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Thursday, November 15, 2012

Controllers from Top Firms say XBRL Costly and Useless

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    The eXtensible Business Reporting Language (XBRL) process, rather than providing an added value, has caused a lot more cost than it is worth and has been of little use to companies, a panel of controllers from some of the nation’s top companies said Nov. 13. 
    The roundtable discussion was a part of the Financial Executive International’s 2012 Financial Reporting Issues Conference in New York, and was focused on issues controllers are addressing in the current environment. 
    Asked if they thought that the XBRL process added value, the Controllers--General Motor’s Nick Cyprus, Johnson & Johnson’s Stephen Cosgrove, Best Buy Co.’s Susan Grafton, and McCormick & Co.’s Kenneth Kelly,--all answered an emphatic: no! no! no! 
    “I think it’s causing a lot more costs that it’s worth,” said Cyprus. The majority of 10QAs are coming in with data that are caused by XBRL, he said. “Either because they couldn’t get it in on time, or they had failed errors in process and had to go in with the 10QA to comply,” said Cyprus.
Viewed as a Regulatory Platform. 
    Cyprus said that companies view XBRL as a regulatory platform that they need to comply with but it is not a tool that they find useful and analysts do not use it. “This isn’t something I’ve heard my analysts saying is useful and at some point I think we’re going to have to decide on one reporting platform versus two different ones today,” he said. 
    Johnson & Johnson’s Cosgrove stated that the regulators may have thought that most companies would eventually use the data for internal tagging. “But we see absolutely no use for it and it is just redundant to what we already have,” he said.
The controllers stated that companies still comply with it and try to be as efficient as possible, but some have more robust systems that they also use. 
    “We also don’t see a lot of use for it,” said Kelly. “I think at some point [the SEC] felt that these things would be tagged by companies, but companies have more robust systems than that already existing, that have 100 times more data and information sitting among them than anything you’re going to tag for XBRL,” he said. 
    Kelly furthermore stated that “[XBRL] was a nice theory thing, but from the start I didn’t see much use within the corporation.”
SEC’s Acting Accounting Chief Responds.
    During a separate panel discussion at the same conference, SEC’s Acting chief Accountant Paul Beswick--in response to questions alluding to the controller’s comments--said that XBRL and the usefulness to investors is something the group responsible for knowing economic analysis at the SEC is continuing to think about. 
    Beswick said data aggregators at the SEC are using it and are finding it helpful. “But we certainly understand people’s frustrations with it,” he said.
He said that there have been helpful dialogues among groups “on how we can still get the benefit of tagged data to kind of right size the level of effort.”
“The [SEC group] is continuing to think about this but we certainly understand there is frustration,” Beswick said.
By dlugo@bna.com (Denise Lugo)

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