A recent survey conducted by Columbia Business School professors found, among other things, that in order to move the adoption of XBRL forward, development should be overseen by technologists and not accountants and regulators.
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Co-authored by Columbia Business School’s Trevor Harris, Arthur J. Samberg Professor of Professional Practice and Suzanne Morsfield, Research Scholar in the Faculty of Business, the survey, interview questions, and conclusions were organized around the original vision for interactive data.
Harris and Morsfield had many reservations about whether XBRL will succeed as that format due to questions about the reliability of the data, the simplicity and stability of the underlying taxonomy, and the lack of user tools that add value and are easily integrated into an investor’s or analyst’s existing work flows.
The researchers believe there are several conditions for XBRL to be widely used:
- XBRL technology development needs to be taken over and run by technologists, rather than accountants and regulators. One alternate and challenging approach to enhancing the underlying technology would be to partner with the major business information system vendors, key Web-based financial information suppliers like Google and Yahoo and possibly even major data aggregators to not only “ensure the necessary mapping to regulatory use of XBRL is as seamless as possible, but, more importantly, to get them to help improve the XBRL technology overall.”
- The entire XBRL community must reduce significantly the error rate and unnecessary “extensions” (company-specific data identifiers known as “tags”); some approaches that might achieve this are: providing greater regulatory oversight, potentially mandating an audit of the data, or requiring filers to resolve the error and quality checks communicated to them by XBRL US.
- Filers should spend the effort they are investing in attempting to destroy the SEC’s XBRL regulation instead to improving the quality of their own data, as well as to making their own data more useful and accessible to users.
“We believe that XBRL-tagged SEC filings data, as they stand today, are at risk of becoming obsolete for use by investors and analysts; we base this on extensive discussions with representatives from all key stakeholder groups of XBRL--including regulators, preparers, regulatory filings service providers, technologists, and most importantly, the analysts and investors themselves,” said Harris in regards to the paper’s findings. “Most analysts and investors we spoke with wanted to use these data, but when they tried, they found unreliable, inaccurate data for their purposes, and no value-added, easy-to-integrate consumption tools. We believe XBRL is at a critical developmental stage, requiring serious changes, including: all stakeholders working together to find effective ways to reduce data errors and unnecessary data tags; filers making their own data accurate, interactive, and accessible in another format if not XBRL; and technologists, rather than mainly accountants, taking charge of the underlying technology to ensure that it is state of the art and easy to use for both input and output.”
Harris and Morsfield also claimed they still have some hope that XBRL data can become useful to investors and analysts. However, they also view XBRL as at a critical stage in its development and that without a serious reconsideration of the technology, coupled with a focus on facile usability of the data, and value-add consumption tools, it will at best remain of marginal benefit to investors and analysts.
Columbia Business School’s Center for Excellence in Accounting and Security Analysis undertook a review of the state of XBRL and interactive data with a focus on their utility for security analysis. This project involved interviews of representatives of the various stakeholders (i.e., preparers, regulators, analysts and investors, XBRL developers, data aggregators, and XBRL filing and consumption tool vendors), and an in-depth discussion with and survey of investors and analysts.