Debunking 3 common myths about XBRL
Accuracy and timeliness in data acquisition are increasingly seen as essential factors in governance and taxation. Digital transformation of the regulatory reporting process has helped get there over the last couple of years. In the US, the use of standards such as XBRL and iXBRL has been mandated by the various regulatory authorities. This requirement enforces issuers to start reporting in formats that is both machine and human readable, instead of submitting PDF files, giving way to consistency, efficiency and accuracy in the compliance process.
As is the case with any new technological compliance requirement, many companies have turned to outsourcing the XBRL/iXBRL creation to reliable XBRL experts. Relevant for both SEC and FERC filings, firms are always scouting for the right partner who can provide them with the right solution to be compliant with respective mandates. With the risks of human error and trouble navigating the complicated waters of compliance, it is now apparent that most energy companies prefer to entrust this responsibility with experienced professionals so they are not on the wrong side of the law.
However, there are always those naysayers who are still on the fence about the ease of this process. So, in this blog, we would like to walk you through three of the most common myths surrounding outsourcing XBRL.
Myth 1: No prior knowledge of XBRL is required if this task is outsourced
It’s not as simple as you think! Delegating the process of XBRL tagging requires knowledge about the configuration of the data so that you can run the necessary checks and ensure that the information is not misrepresented.
In order to review your filing, you need to:
- Be aware of what goes into the dataset so you can check if the accuracy of the taxonomy and attributes selected. After all, no one knows your requirements as well as you do!
- Ensure that the correct extension is created, is accurate, and primarily is required to reflect your reporting intentions
- Articulate what values are being reported by understanding how XBRL format transforms values
Myth 2: Overloaded teams will get some relief
You’ve outsourced your XBRL tagging, but what about the legal liability? Unfortunately, you and your company are accountable for what you submit. Accuracy of the report, representation of the numbers, and the level of compliance are all your responsibility and not the vendors.
Therefore, you will still need a solid workforce to comprehend and review the quality of the work. The task of tagging can be completed by experienced professionals for you. However, once that is done, your team will still have the essential responsibility to justify tagging decisions and act on changes, if required.
Myth 3: XBRL tagging is a herculean task
Yes, this may be true. But not entirely. While it might appear so, the right software and help can help complete this process efficiently. All you need is the right solution and an experienced team of experts to perform your own XBRL mapping, modelling, tagging, and filing. This gives you complete control over the entire process and sticks to deadlines too.
Now that you know that outsourcing your XBRL process is not really a breeze, you may now wonder how you can streamline your existing reporting process to handle the process of XBRL tagging? Well, you have to keep in mind that you will need:
- A modern financial reporting software capable of easing the process for you
- A dedicated team of experienced professionals who are experts in XBRL tagging and associated processes
- A clear review and monitoring process that ensures accuracy while dealing with any possibility of errors
In summary, outsourcing is not out of the question. You can resort to this option to ensure that you are compliant with the government’s rules and regulations. However, it is not an activity that you can delegate in its entirety. It will need your intervention and support for a seamless and efficient engagement with a third party.
If you are ready to partner with a robust and agile firm that is seasoned in XBRL tagging, we’re geared up too! DataTracks boasts 16 years of experience in helping 250+ firms in the US with their compliance and reporting requirements. To start a discussion and find out more about what we do, drop a line at email@example.com and schedule an appointment with our XBRL experts.