Many companies are getting a jump on preparing for adoption of interactive data-tagging technology on their financial statements, even before they are subject to SEC requirements.

Last year, the SEC began requiring 500 of the largest public companies to begin filing their financial statements using Extensible Business Reporting Language, or XBRL, technology, which promises to make financial statements easier to compare by investors and analysts across companies and industries. The requirements have a three-year phase-in period and will gradually expand to smaller public companies.

Companies with market capitalization above $5 billion began filing in XBRL in 2009, but this year they must submit financial statements with more detailed tagging of footnotes. Those with market capitalization above $700 million must make their initial submission in XBRL without detailed tagging of footnotes.

According to a survey by XBRL US, the standard-setter for the technology here in the U.S., and the American Institute of CPAs, 73 percent of the 200 representatives of public companies polled in an online survey in November said they have begun preparations for adoption of XBRL. Ninety-three percent of those surveyed said they had at least a basic knowledge of XBRL.

Many organizations are looking to outside vendors to create and submit their XBRL-formatted financial statements. Fifty-five percent of those who have already submitted XBRL-tagged data have used consultants or outside vendors to create and submit their financials, while 56 percent of those who have yet to submit plan to outsource the job to a service provider.

“It’s clear from this survey that external reporting managers recognize the importance of the XBRL creation process and are taking early steps to get educated,” said XBRL US chief standards officer Campbell Pryde in a statement. “The same care and attention to detail that go into the preparation of any report going to investors and regulators must be applied on the XBRL documents.”

New processes are likely to bring implementation challenges. When asked about their biggest concerns, new filers responded that insufficient resources and a need to get educated was on their minds, while those that have already submitted XBRL filings are more concerned with detailed footnote tagging and obtaining information on how to increase the efficiencies in the preparation and submission process.

Preparation time for creating XBRL-formatted financial statement decreases dramatically after the first filing, according to respondents who have prepared multiple XBRL financials. Fifty-seven percent of the respondents said it took over 120 hours to complete their first submission, while 64 percent of those who filed a second time around said it took less than 40 hours. Forty-five percent of those who filed a second time said it was significantly easier the second time.

The AICPA plans to host a webcast on Jan. 27 on submitting financial statements in XBRL. Jeffrey Naumann, assistant director of the SEC’s Office of Interactive Disclosure, and Susan Yount, who joined the SEC in 2009, will offer guidance to large and midsized public companies that must submit filings with data tags by June 15. 

The Jan. 27 webcast, “XBRL – Preparing for Phase II and Detailed Tagging,” is scheduled to run from 2 to 3:30 p.m. EST and is free of charge. CPAs who attend may receive continuing professional education credit. To register, visit www.cpa2biz.com and click on “Web Events” on the left-hand menu.