You’ve got to just love the irony: the SEC’s amendments mandating the use of Inline XBRL aren’t even effective yet, and experts at an accounting conference have declared XBRL “nearly useless as an investment tool,” and “all but unnecessary.”
As reported in this article from Bloomberg BNA, speakers at the American Accounting Association conference held this week, including a FASB member and accounting technology experts, appear to have been downright hostile to XBRL (eXtensible Business Reporting Language). The FASB member was reported to have told the audience that, because some companies “don’t finalize their XBRL tagging until nearly 60 days after they have filed their financial statements,” the information arrives “too late for investors to use to for making decisions. So much other valuable analytical information has already become available, he said.” Instead, he commented, more often, “analysts and investors are relying on earnings releases to make their decisions.” Moreover, the development by companies of their own unique XBRL tags “has undermined a major purpose of XBRL—the ability to compare financial performance of companies involved in similar enterprises.” He observed that “as many as five different tags can be created for the same piece of information. XBRL’s lack of standardization makes comparing the same type of performance information impossible…” As a result, he reportedly concluded, XBRL has been rendered “nearly useless as an investment tool.” For XBRL “to succeed in expanding data that provides an accurate picture of how a company actually performs,” he said, “standardized methods to apply it to financial reporting must be devised.”
What’s more, tech experts speaking at the same conference said that emerging technologies, such as “Blockchain and the ability to store, organize, and retrieve financial data from cloud computing sites” currently “threaten to supersede XBRL” and are making XBRL “all but unnecessary.”
In the Inline XBRL adopting release, the SEC indicates that, because data tags will be embedded, “Inline XBRL filers will have less of an incentive to create custom XBRL tags solely to mimic the appearance of an HTML filing,” and, as a result, “Inline XBRL could increase the ability of investors, other market participants, and other data users to compare information across filers for those filers that currently engage in such tagging practice.” Whether this and other benefits associated with Inline XBRL will be enough to make the technology more palatable to these critics remains to be seen.
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