It is important to note that all filings submitted to the SEC pass EDGAR validations otherwise they would not have been accepted by the SEC. The Cloud is a third party’s interpretation of the SEC guidelines as are all the validation tools on the market. It is not an official validation tool of the SEC. When the Cloud was first created, there were concerns that the terminology used, specifically error, was interpreted as not being accepted by the SEC for filing. This was not the case. The Cloud’s term error includes both SEC Rule violations and SEC Warnings. For example, the Cloud lists Error LC3. This Cloud error is actually an SEC warning related to the fact that no numbers can be listed in the element name label. Yet the SEC Rule requires that the element name label exactly match the financial statement label including the numbers. The filer must meet the SEC Rule as they will not be able to submit through Edgar without following it. Yet because the filer is following the SEC Rule, they will get a SEC warning because the label includes numbers and therefore, an error LC3 in the Cloud.

The Cloud has always meant to be used as a collaborative tool to help vendors and filers interpret the SEC EDGAR Rules. If you have ever looked at these rules, you will agree that it is very difficult for a non-technical person to interpret. We have worked with the Cloud’s founder to offer guidance on how we interpret the rules and he has provided us with valuable feedback in our interpretation. This has led to conversations with the SEC and has helped everyone in interpreting the SEC Rules more accurately.

In summary,

• The Cloud Report is not an SEC endorsed tool. It is a third party interpretation of the guidelines.
• All filings run through the Cloud Report were successfully filed with the SEC. The Cloud errors do not mean SEC errors.
• The Cloud Report was meant to be used as a validation tool, not to evaluate XBRL vendors.

The Cloud should not be used as a tool to rank XBRL vendors for several reasons:

• First, all filers have passed the SEC Rules during the filing process otherwise they would not have been able to file. The errors listed on the Cloud Report are SEC warnings.
• Second, XBRL vendors cannot necessarily control what the filer decides to do with regard to the SEC warnings. For example, if Rivet is providing our full service solution to a client, we change the terse element label to reflect the element name so that there is no SEC warning produced. If our client has taken the filing process in house, we cannot control if they make this change or not. Either way is accepted by the SEC, but without updating the terse element label, a warning is produced and on the Cloud, an error is produced. Since this has no bearing on their filing, they usually pass on performing this step.
• Third, the Cloud was meant to be a collaborative tool to be used in the filing process to ensure accuracy. All XBRL vendors have Cloud errors. The Cloud is an interpretation of the SEC guidelines and is not an official SEC validation tool.

If you find that this tactic is being used by a XBRL vendor vying for your business, you may want to ask the following:

• Please show me your percentage of overall errors compared to the other XBRL vendors for all filings to date. All vendors have some Cloud errors because Cloud errors are the same as SEC warnings and are accepted by the SEC for filing.
• Drilldown into a particular filing and have the XBRL vendor show you the actual Cloud error and have them explain in detail how this error impacted the filing.

Please let me know if I can be of any assistance during your evaluation phase. I would be more than happy to work with you in evaluating your XBRL needs.

This is a sentiment that I hear over and over again from folks working in the modern corporate world. That’s why I can understand how the recent XBRL mandate can be positioned as part of a long list of regulations that turn accountants into law enforcers. But this assumption severely undermines the ability of XBRL to transform the financial reporting and analysis inside an organization; XBRL isn’t only about financial transparency for outsiders or Street analysts, it’s about the financial transparency within an organization.

The XBRL mandate is here, though, and the first step is to ensure compliance with the SEC. But we at Rivet also know the extraordinary benefits that XBRL can have for an organization. That’s why our Solution for SEC Corporate Filers minimizes the compliance burden and maximizes the benefit for an organization, all while keeping the customer in control.

One concern that comes up frequently from our clients is how to really be sure that the XBRL files produced will be blessed and accepted by the SEC. The validation tool in our product happens to be a beneficiary of Rivet’s 5 years and 100,000+ hours of experience with XBRL. Rivet’s developers, QA team and Professional Services team have been meticulous in their research and integration of the EGDAR manual and XBRL specifications. I have even seen one particular QA Manager with the EDGAR manual on in her kitchen! The validation tool in the Compliance Package runs the documents through three levels of validation: XBRL 2.1 specifications, EDGAR requirements and taxonomy calculation. And because the Crossfire products are web delivered, any updates from the SEC or XBRL US are quickly integrated into the validation tool and no software updates or installs are required by the user. This is just one of the ways that the Crossfire Financial Reporting Platform aims to make accountants’ lives a little easier.

I have also heard again and again from clients that while undergoing the XBRL vendor evaluation process, they couldn’t help but wonder if and how XBRL could be beneficial for them. Rivet has a way to make XBRL work for you. The Compliance Package includes an easy to use Excel add in which allows the user to pull all XBRL filings to the SEC into a spreadsheet to slice and dice to the heart’s content. Within seconds (not hours), our customers create KPIs, benchmark reports or any other kind of analysis one can think of. They can compare an internal quarter filing to competitors’ before it even goes live. They can create bar charts in Excel using publicly filed data without ever having to comb through their own or a competitor’s financials. In fact, Crossfire emails them an alert any time a particularly interesting data field is updated. Seriously!

Rather than becoming a compliance burden, the XBRL mandate has allowed Rivet’s clients to drastically improve and revolutionize their internal reporting processes, leaving them more time for analysis. With all of the slicing and dicing made possible by Crossfire, I might get that MBA in accounting after all.