Few hiccups so far in XBRL earnings season
Jul 29, 2009
Some errors slip through while issuers skimp on interactive tools
Updated July 30 with comments from the SEC
It’s midway through earnings season and 61 companies (as of 5 pm today) have produced XBRL statements under the SEC mandate for reporting periods ending after June 15. The rest of the first 500 biggest companies should join the interactive data movement in the coming weeks. According to early indications, all’s well with XBRL.
The bad news is few if any issuer websites are giving shareholders more than a basic view of XBRL statements while some errors may reveal the SEC hasn’t fully scaled up its review process.
More than 400 companies in the first wave still have to produce their first official XBRL statements. Many of them have to do so by August 10, which is the deadline for 10-Qs from calendar-year filers, or within their one-time-only 30-day grace period. Look out for amended 10-Qs (10-Q/As), which could mark a company unable to produce XBRL statements the same day as its 10-Q.
Robert Krugman, formerly with Edgar Online and now vice president at TheMarkets.com, a large redistributor of institutional research, thinks the majority of companies will easily meet their XBRL deadlines without having to spend a lot of time or money. He says service providers like RR Donnelley and Edgar Online haven’t run into problems either.
‘Don’t jinx me, but everything seems to be going smoothly,’ says David Blaszkowsky, director of the SEC’s office of interactive disclosure. ‘We’re getting lots of questions but we haven’t come across any barriers faced by corporate filers. The serious problems some people expected to see at the largest, most complicated companies haven’t arisen.’
Blaszkowsky remains vigilant and expects ‘a significant number’ of companies will take advantage of the grace period and submit XBRL statements after their 10-Qs.
Fast track
A number of companies filed 10-Qs with XBRL after April 13, when the SEC’s voluntary XBRL program ended. CSX Corporation’s July 15 quarterly report claimed the honor of being the first to use XBRL for a reporting period ending after June 15.
This Florida-based railway company was already comfortable with interactive data. CSX voluntarily submitted its 2008 10-K in XBRL and did a ‘trial run’ with its first quarter 10-Q. ‘Before either of those two filings, we had extensive conversations with our peers in the railroad industry to try and reach consensus on how to ‘tag’ the data and we were generally successful,’ says Missy Mucha, assistant controller.
Neal Hannon, senior XBRL consultant at Cambridge, Massachusetts-based Gilbane Group, is surprised that a lot of companies are using the 2008 XBRL taxonomy even though the 2009 taxonomy is now available and being accepted by the SEC.
Hannon has also noticed more anomalies than he expected, such as wrongly block-tagged footnotes which don’t appear as they should in an XBRL viewer. That could annoy analysts and investors. ‘It tells me the SEC is still learning. They’re struggling with the volume of filings,’ Hannon says.
Blaszkowsky says the SEC’s bandwidth isn’t stressed. As with the old EDGAR, filers can preview their XBRL statements and catch any mistakes. Once they’re submitted, the SEC ‘validates’ them to make sure they’re correctly coded. ‘We may not know if a particular footnote will render correctly, but it may still be correct XBRL,’ Blaszkowsky says.
The audit and integrity team within the office of interactive disclosure has been doing detailed reviews of XBRL statements since the rule went into effect in April. They may ‘informally communicate’ problems to issuers, which may choose to file amended 10-Qs. ‘It’s not a ‘gotcha’, but rather feedback to the filer community,’ Blaszkowsky says.
Most companies are doing the bare minimum with XBRL on their websites. ‘They’re complying with the SEC rules by putting their XBRL statements on the web but they aren’t giving users any tools to play around with them,’ says Hannon, who recommends Bowne’s interactive viewer to get beyond the basics.
IR manager Rob Jacobson at Biogen Idec, a Massachusetts biotech company, says making XBRL statements available on the company website was ‘a simple, smooth transition,’ even with the company’s 10-Q going out just two weeks after the end of the quarter on the same day as the earnings release. Biogen’s finance group was well prepared in terms of tagging and Thomson Reuters, which handles Biogen’s IR website, promptly put the XBRL online. ‘I really like the way it presents on the page,’ Jacobson remarks.
Jacobson believes putting more sophisticated XBRL tools on Biogen’s website could benefit retail investors but he has no plans to do so because the company is over 90 percent institutionally held.
Mucha adds that CSX supports XBRL as a powerful tool for investors and analysts to compare and review data. ‘However it is still in its infancy stage and will take time for the data to become widely available and the tools to spread,’ she says.
By Neil Stewart