XBRL US and an alliance of member companies have formed the XBRL US Center for Data Quality (the Center) to address concerns about, and to improve the utility of, XBRL financial data filed with the U.S. Securities and Exchange Commission (SEC).
The Founding Members of the Center provide software and services to a majority of Securities and Exchange Commission (“SEC”)-registered public companies for preparing and filing their financial and business data. They are well versed in the eXtensible business reporting language (“XBRL”) that the SEC adopted in 2009, requiring issuers to file their financial data in this structured format. While investors, the SEC, analysts, and the market in general could reap significant benefits from the utilization of XBRL data, such benefits have not been realized due to inconsistencies and errors in the XBRL data filed with the SEC.
The Center is dedicated to funding an initiative to improve the usability and effectiveness of XBRL data. Specifically, the Center has funded the creation and implementation of a Data Quality Committee that will develop appropriate guidance and validation standards (freely available to all public companies) to prevent or detect inconsistencies and errors in the XBRL data.
When the SEC adopted its rules in January 2009, requiring companies to provide their financial statements to the Commission in structured data format using XBRL, its goal was to improve the usefulness of financial statement information to investors by making automated analysis of the information feasible. Consequently, the Commission expected the use of XBRL to enable investors, the Commission’s Staff, and analysts to capture and analyze that information more quickly and at a lower cost than is possible using the same financial information provided in a printed format.
The Current Problem
XBRL has become a worldwide standard for the exchange, process, and analysis of business and financial data. But, its benefits have not been fully achieved for the XBRL financial data filed with the SEC due to errors and inconsistencies in data tagging that in large part result from:
- Absence of unambiguous guidance for using the US GAAP taxonomy;
- Lack of corporate awareness of errors in their filings.
Investors and analysts have been reluctant to use the data because of concerns about its accuracy, consistency, and reliability. Inconsistent or incorrect data tagging, including the use of custom tags in lieu of standard tags and input mistakes, causes translation errors, which make automated analysis of the data unduly difficult.
Investors and analysts will not realize the full potential and overarching benefits of XBRL unless:
- Companies are offered unambiguous guidance to eliminate data tagging options;
- Uniform validation rules are used to verify compliance with the guidance and prevent or detect tagging errors; and
- A zero tolerance approach is applied to errors and inconsistencies as the only acceptable standard for XBRL data filed with the SEC.
The need for XBRL data to be accurately tagged and fully utilized has been, and is, a priority for the SEC. Recently, Mark Flannery, SEC Chief Economist and Director of the Division of Economic and Risk Analysis (“DERA”), stated that, “DERA staff will continue to address the quality of XBRL submissions by periodically analyzing their content for accuracy and completeness.”
 Initial founders included Merrill Corporation, RDG Filings, RR Donnelley, Vintage (a Division of PR Newswire) and Workiva, Inc. Other organizations have joined the Center in support of data quality.
 See generally, http://xbrl.sec.gov/. XBRL is a freely available and global standard for exchanging business information.
 See SEC, “Interactive Data to Improve Financial Reporting,” Securities Act Rel. No. 9002 (Jan 30, 2009), available at http://www.sec.gov/rules/final/2009/33-9002.pdf.
 Several million XBRL financial statements per year are already available in the European Union. Across the rest of the world, XBRL is mandated most notably (with data available) in Australia, Japan, China, South Korea, Chile and the UAE. The following countries have adopted XBRL as a filing standard: Australia, Austria, Belgium, Bermuda, Chile, China, Denmark, Estonia, Finland, France, Germany, Ireland, Israel, Italy, Japan, Korea, Lithuania, Luxembourg, Netherlands, Norway, Poland, Singapore, Spain, Sweden, United Arab Emirates, and the United Kingdom. XBRL has also been adopted by the Federal Deposit Insurance Corporation and the Board of Governors for the Federal Reserve System, as well as by the SEC.
 Mark Flannery, SEC Chief Economist & Director of the Division of Economic and Risk Analysis, “The Commission’s Production and Use of Structured Data,” Data Transparency Coalition’s Fall Policy Conference (Sept. 30, 2014), available at http://www.sec.gov/News/Speech/Detail/Speech/1370543071869#.VKxpsqZkri8.