Over the past weeks and months even, there has been a growing pool of myths about XBRL. Some of these are, frankly, uninformed while others provide justification for the high prices that some vendors are charging. Here we present some of the fallacies that we are hearing that are being passed off as hard fact.
1. 30,000 - 40,000 or more elements in the taxonomy
More and more websites are cropping up with warnings that with 30,000 or 40,000 elements in the 2011 US-GAAP taxonomy, XBRL is a really complex problem that will require experts to help solve - even if it’s just to wade through all those elements.
Fact: the FASB says that there are around 15,000 elements, and that the 2011 release has not resulted in any meaningful increase in the total number of elements. Now, we're not suggesting that 15,000 elements is not a lot, from first hand discussions with the FASB, we have been told that the 30,000 - 40,000 number is just plain wrong.
Fact: there have been a huge number, easily over 100,000, Extensions. but extensions are not a core part of the taxonomy, and may be contributing to the confusion.
2. 80 hours or more of client-side (filer) time
First-wave filers (the top 500 companies) did take an average of over 120 hours to create their first block-tagged XBRL (57% of respondents to an AICPA/XBRL US Inc survey of first time, top 500 filers). Additionally, as recently as December 2010, one of the major filing agents told an audience that they should expect their block tagging to require 125 person hours, *plus* internal filer time and expertise.
Fact: We think this is madness because we have been producing quality XBRL that requires an order of magnitude less total time, on our side and on the client-side. Opinion: any process that requires that much time (80+ hours for block tagging of Wave-3 filers) is simply inefficient or uses inefficient software.
Yes, XBRL is a complex standard but then so is PDF. If there is one common comment we keep hearing it is, "How can this be so complex, our financial statements are not that different from our peers or even from most other companies. We do nothing exotic, so why is this so difficult?"
It does not need to be, and again this is Opinion, but anyone who tells you how complex this is, is simply ensuring that you are too scared to either do it yourself (with the right software) or engage someone to make the problem go away at a fair price. Consider your options. We've heard the president of one software provider say that they will not be satisfied until XBRL (with their tool) is "as easy as Word", and from what we've seen, they are well on their way to accomplishing that goal.
There are plenty of vendors charging from $15,000 to over $30,000, and some that are charging as low as $995 for software. These are not myths. The myth is that to get it done right by someone else you either need to pay that those exorbitant amounts, or that if you buy the $995 software you will not need to spend a huge amount of time becoming an XBRL expert.
5. It can be really really cheap
Well, that's not really a myth either - it can be really really cheap. Remember though, you only get one grace period, and if your service provider is not resourced for the peak time, then you will use that first grace period, and be stuck worrying about your provider’s ability to actually get it done on time next time, when you have no grace period.
6. FPIs are getting a deferral
As yet, Foreign Private Issuers have NOT been given a deferral. The SEC has said that they cannot file in XBRL until there is an approved taxonomy, and the IFRS taxonomy has not yet been approved by the SEC. That is very different from a deferral. Of course there might be a deferral, but that is not what the SEC has said.
Opinion: We fully expect the IFRS Foundation to release an updated taxonomy (they have already announced that they will), and for that taxonomy to be approved by the SEC which means that FPIs will indeed have to file XBRL versions of their financial statements.