Gap Between SEC Specified and True Requirement Causes Confusion
Saturday, January 14, 2012 at 08:14AM
Charlie in Creating Investor Friendly SEC XBRL Filings

The evidence is very strong that there is a gap between the SEC specified requirement for SEC XBRL financial filings and the true requirement which is necessary for such filings; and this gap is causing confusion.

Further, I have not found one software vendor or one accountant/CPA who can or will state that they are able to meet the true requirement for what an SEC XBRL financial filing needs to be.  Every CPA that I talked to about this agrees that there is a gap.

The graphic below explains. (you can see the a larger version of the graphic here).

 

Here are the highlights:

On the one hand, the red line is what the SEC requires today.  Do you shoot for that level because it sure is easier and the cost of doing so will be less.  On the other hand, if you shoot for the true requirement, your costs will be higher than those shooting for the lower bar.  Besides, there is no software which makes it easy to know if you are meeting the true requirement.

Eventually this condition, the gap between SEC requirment and true requirement, will be rectified and software will exist and then the world will see the true quality of work.

The worse thing about all this is that because there is no software which can help a business user hit that true requirement, XBRL is rather useless to solve any real business problem for business users.  The good news is that the true requirement is knowable and when software does meet this requirement, XBRL will offer a lot to business users trying to make their information actionable.

Article originally appeared on Intelligent XBRL-based structured digital financial reporting using US GAAP and IFRS (http://xbrl.squarespace.com/).
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