In our years of helping companies file their compliance report with the SEC, one thing for sure is common among most of the them-the mad rush to meet the filing deadline. We all know that preparing something as critical as the SEC XBRL Filings in a hurry may lead to compromises, including that of data quality with inconsistencies and inaccuracies creeping in. And mind you, with the commencing of the SEC iXBRL Mandate, the SEC has a stern vigil over the quality of your reports.
But despite the SEC’s best intentions, the quality of filings hasn’t really changed all that much. While every rule from the SEC is ultimately for investor benefit and for users of data, most corporates just about manage to meet the minimum threshold in terms of data quality. So in the larger interest of things, here’s a quick cheat sheet to help you prepare a high-quality SEC XBRL filing the next time around.
A quick checklist to help you prepare high-quality SEC XBRL filings
Keep track of the final version
We all know that it takes a small army to prepare the SEC XBRL filing document. The document is prepared by one set of people, reviewed by another, and audited by a third before final submission.
And no matter how early you start, there are always last-minute changes in the report, which in most cases has an impact on XBRL tagging as well. It goes through a lot of iterations before it actually becomes final. Hence, it is of utmost importance to keep a track of all the changes and ensure that these are captured in the final document.
It is advised to invest in an SEC software that offers a cloud-based, collaborative and single-source platform. Any number of members can work on the document with changes and comments reflected in real-time. There is just one document in place which is the ‘single source of truth that guarantees visibility and control.
File and check your XBRL and HTML reports
The SEC requires companies to file their 10-Qs and 10-Ks in XBRL and EDGAR HTML format together but some companies file their EDGAR HTML first and the XBRL later. This could be because either their XBRL is not ready yet, or it is ready however the Company has not reviewed it yet. It is advised that both the documents are filed simultaneously as they impact various stakeholders such as investors and market analysts. Also, make sure that the XBRL output is correct and complete. Check whether the correct dates, scales, and labels have been assigned to values during XBRL tagging. Also, ensure that all the values present in the HTML or pdf version are the same as the ones in the XML format.
“Single-Source” platforms are the only solution for enabling the Company to file both XBRL and EDGAR HTML together. With a single-source solution, any updates made to the document are updated both to XBRL and EDGAR outputs. This would ensure that both documents are filed together and are in sync with each other on the SEC XBRL previewer. It is also important that the XBRL teams of the software provider work in tandem with the companys filing schedule to make sure that the XBRL instance is ready and complete in all aspects.
Check and recheck calculations and report mistakes
You might laugh if I asked you if 1+1 equal 2? But in the quality reports of SEC XBRL filings, there are numerous instances of calculation errors between various reported items. It is advised to review all the XBRL tags in the document which has an impact on calculations. This is because incorrectly reported or entered values in the document, ultimately show up as calculation inconsistencies.
With the progress of technology and evolution of cloud-based SaaS offerings, advanced features such as spreadsheet linking ensure that updates are made in one place in the document flow through all the linked places. This helps in ensuring that accurate numbers flow through properly.
These 3 steps followed every quarter will go a long way in improving the data quality of your SEC XBRL filings. With the SEC paying more and more attention to data quality, these steps will hold you in good stead so that you measure up to the regulator’s data quality standards.
