Philadelphia, the city in which our Founding Fathers created the words to govern our country, this month housed the fathers of another language -- one they hope businesses in every nation will adopt to turn financial reporting from a tower of babble into a world of ubiquitous fluency. Backers of the Extensible Business Reporting Language expressed excitement over their progress in enticing companies to conduct internal reporting and regulatory filings in this format. Roughly 500 people from 27 countries attended the 14th international conference, which indicates increased interest from last fall’s showing of 300, but not necessarily increased understanding. At least conference organizers foresaw the dilemma and astutely prepared novices, even promising “compelling” demos free of technical jargon to prove that XBRL applications can make life easier for accountants, auditors, and investors looking to do everything from internal budgeting on Excel spreadsheets to quantitative analysis for investment management.
A Newcomers Welcome served as a 101 introductory course to technical terms they would hear throughout the three-day event -- like “taxonomy” and “instance document.” But even the newbies could tell the authorities have a long way to go before filing financial reports in this language becomes mandatory in the United States, especially with only about 76 organizations agreeing to do so voluntarily since the concept emerged in 1998 (30 more than in August 2005). Some countries now mandate it, but America has been slower to conform. Securities and Exchange Commission Chairman Christopher Cox, one of the most vociferous supporters of XBRL, blamed this on essential problems. “Far too many people still think XBRL may be a new car model or some newly discovered medical condition,” he said during his keynote address. "Enthusiasm needs to spread beyond the larger accounting firms who are already getting the message to smaller firms and anyone that can help.” Cox isn’t the only one sending out an SOS. The XBRL International home page is filled with Calls for Participation in various workgroups nearly every week, and adoption levels of XBRL applications remain low even as the number of competing products grows. During lunch, one vendor boasted about how his product will help government entities compile data from disparate systems into one comprehensive format for more accurate and timely reporting. When asked how many customers he had, his lips curled up and his eyes circled the room like a child caught with his hands in the cookie jar. “Not many,” he responded sheepishly. If Cox and others want public support, they must educate financial organizations so they can spread the word further, instead of forcing conformity through regulatory mandates. The goal should not be to make companies comply, but to make them want to comply. In November, 90 percent of the Chartered Financial Analyst Institute’s 90,000 investment professionals who knew what XBRL is said they stood behind the concept and wanted to support its development, according to the institute’s president. Yet more than half of them didn’t know what it is. In between jokes, Department of Labor chief financial officer Sam Mok admitted that he couldn’t define XBRL when he was first asked to speak on the topic and still has difficulty explaining it to others. His advice makes sense: Maybe it’s time to change the name to something people can understand and recognize in all languages.
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