The Journal of Accountancy published an article, The future is now: XBRL emerges as career niche, pointing out a few things such as:
- The “SERIOUS DEFICIENCY OF XBRL-KNOWLEDGEABLE PEOPLE”
- Merrill, one SEC filing agent, has on staff more CPAs than the vast majority of U.S. accounting firms (Merrill is one of the largest filing agents, but there are many other filing agents
- XBRL is a global phenomenon
- “This is a real global opportunity for students to learn some skills that will be valued around the world.”
Something the article did not mention is that the last group of about 6,000 SEC public companies is moving from having to summary level creation of their SEC XBRL financial reports (most people call this block tagging) to having to provide all the details of the disclosures in the notes (detailed tagging). There will be a lot of work done in June/July as most filers create their 10-Qs and then another big jump in December/January as filers report 10-Ks.
But I disagree that the opportunity about "XBRL". The opportunity is more about digital financial reporting than it is about XBRL. XBRL is simply an enabling technology. There are many, many things that you need to understand in order to satisfy the market need. Sure, XBRL is part of digital financial reporting but the operative word is "part".
This would be my list of necessary skills and how to get those skills:
- Financial reporting/accounting. If you don't have financial reporting and accounting skills then you really can't be of much value in expressing financial information digitally using the XBRL medium. Accountants, particularly certified public accountants and chartered accountants, understand what it takes to be at this level and have this necessary building block. It is way easier to teach accountants the few additional things they need to work with digital financial reports effectively than it is to take a technical person who grasps the XBRL technical syntax and teach them accounting. You can do it and certain types of technical people can provide significant value, but it will always be through working with someone with accounting and financial reporting expertise.
- Modeling-based reporting. XBRL is a means of modeling business information. Accountants today can use the medium of "paper and pencil" or "Microsoft Word" or Excel or HTML to express a financial report. With digital financial reporting using the XBRL medium, you need to convey that same message using a different medium. Just as your paper version (or the electronic version of that paper version in HTML, PDF, Word) needs to be a true and fair representation of your financial information which is complete, correct, consistent, accurate and which "foots and cross casts" and otherwise ticks and ties; so to does your digital financial report. The paper version and the digital version of a financial report must convey the same message. Another term for digital financial reporting is model-based reporting.
- Understanding the big picture. The first thing you need to understand is how to convert your thinking from paper-based also called "document-based" or "presentation-based" reporting into model-based reporting or digital financial reporting. The document Financial Report Semantics and Dynamics Theory does just that. Once you understand the pieces of the model you have to understand how to be sure you are building your model correctly and expressing your financial information correctly using that model. The document Guide to Verification of an SEC XBRL Financial Report can help you with that.
- Get the right software. This is the tricky task today, finding the right software. Today every software application for creating something like an SEC XBRL financial report is an XBRL technical syntax editor. As such, you have to understand the XBRL technical syntax. This will change. First, you need to understand the big picture (see above) so you know what to look for in software. Basically, you need to become an educated buyer. Second, you need to ask good questions of software vendors. That will push software vendors to build the right software, financial report creation software rather than XBRL technical syntax editors. A knowledgeable accountant will know this software when they see it; basically it will let them be successful and they will understand that they are being successful. The Guide to Verification of an SEC XBRL Financial Report has a list of what accountants need from software, see the section "Role of Software". This is a more extensive but less refined list.
- Get involved. Once you get properly trained, get involved. One of my favorite quotes is "The best way to predict the future is to create it." There is a huge need for accountants, financial analysts, and others to understand how to use this new medium, XBRL. There are other pieces to the digital financial reporting puzzle such as RDF/OWL. Few accountants truly understand how to put all the pieces of the puzzle together. Don't become part of the problem by attacking this change half-cocked; get properlytrained and become part of the solution. Some accountants will need to dig into the XBRL technical syntax deeply, but most will not. Digital financial reporting or model-based reporting or however you want to refer to it will be part of the future.
Digital financial reporting is part of a much bigger trend, digital business reporting. Some people call this "linked data" and prefer RDF/OWL as to XBRL, for example the Government Linked Data Working Group. The Data Coalition is pushing the US Federal Government to adopt something like XBRL or maybe linked data. Like the Journal of Accountancy article said, this is a global phenomenon. If you want to understand the bigger picture, take a look at XBRL for Dummies which puts these pieces together for you.
If you invest wisely, your investment will pay good dividends and position you well for our digital future!