XBRL enables filers to utilize XBRL software to tag all financial items in their business reports to the elements within a taxonomy. It’s important that filers are operating with effective control while conducting the XBRL process so that it brings out complete transparency and accurate data to analyses by the regulators and users.
How do I start implementing controls around XBRL?
Many companies want to implement controls around XBRL, but many a times fails to understand where to start from. Well, it starts with an accurate and effective review process. One of the biggest problems faced by the filers with XBRL is the volume of tagging to review for each item in the financial statements. An average XBRL filing contains approximately 2,000 facts and each XBRL fact has an average of 10 items to review. So on average there are around 20,000 items needing review for appropriate tagging in the XBRL Taxonomy.
What should I review?
Foremost make sure that you are in compliance with the facts and rules. All main financial statements, notes, schedules and reports should be tagged. Filers must ensure that all the required information have been appropriately tagged and calculations have been applied throughout the document, and that the final outline structure is inline.
Do I need to worry about validation?
Yes, validation is very important. Validation rules test whether or not your XBRL file is free from any error or not. Only error free XBRL files are accepted by the Regulators.
Be careful, though! Clearing validation errors doesn’t ensure complete compliance – not all tests can be automated. Filer still need to manually review requirements that demand professional judgments and accuracy.
Next up is completeness of the XBRL file. Filers need to make sure everything in their document that needs to be tagged, is tagged and includes all the required information as compared to its HTML document. The process of ticking and tying is manual but necessary to make sure your document in HTML is exactly the same as your document in XBRL.
My document is fully tagged, but I’m worried about fact properties.
Don’t worry, we’ve got the full list of what to review for each fact property. For every fact in your document filer should check the following:
Accuracy – Make sure that your HTML document is exactly same as XBRL file
Values – Level of rounding off presented is same in both the documents and verify amounts are correct, and the proper positive or negative value based on the debit or credit balance of the tag that is used
Units – Currency in which the financial reporting is carried out
Dates – Confirm they match what is being disclosed in the HTML version and that they follow SEC rules
Labels – Remember that the labels are what render in the SEC Viewer, so make sure they match what you have in your HTML presentation.
What about calculations?
You may have heard about the SEC’s recent Dear CFO letter about calculations. Even if you didn’t receive this letter from the SEC, that’s no assurance that your filing is correct. You should make sure that you have specified all required calculations in your statements and your footnotes.
Is that all?
Yes! Follow this guide quarterly, if not more frequently, to ensure compliance. Carrying out these process will give you and your CFO peace of mind that your organization is following all XBRL rules and is in compliance.