iXBRL standard adds an extra layer of quality to a company’s annual financial reports. There is a huge benefit of using a software solution that would make the process of filing your financial reports far way smoother. Now the question arises what to look for in an SEC iXBRL financial reporting software?
We have come up with a checklist, that you can keep handy:
Check for the Fundamental Features
The SEC iXBRL financial reporting software should be cloud-based and collaborative. It should cater to smooth integration between numbers and text while providing easy document management.
Check for the XBRL International Certification
It is important to check if the iXBRL financial reporting software that your company chooses is XBRL International (XII) certified. XII provides a list of certified software that is compliant with the latest specifications, along with their providers on the website.
Make sure that the vendor you select is a member of jurisdiction such as XBRL US.
Check for the Right Credentials
Effective compliance with the SEC iXBRL mandate hinges on the track record and accreditations of the XBRL software and service provider that you choose. It would help to check for:
- How long a software vendor has been in the XBRL/ iXBRL space?
- How many clients, and across how many markets?
- What kind of expertise do they bring?
- How many SEC iXBRL mandates have their solution catered to in the past?
Check for ‘Third-Party Quality Rankings’ of XBRL
Look for any independent verification of quality, especially on the XBRL side. Different solutions integrate and leverage the standard differently, and the best ones squeeze in as much as they can from the specifications to offer their clients the highest quality.
There are independent third-party experts in the US who analyze and rank the quality of software based on XBRL / iXBRL filings published with the US SEC. Rankings are a good way to get a feel for how well software has leveraged the innate advantages.
XBRLogic, an independent US-based quality evaluator publishes rankings each year. IRIS CARBON® stands high ranked as #1 for XBRL quality in all four quarters of 2021. What more? We have been consistently scoring this position since 2019. (Check out how we rank on XBRL quality: https://iriscarbon.com/xbrl-quality-scores/)
Check for The Right Automation Features
Automation in tagging is possible to an extent in XBRL. However, be wary of solutions that promise to automate the entire tagging process. It has been a pain point for companies where they need to retag every time they make a report, which is a cumbersome and time-consuming process.
You should look for a tool that requires tagging only the first time. And for the subsequent quarters and filings, you can use smart features like the roll-forward feature, wherein all your current tags are retained. That way, you need not tag every single time for future filings.
Check for Customer References and Testimonials
Nothing beats feedback from actual users of the software, who can share their experience with you. As you go down your evaluation process, do not hesitate to ask (or look) for testimonials and references. Whether it’s a firm in your jurisdiction or elsewhere, hearing from users who have hands-on experience with the solution makes a tremendous difference. (See what our clients have to say about us: https://iriscarbon.com/customer-stories/)
Check for Availability of Expert XBRL Support
A new filing requirement SEC mandate often needs extra careful observation and implementation. Make sure the SEC iXBRL financial reporting software provider should be able to offer you support and expert assistance when you need it the most.
Some points to note:
- Check whether the provider operates in your time zone.
- Ask them how you can reach their support teams (through a phone call, email, or online chat).
- Make sure if there are additional charges involved in providing support in extra hours.
- Most importantly, check if the software can sail you through the many taxonomy and mandate revisions that come up through the years.
The ideal software vendor would let some of his knowledge and expertise rub off on you. Maybe offer you services support until you feel comfortable in the saddle, or allow you to understand what happens at his end as his team helps you through the transition, and makes sure you’re invested in the process. They provide you with full support – whenever you need it.
In Conclusion…
There is no doubt the SEC mandate is bound to make your regulatory compliance a more comfortable affair and lead to a more intelligent future. However, the importance of exercising care in choosing an iXBRL software cannot be stressed enough. Your decision would have a bearing on how hassle-free your filing process is going to be going ahead. Do stay tuned for many such articles that ease your decision-making process.
