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Wednesday, August 13, 2014

XBRL Advice for Non-Accelerated Filers


XBRL, a financial reporting format the Securities and Exchange Commission started enforcing for large companies two years ago, is now due to be implemented for the remainder of public companies. Companies for whom using XBRL is now required can benefit from lessons learned and best practices in order to make their conversion as seamless as possible.

XBRL stands for Extensible Business Reporting Language. It’s a standards-based way to communicate, catalog, and explain business information through mapping. Large accelerated filers, or 500 of the largest domestic and foreign public companies, started XBRL in 2009. Accelerated filers, or mid-sized businesses, started in 2010. Non-accelerated filers will start this year.

Despite a June deadline for non-accelerated filers to start using XBRL, only 17 percent of those filers surveyed by Armanino in December 2010 feel they are on-track and ready.

The most critical factor to a successful XBRL conversion is properly planning the time and money needed to prepare company financial information by the required deadline. XBRL adoption is completed in phases, with each phase more complex than the previous one. In the first year, the amount of data that must be tagged is substantially less than in year two.

The SEC recommends treating the adoption of XBRL as any other major project: set a timeline and engage the right people, including senior management, SEC counsel, software vendors, contractors, service providers and filing agents.
Liz Gantnier, director of quality control for Stegman and Company and an XBRL trainer, said companies should be aware that just because a company is small doesn’t mean its XBRL reporting process from start to finish will be easy.

“A small company can have a very complex general ledger,” added Dave Davis, consulting partner with Armanino’s CFO Advisory Practice. “The amount of time the project takes is not how big your company is, but how unique your financial reporting infrastructure is.”

Davis and Gantnier agree that most companies that have implemented XBRL have had a good handle in year one, but not year two.
Working closely with the third-party printer who files the XBRL tagging electronically with the SEC is critical to having a good transition.

  • To have a manageable XBRL process, Gantnier recommends:
  • Realizing that the June deadline is fast approaching.
  • Determining how your company will tag its data. For example, companies need to decide if the process be done internally or via a third party such as your printer.
  • Allocating adequate internal time and people.
  • Testing the XBRL submission to be sure it works.
  • Checking with your printer on its costs and pipeline.

“Printers need their clients to be in a ‘pencils down’ position four to seven days earlier than the actual filing date,” Gantnier said. “This can wreak havoc with your own process if you must be “done” a week early.”

Additionally, the company should inquire how a change found after a “pencils down” deadline, but before the actual filing will be handled.

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