XBRL Mandate to End at SEC?

If one were to believe all the recent headlines, it sure seems like this could be in play:  CFOs grow weary of XBRL.  Controllers find XBRL worthless and costly. Schapiro to step down as SEC Chair.  High Priests of XBRL told to stop touting XBRL as the end all/be all (See LinkedIn Group “XBRL Matters” discussion).  Quite the onslaught of interesting news around XBRL.  After an extended period of quiet around the mandate, it looks like the proverbial pot is getting stirred a bit, and quite frankly I think that is good.  Let me explain.

While the recent headlines would make one think there’s some new angst around XBRL, there’s nothing new about it.  Companies were never excited about this mandate from the start due to the extra work, extra cost, and extra pressure this (continues to) put on their financial disclosure process. I’ll give the naysayers the point that over the past 4 years, XBRL was touted to be the Oxiclean® of reporting more than it needed to be.  Internal reporting…external reporting…regulatory reporting…you name it, use a little XBRL and BAM!…no more reporting stains!

I think the intention was good. But for those medium and smaller-size companies with fairly simple internal and external reporting requirements, all this did was cement the distaste.  To get beyond this, let’s form an XBRL hug circle and repeat after me:  XBRL is for the SEC.  XBRL is for the SEC.  There, we said it.  Let’s forget the niceties about the “other benefits” that XBRL could provide down the road, whether it’s for internal reporting (global companies, companies with disparate accounting systems) or the analyst community (consuming data faster and more precisely).  It simply doesn’t matter.  The Mandate is first and foremost about the SEC.

Now that we have that out of our system, how’s this recent news uproar good?  With registrants getting more vocal about XBRL, the SEC will be more likely to address the XBRL discontent in the rank and file in some fashion.  Be it by proposed incoming Chairperson Elisse Walter or updates to the Mandate itself, the past year’s “Cone of Silence” from the SEC has to come to end.  I get that the Cone of Silence to some means there’s an implied chance that the Mandate will be taken off the table.  This, added to a new incoming Chair, is sure to increase the noise around an XBRL free table.  The question is… is that realistic?  Is there a chance the SEC would actually repeal the Mandate?

Blake’s Take:  While being the first to admit anything’s possible, let’s be real:  XBRL at the SEC isn’t going anywhere but forward.  In fact, I think it will be strengthened (iXBRL, your table is ready) in the not-so-distant future. There are a number of reasons for this, but two that come to mind are XBRL’s role as a global regulatory enabler and, most importantly, it’s an enabler for the SEC.  Companies should not let recent grumblings take the focus away from treating their XBRL submissions very seriously, especially since XBRL-based Comment Letters are starting to flow more freely.  What the XBRL Mandate is missing that would help quiet the noise is what I like to call the “Freon effect“, and I know just the way to make this happen.  More to come.

Rob Blake

Product Director, Cadency Complete