The two primary resources needed to meet the interactive data SEC filing mandate are training (people) and technology (software).  The typical options for obtaining the necessary resources to become compliant with the SEC mandate generally range from completely outsourcing the XBRL filing requirements to bringing the XBRL tagging process in house.  Your choice should be based on your company’s particular circumstances.  The following discussion will identify the pros and cons of three options; (1) outsource completely, (2) bringing XBRL compliance in house, or (3) some combination of both.

Option 1: Outsourcing

If you decide to completely outsource your SEC filing requirement you still need to understand the specifics of the SEC mandate relative to your company.  The compliance responsibility ultimately is still yours so the reliability of the interactive data service provider is crucial when choosing your XBRL service provider.  This option avoids the costs of XBRL technology training and the extra infrastructure that is required to run the software, including ongoing maintenance fees associated with both the hardware and software.  The degree of XBRL expertise necessary to meet a filing requirement once every quarter may be a core competency that can be more efficiently outsourced.

Pros: avoids XBRL-related IT and training costs

Cons: you are not in control of your filing and your internal staff does not have the knowledge to verify the accuracy of the filing (which you are still responsible for)

Option 2: In House

Buying the technology and training your internal resources to meet the interactive data SEC filing requirements provides you with complete control of the final work product.  There is benefit to knowing the details behind the numbers in the external financial reports while selecting particular taxonomy elements for the financial statement line items.  The initial costs may be higher than completely outsourcing. However, over time the ongoing expense may be lower with a successful initial implementation of XBRL technology and training.  On the other hand, if you experience personnel turnover in your external reporting group, your training costs could remain higher over time.

Pros: you are in complete control of your filing

Cons: you incur significant initial costs for IT setup and personnel training with no guarantee of success or accuracy

Option 3: Outsource / In House Combination

When you choose to outsource the technology while bringing the XBRL expertise fully or partially in house, you are generally choosing the best of both worlds. The decision to choose this option should be based on your company’s desired level of control, turnover expected in the external reporting role, and the cost versus benefit of having in house XBRL expertise as opposed to outsourcing your XBRL needs. But remember, you can outsource your XBRL tagging, but you can’t outsource compliance. It is a good idea to have someone internally that knows enough about XBRL to verify the accuracy of your filings. The software as a service (“SaaS”) business model has been in use for over 10 years and is continuing to gain traction in the marketplace as an efficient , secure and reliable technology option. By relinquishing certain controls over the systems when you choose a SAS 70 Type II SaaS model, you are freeing yourself from the burden of ensuring the security of the data.

Pros: you maintain control over your filing, your overhead is less than it would be if you chose a full outsource or in house solution, you receive training and support from a dedicated team of CPAs who are XBRL experts

Cons: perceived lack of control over the data

At Rivet Software we overcome this perceived lack of control by offering a customer empowerment business model that allows you to be as involved as you want to be in the tagging process. You can choose to have your staff fully trained by our experts from the beginning or you can opt to have our team handle your tagging for you. Our most common professional services delivery option has been to provide full service for the first year (4 quarters) block tagging filing requirements, then training the client to perform the quarterly block tagging instance filing thereafter. Then we provide full service during the second year (4 quarters) detailed tagging filing requirement, then train the client to perform the full block and detailed tagging for each ensuing quarterly instance filing thereafter. We also offer a test filing to all of our customers before they submit their filing. Our XBRL professional services team is comprised of CPAs with industry specific knowledge. Our flexible training and tagging options are complemented by our secure SAS70 Type II managed hosted facility. The SaaS technology delivery model promises easier, speedier and less expensive implementations.

The value proposition of Rivet’s combined outsource / in house solution is hard to ignore.