We have previously reported how the U.S. Securities and Exchange Commission (SEC) recently released the final version of its four-year Strategic Plan (the “Plan”).
While it is encouraging to see the SEC place increased importance on areas such as data analytics in its Plan, we have been left wondering whether the SEC could have written more about XBRL and the benefits of introducing widespread use of the data standard.
As a member of XBRL International, DataTracks is committed to improving the accountability, consistency, and transparency of business reporting, particularly through the use of open data exchange standards.
As a result, DataTracks supports the comments made by XBRL US upon the initial release of the SEC’s draft Strategic Plan. In its response to the (at the time) draft Plan, XBRL US made a number of recommendations to the SEC, including the use of consistent standards across the SEC “to keep the cost of producing and consuming […] data low, and improve the ability to perform analysis.”
XBRL US specifically mentioned the advantages of using XBRL as part of its response, as it is “uniquely designed to handle the complexities of financial data.”
As the SEC did not amend its draft Plan in any significant way when the final version was released, it remains to be seen whether the recommendations made by XBRL US will be heeded by the SEC as its Plan is implemented.
XBRL offers numerous benefits, not only when it comes to financial reporting, but also when it comes to the processing of non-financial data.
What’s more, having a consistent data standard in place would further help organizations, investors, and analysts when it comes to comparing and reviewing financial data between organizations. Given the move towards more open and transparent reporting at a federal and government level with the emergence of the OPEN Government Data Act and the GREAT Act, it would seem sensible for such strides to also be made when it comes to private sector reporting.
When you also take into account the fact that XBRL compliance costs appear to be falling, meaning less of a financial burden on its users, it’s a wonder that the SEC has not done more to promote this data standard, particularly in respect of reporting requirements for investment companies and crowdfunded entities.
Hopefully, over the course of the next four years, the SEC will see the benefits that XBRL can bring, not only to the realm of regulatory reporting and compliance, but also in respect of data analytics, and will update its policies accordingly.
DataTracks is a member of XBRL International and has extensive experience helping clients with their regulatory reporting and compliance obligations with the SEC, as well as with other regulatory bodies in the UK and India.