The XBRL US Investor Forum 2021: Data that Delivers event on November 10, 2021, had much to offer attendees in terms of what XBRL data means to parties other than the filing companies and the regulator.
Speakers at the event included analysts, investors, asset managers, service providers, researchers, and standards setters. The topics covered at the event were: How Data Standards Support Better Analytics; Delivering Value for Analysts & Investors; Conducting Better, More Effective Corporate Disclosure Research; Future of Machine-readable Data for Investors.
While the unifying theme of the event was the use of XBRL data by investors, analysts, auditors, public companies, academics, and regulators, a matter of concern that was brought to the fore, especially by the keynote speakers of the event, was that of data quality.
The first keynote speaker, Leslie F. Seidman, said that while there is a significant improvement in XBRL data quality over the last couple of years, basic errors often still creep into XBRL filings. These errors include figures with the wrong number of zeros and the use of negative values instead of positive ones and vice versa.
Seidman, who is an independent corporate director and former chair of the Financial Accounting Standards Board (FASB), suggested a few measures companies could take to improve the quality of their XBRL filings.
She said that at a bare minimum, companies should make sure that their data are properly tagged by people who understand their financials. “Don’t just rely on your vendor and the way they’ve set up their tagging system,” she said.
Seidman also said filers should not resort to using customized tags unnecessarily — especially when an appropriate tag already exists in the taxonomy.
She further suggested a few steps that companies can take to ensure high-quality filings:
- Companies need to make their information available when investors want it most. “Try to align the timing of your SEC filings with your earnings release.”
- Companies need to voluntarily tag their earnings release and other key information in Management Discussion & Analysis using the existing XBRL taxonomy. “This makes the process of analyzing the quarterly information much more streamlined and comprehensive.”
- Many investors assume that the iXBRL file has been audited. But that is generally not the case. Companies can voluntarily have their external auditors review their tags and extensions for an independent view of the quality of their reports.
- “Apply the same rigor to your digital reporting that you apply to your traditional methods of reporting.”
SEC Commissioner Caroline A Crenshaw, the second keynote speaker at the event, also expressed concern about data quality.
“…while I believe XBRL data are delivering myriad benefits, there is room for improvement in terms of the quality and accuracy of the data. Some users have found material error rates in data tagged in our filings, including errors in tags that are likely to be crucially important to investors like Revenues, Net Income, and Assets, and scaling errors that can be impactful,” Commissioner Crenshaw said.
The commissioner added that both the companies filing XBRL data and the SEC had a role to play in mitigating errors. However, the primary responsibility lies with the filers. There are a number of free tools filers can use to verify the quality of their filings. The EDGAR system, too, provides validations warnings that flag data quality issues, which include the use of outdated tags, she said.