How will Inline XBRL affect SEC filers and the investors who use the data?
To mark the tenth anniversary of the SEC implementing its XBRL-tagging requirement for financial disclosure filings,
Dimensions asked six XBRL experts in the securities regulation, financial reporting, or capital markets sectors to comment on the structured-data revolution in SEC reporting. In Part 1 (see the June/July 2019 issue of Dimensions), the experts commented on whether the XBRL requirement has been a success, how the use of structured data has evolved over the past ten years, and what challenges remain for issuers in preparing SEC filings. Here in Part 2, we cover quality issues, Inline XBRL, and future developments.
In today's blog, we will focus on Inline XBRL.
• Mike Willis, Assistant Director, SEC Office of Structured Disclosure
• J. Louis Matherne, Chief of Taxonomy Development, FASB
• Campbell Pryde, President and CEO, XBRL US
• Christine Tan, Co-Founder and Chief Research Officer, idaciti
• Pranav Ghai, CEO, Calcbench
• Lou Rohman, Vice President of XBRL Services, Toppan Merrill
NOTE: The views expressed here are solely those of the individual respondents, and they do not necessarily reflect the views of their respective organizations.
Question: How will Inline XBRL affect SEC filers and the investors who use the data?
Mike Willis, SEC: Reduced duplication and cost, improved quality, and new capabilities are some Inline XBRL benefits for filers and investors. The freely available and open Inline XBRL format combines the previous duplicate and separate HTML- and XBRL-formatted reports into a single, human-oriented document with a familiar organization and layout, tightly coupled with a machine-readable dataset. In that context, it will reduce duplicative reporting
and give filers one less report to worry about.
Second, the SEC’s open-source Inline XBRL viewer includes a range of filters and search capabilities that should help filers, investors, and analysts to more quickly identify many common data-quality issues. Filters embedded within the Inline viewer offer filers the opportunity to more effectively identify and correct common errors during their draft-report review.
Third, the open-source nature of the Inline XBRL viewer enables add-on features and capabilities by market participants. This is an area to closely monitor, due to the innovations already appearing, such as:
• Leveraging the accounting-reference search feature to enable a disclosure-checklist capability, which assists in identifying topical disclosures present in (as well as those absent from) the report
• Using filters to quickly identify extensions and enable benchmarking of similar disclosure concepts as a quality-reference assessment
• Using structured disclosures to view time-series charting of numeric disclosures, including comparative visualizations with selected registrants (e.g., point-and-click on a number and see a time-series chart)
• Using the interactive capabilities of Inline XBRL to enable contextual presentation of additional analytical insights, such as comparisons of a filing’s ratios with sector or industry or peer ratios, delivered directly “on top of the report”
Lastly, as Inline XBRL tools mature, the capabilities enabled will be impressive by any current context. The analytical results of artificial intelligence, risk, liquidity, compliance, and other modeling and analytics applied to reported
disclosures will be contextually presented as a “heads-up display” enabling filers, analysts, and investors alike to quickly assess entity communications and alignment with their personalized expectations. We might also expect to see more market collaboration on reporting analytics and insights—much as we observe via social-knowledge platforms.
Christine Tan, idaciti: Inline XBRL will significantly improve the quality of the XBRL filings. This will be the case because errors made in the XBRL filing will be obvious, since the XBRL data is embedded in the filing and can be easily exposed through additional analytics functionality that can be built on top of the inline viewer. Also, I think Inline XBRL can be used to improve efficiencies in the traditional audit process. The metadata in XBRL data can be used to help auditors reconcile balances, look for revisions in line items from filing to filing for a given period, and identify anomalies.
Pranav Ghai, Calcbench: It should improve the data quality, but I do not believe that it will be a magic bullet.
Campbell Pryde, XBRL US: While there will be a learning curve for vendors and for filers, the Inline XBRL requirement will ultimately reduce the workload on issuers, because they will need to prepare only a single document. Inline XBRL will also help with data quality, because there will be no more duplication of reporting.
Lou Rohman, Toppan Merrill: For a person at a company filing XBRL who has less experience with the XBRL tagging, it will be easier to review the XBRL using Inline XBRL. This is because the tagging will be embedded directly in the traditionally formatted financials. Anyone familiar with the traditional financials can also become familiar with the XBRL tagging. In addition, because Inline XBRL displays the XBRL financials in a human-readable presentation,
tools will be developed that allow registrants and analysts to see the traditional financial statements and, at the same time, to consume the rich XBRL data that is directly embedded within those financials. Many of these Inline XBRL tools will become mainstream for analyzing financial disclosures.
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