There have been a couple of related items posted recently that I’d like to briefly respond to. The first is a blog post by Mike Willis on The New Math for Transparency and the second is the tweeted assertion by Daniel Roberts that Until the SEC (and others) can clearly show the value of #XBRL Detailed Tagging to the producing company,  only the Consultants will win.

Mike’s useful post on the new math of transparency does a good job of unpicking some layers of transparency  but I think he missed a key layer and an opportunity to further promote the value of XBRL. I think what’s missing from Mike’s argument is ‘verifiability’ . You can offer the most available, accessible and reusable information possible but it’s not truly transparent unless it verifiable.

So I think a refinement to Mike’s formula goes something like this:

Of course providing verifiable information is hard. Do you let information stakeholders drilldown into your operational systems? Probably not. Do you have to pay an independent auditor/assurer to verify your information – well maybe in some cases. Or do you rely on the use of ‘standards-based’ data (e.g. XBRL taxonomy-tagged data) to provide some reassurance that this data is verifiable – in the sense that it  has been tagged with a generally accepted data standard  (GADS). Presumably if the information is based on what you have filed to a regulator and uses a GADS then that has a reasonably high verifiability % status.

Turning to Daniel’s point, I think there is more to detail tagging than money for consultants. Detail tagging (vs. block tagging) makes the  voluminous textual information in an SEC filing, that is often full of  nuggets of financial data, easier to search. Yes easier to search by the regulator and by consultants looking to make a buck but also easier to search by any information consumer that is looking for something in particular - who knows what – to help them make a decision.

Sure, detail tagging is yet another burden on corporate filers (and it’s quite challenging for XBRL service providers) but it’s also an essential part of data democratization and the kind of available, accessible and reusable transparency that Mike Willis is referring to – which is somewhat key to the core value proposition of using XBRL in the first place.

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This entry was posted on Thursday, February 24th, 2011 at 4:18 am and is filed under Communication, Transparency, XBRL. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.