Printers warn on XBRL deadlines
May 19, 2010
Issuers run risk of being deemed not current by SEC
Many companies remain unaware of the amount of time it takes to amend XBRL filings, which is putting them at risk of missing their SEC deadlines, according to financial printers.
This year a further 1,500 US issuers will begin filing in XBRL, following the SEC’s decision to mandate the tagging of financial data. Companies that are used to making last-minute changes need to leave themselves more time to finalize EDGAR filings given the increased amount of work and complexity required for XBRL submissions, warns Mike Schlanger, Merrill Corporation’s vice president of business development and strategy.
‘This is a really hot topic at the moment as clients are having to add more time to their traditional SEC compliance processes,’ he says. ‘Prior to the XBRL mandate, clients could make changes to their EDGAR document minutes before filing and still meet their deadlines; with this new mandate, however, companies will need to allow up to 24 hours to prepare the XBRL exhibit in order to meet their first-year filing requirement.’
John Truzzolino, director of electronic solutions at RR Donnelley, concurs. ‘Companies are not aware,’ he says. ‘We as an industry need to pull back the curtains and show them what this means. They’re used to making 11th hour changes – like at 5.29 pm on the day of filing – and we simply can’t produce those edits now in the same timeframe.
‘Our financial reporting teams are struggling to educate their senior managers – CEOs, CFOs, audit committees and general counsels – on new rules and how they affect timings.’
Problems can arise as XBRL maps together different parts of the filing. As a result, if one number is changed it can create inconsistencies in other parts of the document. A company that rushes through a change without getting it checked properly might not meet the SEC’s specifications. In such an instance, it runs the risk of being deemed not current by the regulator.
‘Think of the changes as being either to content or to the XBRL tag,’ explains Ray Batt, senior vice president of global operations at Bowne. ‘If the changes are to the content – a number change, for example – by and large those changes can still happen, and do still happen, right up until the filing.
‘When you’re talking about a change to the XBRL tags, that’s much more difficult to accommodate at the last minute because of the impact to the extension taxonomy and additional review and sign-off it requires from the client.’
Batt points out, however, that the situation has improved a lot in recent months as issuers better understand the tagging process. ‘A year ago, there was a lot of misinformation in the marketplace with regard to how XBRL is different from HTML. We have spent a lot of time educating clients about what is going on and how XBRL is different,’ he says.
Financial printers say the problems being experienced now should ease in subsequent years as technology improves, allowing last-minute changes to be made to filings once again. ‘It’s probably a temporary change while technology catches up with the rules. As a new rule, it is very challenging and the current software does have its limitations,’ concludes Truzzolino.
By Tim Human