The Consistency Suite doesn’t flag instances in which companies create extensions — tags for elements that are particular to a company — when an appropriate tag is already in the XBRL taxonomy. While the number of such errors is unknown, they likely are occurring much more frequently in the year-two filings, when filers are creating many more tags than they did the first year, says Pryde.
A company’s proclivity for error could be influenced by its approach to the tagging. The vast majority of year-one filers have been letting their financial printers do the tagging after financial reports are completed (the so-called bolt-on approach). But in their second year of filings, many switched to using report-writing software that builds the taxonomy mapping into the reporting process (the “built-in” approach.
The built-in approach is less manual, less costly, and more efficient than the bolt-on approach, says PricewaterhouseCoopers partner Mike Willis, a founding member of XBRL International (a global consortium to which XBRL US belongs). On the other hand, companies doing their own filings for the first time are more likely to encounter problems, says Pryde. Financial printers make errors, too, but since each applies its particular tagging process to all of its clients, each has common threads of problems. That makes it easy for XBRL US to point out the shortcomings and influence the printer to do things differently.
For Mary Hoeltzel, chief accounting officer at Cigna, which made its first quarterly filing with tagged footnotes in August, there’s no question that the built-in approach is superior — and for reasons beyond efficiency and cost.
First, Hoeltzel says, it’s simply preferable to “control your own destiny” rather than rely on a third party, and also a plus to really learn XBRL for yourself. Second, she’s looking ahead to a day when XBRL, currently just a compliance requirement for Cigna, could be used to make financial analysis more robust by tagging data in the general ledger.
But her most important reason for using the built-in approach is the turnaround time for financial printers to return the tagged filing. “You need to give them your report several days before your filing, and I just don’t have the luxury of that time,” says Hoeltzel. “I’ve got an audit committee meeting within that time frame, and if they want to make changes, I might have to change my tagging. We were better off learning how to do this ourselves.”
The software Cigna bought, from Clarity Systems, is easy to use, says Hoeltzel. It just takes time and effort: her team started the work to implement the detailed tagging in January for its August 5 filing of its second-quarter report.
Regardless of errors a company may make, it won’t have to worry about SEC enforcement for the foreseeable future. “At this stage, it’s not about rapping knuckles,” says Blaszkowsky. “It’s about working with filers to help them get it right and to make the process easier so that users [of financial statements] will have a better product.”
Correction: An earlier version of this article made references to specific XBRL software vendors that created a misleading impression about which software packages are most commonly used. Those references have been removed.