Sometimes you read one of these analyst reports and you wonder what it all means. For example, take the (sponsored) report by Aberdeen Group Enabling Compliance and Business Improvements Through XBRL. Aberdeen has a useful best in class, average and laggard model for assessing some of their report topics. So on page 15 it was rather a surprise to discover that only 75% of ‘best in class’ respondents to their survey have general ledger technology in use. Huh? Read on for an extended rant…
I’m a one man band and far from best in any class, as my boarding school cane marks will testify, but even I have a general ledger. I also have financial reporting technology. I gave up trying to construct my income statements from a wall of abacuses years ago. It kept toppling over, which sent all the beads flying. And it didn’t fit in my accountant’s office.
Perhaps the authors meant a general ledger that automatically outputs XBRL (e.g. as an XBRL GL instance document) but I doubt it as I’m not aware of many of those either. Maybe SAP does it – it seems they do everything else. I hear they are adding a Teasmade module to R3 that wakes you up in the morning with a freshly brewed cuppa (US translation: a cup of tea) and a plate of sizzling black pudding (US translation: congealed pigs blood mixed with fat and oatmeal disguised as a sausage). ‘Waking up’ has now been added to SAP’s ‘business event’ catalog as it triggers the ‘washing and dressing’ workflow.
On page 6 only 55% of all respondents cited the SEC regulatory mandate as a core driver for undertaking XBRL initiatives so presumably the other 45% are not subject to this mandate? I remember the noisy rush to use XBRL pre-mandate. It reminded me of the sound of one hand clapping or the day the earth stood still (klaatu barada nikto if you know what I mean).
On page 9 , 35% of best in class respondents are streamlining their external XBRL reporting but again on page 15 only 20% are using XBRL-based financial reporting solutions. Huh? What’s the 15% delta doing – imagining they are getting an XBRL statement from their streamlined process? L Frank Baum used to live in Aberdeen, in the Dakota Territory, and I think you’d need to be the Wizard of OZ to make sense of some of the stats in this report.
And check this: Compliance and finance departments are often the most affected and directly impacted by new financial regulations. Well that’s a relief cos the guy who delivers our burritos was losing sleep over how to transition from the 2009 to the 2011 taxonomy until I told him not to worry as he’s not in finance – oh and hold the guacamole.
But surely there’s a solid case study? I’ll let you be the judge of that. And of some very bizarre pull-quotes. The report also repeats the old ‘XBRL as barcode’ analogy which is just daft. XBRL tags are nothing like barcodes – they don’t need hardware to scan them for a start. Otherwise the SEC would need an army of tag scanners to process all those Qs and Ks which rather defeats the purpose of filing in XBRL.
I was also very disappointed to learn that:
As easy as it is for an author to create correct content that impacts all associated documents, the author can create erroneous content that impacts the same. So in essence, XBRL can not eliminate the possibility of human error, since there always has to be an original author, but it can reduce the probability of human error by limiting such liability to only the original author.
Damn! And I thought that XBRL would eliminate all human error. We need to take that out of our sales collateral. Another of Brad’s XBRL myths debunked.
It’s easy to be critical and quote selectively – that’s why I do it – so I recommend you get your own copy of the report and reach your own conclusions. There’s undoubtedly some good stuff in there.
