A friend was telling me about a co-op meeting in his building, quite an old building. The roof needs cleaning. After much to'ing and fro'ing, the building managers came back with four proposals. The first two were to clean to roof. The other two were to put four new windows in the roof that will facilitate future access, for future cleaning and repairs to the roof, oh, and to clean the roof. There's no indication that repairs are needed now, but just in case, here's a proposal to make it easier when they do repair the roof.
It seemed really sensible, until they thought about it, and realised that the requirement was to clean the roof. Certainly future repairs will be required. In fact, as an old building, there is a constant stream of repairs required, the trick being to phase and plan the repairs, not to react to each requirement by trying to solve a different problem.
Now I know the analogy has problems, but it got me thinking about the SEC's XBRL reporting mandate.
In effect the SEC has added a requirement that reporting companies provide a "cleaner" version of their 10K/10Q filings. After all, isn't that one of the core benefits of XBRL, cleaner data, fewer errors, greater confidence that what is tagged equates to a common taxonomy element clearly defined and understood by all.
And now we get to the co-ops options: provide cleaner data in the XBRL format, or replace their existing consolidation and financial reporting software with a new system and environment that will also enable them to provide XBRL to the SEC. Certainly that old building of consolidation reporting probably needs a number of repairs, and I'm willing to bet it is out of date, inefficient, etc etc. Is the new reporting requirement an adequate level of problem to provide the justification and ROI for replacing the roof?
In some cases, absolutely.
In others, maybe a second, or even third (not to mention a first) careful look at the business case would be a good idea.
At the building, they've asked the building manager to come back with a multi-year strategic plan for maintenance and eventual roof repair. They've also accepted one of the two bids just to clean the roof. Seems a sensible approach to me.