A few posts back I talked about the possibility (probability) of the SEC putting a little beef in their comment letters related to quality issues in XBRL submissions (and thus making Clara Peller proud!). My take was that it was only a matter of time before the SEC moved into commenting on the quality (or lack thereof) found in XBRL submissions. Well, that time has come. Sort of.
On July 12, 2013, Standard Drilling (now EFactor Group) received a fairly lengthy comment letter from the SEC involving both non-XBRL and XBRL items. Item 15 of 17 quickly grabbed my attention as it involved the SEC calling out incorrect Document and Entity (DEI) information found in the XBRL data. In addition, the SEC requested Standard Drilling revise their XBRL submission to correct these DEI issues accordingly.
In reviewing the Standard Drilling XBRL submission, it’s pretty clear why the SEC couldn’t let this one go without comment as there’s definitely “low hanging fruit” issues. Of the 13 DEI items reported in XBRL by Standard Drilling, only 5 of them are correct. Incorrect DEI items include the reporting period (kind of important), fiscal year and public float to name a few. Good news, right? The SEC commenting on data quality? Absolutely. Unfortunately, one small issue: As of this blog post, Standard Drilling has yet to amend their original XBRL submission to address the incorrect DEI information as per the SEC’s request on the comment letter. In fact, in the comment letter thread available on EDGAR, it appears the XBRL dialogue stopped after the initial SEC comment.
Blake’s Take: The all-important first step into the land of commenting on XBRL data quality has happened. As basic as this initial DEI checking may be, it’s a critical component to ensuring SEC registrants know the SEC is (or at least will be) taking XBRL submission quality seriously. Unfortunately, if CorpFin doesn’t follow through and continues on what appears to be an “Okay, no worries, fix it next time” path, the overall impact is watered down.
SEC registrants take note: Make sure your DEI is and stays correct, as clearly the SEC is paying attention to it. As an interesting aside, I would have to assume we’ll see the SEC highlight this initial data quality effort as part of their response to the mandate and XBRL noise coming from Rep. Issa’s and Rep. Hurt’s respective camps.