As the financial world continues to evolve toward a transparent ecosystem through XBRL reporting, it’s interesting to see how open access to information can empower us in unpredictable ways. Take, for example, the October 12, 2010 article posted by David McCann on CFO Magazine’s website, “18,000 Tagging Errors in XBRL Filings So Far.” Thanks to the XBRL filing mandate, anyone with access to a computer can examine the data explored in this article and come to dramatically different conclusions.
I am generally happy to see the media covering anything related to XBRL and financial reporting because it’s still a mystery to many who don’t understand the implications. Education should only serve to further the cause, right? But Mr. McCann’s article asserts generalizations that simply don’t paint an accurate picture of how companies are approaching the SEC’s XBRL mandate. This sort of misinformation serves to muddy the waters that are already cloudy with uncertainty in this brave new world of financial reporting.
The most grievous inaccuracy in the CFO Magazine article is the statement: “about a third of year-two filers are doing the tagging themselves (the ‘built-in’ approach), often using report-writing software from Clarity Systems or Trintech that builds the taxonomy mapping into the reporting process.”
The first item in this statement that I take exception with is the statistic that one-third of year-two filers are self-filers. The numbers simply don’t support this account. Nor does our experience at Rivet Software, where 25% of the year-two filers in question are using our software and services to meet the SEC’s XBRL filing mandate.
Mr. McCann’s numbers become especially problematic when he lists Clarity Systems and Trintech as the software providers of choice for self-filing companies. An analysis of the independent XBRL Cloud EDGAR Dashboard reveals that fewer than 5% of all XBRL SEC filings have been submitted via Clarity Systems. As of October 8, 2010, exactly TWO of 3,415 total XBRL filings with the SEC were submitted with Trintech software. That’s 0.06% of total SEC filings from Trintech since the mandate kicked in — hardly a good source for benchmarking and statistics.
There is some solid, relevant information in the CFO Magazine article, to be sure. And I have an appreciation for the constraints of journalists these days. However, a more balanced piece would include examples from the majority of current filers; the struggles they’ve endured as XBRL pioneers, lessons learned, and the victories they’ve enjoyed partnering with companies like Rivet to make the process easier.
Rivet has invested more than seven years and 150,000 tech development hours into being an informed, trusted partner in this journey. We’ve done more year-two filings than any vendor and our software is the most proven in the industry. In other words, we have done the legwork. We know our stuff. Our clients have the luxury of getting a good night’s sleep the night before a live SEC filing. Just ask them.
The article also cites input from the SEC’s David Blaszkowsky, and I appreciate his commentary with regard to the errors being uncovered and that it is getting better. His calm attitude helps create a collaborative environment that supports vendors in creating best practices to ensure outsourced filings are accurate. In turn, vendors can teach these best practices to clients who want to bring this function in-house.
I believe we will start to see more and more companies wanting to bring the SEC mandate in house. I have always said you can’t outsource compliance. Besides, accountants are control freaks by nature, and I say this with great pride as a CPA. I’m guessing Mary Hoeltzel at Cigna (who was quoted in the article) feels the same way. She has her company on the right track, embedding XBRL into their financial reporting process. My concern is that they started implementing Clarity in January for an August filing date. I find this shameful. XBRL should not take this long to implement. What gives?
I am certain that Ms. Hoeltzel is a competent CAO, therefore, I question Clarity’s role in this inflated scheduling. More than seven months to implement? Really? Rivet’s solution takes two weeks on average. Two months, max. It concerns me that companies needing to comply with the SEC mandate are getting bamboozled by some XBRL vendors. And I can’t help but wonder how much this has cost Cigna above and beyond the original fees quoted by Clarity.
When I blog, I try to separate my sales hat from my independent accounting hat. It’s a hard habit to kick after my Big 8 public accounting days (I am really dating myself now!). Mr McCann’s article inflamed my sense of independence, which incited this informed rant.
So feel free to give me a call, Mr. McCann. Rivet has done over 579 filings to date and I’d be happy to share some actual stories and accurate statistics from the trenches of this exciting revolution in financial reporting. I’d also like to thank you for shining light on yet another benefit of financial transparency – readers don’t have to take your word for it anymore. Or my word, for that matter. The facts are available to anyone willing to take a look.
