October 18, 2010 – U.S. corporations are making mistakes when it comes to tagging their financial reports in the eXtensible Business Reporting Language: 18,895 in the two years the Securities and Exchange Commission’s requirement to use XBRL tags has been in effect.

That 18,895 figure isn’t huge considering the 1.6 million items that had to be tagged, says XBRL US, the U.S. arm of XBRL International. XBRL US has helped the SEC set up the tagging taxonomy and is the organization that counted the errors, in a review.

In fact, XBRL officials say that the errors are far fewer than they had expected.

The 18,895 errors were found in the 3,400 filings made by 1,400 companies from June 15, 2009 through September 29, 2010.

This  may not be the total number. XBRL US says that the software it used to catch the errors didn’t flag mistakes in tagging when companies created their own extensions; that is, their own tags for elements already in XBRL’s taxonomy. That is the dictionary for how to tag data elements in the financial reports.

The largest number of errors: 12,550 for the negative value of an element expected to have a positive value. That scenario occurs when numbers for dividends or other items that are positive are for some reason entered with parentheses around them. The language interprets the parentheses as indicating a negative number, which is accounting practice.

The second most common type of error is not reporting a required value such as earnings per share or assets.

Yet another error identified in more than 1,000 cases: reporting a value for an element that should be zero or show as an empty space in a table.

About five hundred of the U.S. largest companies were required to use XBRL to tag data in their financial statements for the period ending on or before June 15, 2009. About nine hundred more companies had to do as of June 15 of this year. All remaining companies listed on a US stock market will begin filing in June 2011.

According to XBRL US, “the vast majority” of filers in the first year XBRL tagging was required let their financial printers did the tagging after the financial reports were completed – a process called the bolt-on approach.

But about a third of filers in the second year did the tagging themselves using report building software from firms such as Clarity Systems or Trinitech that builds the taxonomy mapping into their reporting process; XBRL US terms that scenario the built-in approach.

The following represents a breakdown of the errors as provided by XBRL US.

  • 12,550: Negative value for an element expected to have a positive value.
  • 2,582: Required value not reported.
  • 1,530: Value reported for an element that should be zero or empty.
  • 611: Element reported that was included in prior taxonomy but has been removed.
  • 398: Value for an element is different from a dimension equivalent reported elsewhere in the filing.

This originally appeared on Securities Technology Monitor.

 

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