XBRL Costs

A very interesting survey that I found today was the SEC survey related to XBRL. What intrigued me was the cost structure of the XBRL filing. The survey states that the first time filers with block text footnotes and schedules on an average require 125 hours, assuming a $250/hr charge the cost is $31K + footnotes and website posting and software the amount is around $40K. This is the lower bound. To mainitain that the SEC states will be less time comsuming, the survey puts the number of hours for future face of the financials filing to be 17, a reduction of 85%.

Once the first hurdle is taken care of, then comes the more detailed footnote filing and that would be another 70 hours leading to $18K. So in total the companies are looking at a total cost of $75-80K considering their footnotes and financials are comparitively straightforward.

Hopefully the costs associated with the charges of XBRL will be overshadowed by the benefits the process will lead to.

http://www.sec.gov/rules/final/2009/33-9002fr.pdf

XBRL- The final filing dates

On February 10, 2009, SEC issued the final rule mandating that the 500 largest public companies start to file their financial results using XBRL. The effective date of the new rule is April 13, 2009, which means that most of the largest public issuers are required to file their quarterly results using XBRL for fiscal period ending on or after June 15. By 2010, all accelerated filers must comply with the new rule and by 2011 all public companies will have to file using XBRL.

How XBRL works?

Under XBRL every financial data has its identifying tag, which is computer readable. SO instead of having data as text, it is stored as a tag. Computer can read it, store it, analyze it, and present it in different forms. It will make not just intra company analysis easy, but facilitate inter company analysis. This is how: if the tag for Net Income is same for all companies, as is the case in XBRL, then the computer can generate a report analyzing the Net Income tag for one company against its competitors, other companies in different industries, suppliers, buyers, etc…It can compare data of not just national players but also international players.

The tags provide a range of information about the item, such as whether it is a monetary item, percentage or fraction. XBRL allows labels in any language to be applied to items, as well as accounting references or other subsidiary information.

XBRL can show how items are related to one another. It can thus represent how they are calculated. It can also identify whether they fall into particular groupings for organizational or presentational purposes. XBRL is easily extensible, so companies and other organizations can adapt it to meet a variety of special requirements.