Are US companies ready for XBRL? Are they even thinking about it? Compliance Week polled its readers on the subject a few weeks ago.
The results were less than encouraging:
• Of the 236 respondents, 104 respondents (44 percent) said they had just begun researching XBRL and their companies had done no previous testing. Another 26 respondents (11 percent) said they had no knowledge of XBRL at all.
• 79 percent said their companies had no XBRL expert on staff at all. 19 percent had an expert on the financial reporting team, and 2 percent had an expert in the IT department. • Sixteen respondents (7 percent) participate in the SEC’s voluntary filer program. Another 6 percent say they’ve done some small pilot tests, and 2 percent say they’ve been testing their own systems comprehensively.
• Another 30 percent of respondents say their companies haven’t yet tested XBRL, but say they’ve been following the topic closely.
Surprisingly, even though large companies will start adopting XBRL probably in a matter of months — they are just as unprepared for the change as small companies. Of the 47 respondents with 20,000 or more employees, 34 percent had either just started researching XBRL or done no homework at all. Thirty-eight percent of companies with $5 billion or more in annual revenue were similarly unprepared.
The survey mirrors the sentiment at Compliance Week’s annual conference around the same time. Prior to his talk at the event, SEC Office of Interactive Disclosure Director David Blaszkowsky asked the audience of financial reporting and corporate compliance officers if they had begun tinkering with interactive data. Out of hundreds in the room, only one hand went up, and it belonged to the speaker who was there to give a talk on his own XBRL experiences.
Is this just the usual tendency among most corporations to ignore any new rule until the last minute, and then rush to comply as quickly as possible - ? Or is something different happening?
When Sarbanes-Oxley was enacted four year ago, we saw a somewhat similar phenomena of US companies sticking their heads in the sand, if you will. Realistically, XBRL genuinely isn’t as hard to implement as SOX and its dreaded Section 404 provision. Feedback from the 25 or so companies participating in the SEC’s pilot XBRL program that our publication has been monitoring indicate that XBRL tagging was perhaps a bit confusing for a quarter, but then quickly proved to fulfill its promise of simplifying financial reporting.
Such news provides hope for the rest of US companies, in following their counterparts in the rest of the world toward XBRL adoption.
