Two Frank XBRL Questions, Two Candid Answers

October 28, 2009

by Michael Becker, Vice President, Global Disclosure and Financial Reporting Services, Business Wire

Quite often I speak at industry events on XBRL. At these events I take off my Business Wire hat and speak in general terms about the XBRL community. And while I enjoy nothing more than speaking to folks about XBRL, I have not had an opportunity to let you know how I personally feel, until now. This month we will answer two questions: How should you file (do-it-yourself vs. outsource); and if you opt to outsource XBRL, how do you select a partner?

However, before we can use words like “in-house,” “outsource,” “dimension” or “hypercube,” your organization must first lay the groundwork for XBRL. The primary task is to select a cross-departmental team of individuals who possess the requisite knowledge of your financial statements and footnotes (e.g., investor relations and financial reporting). This XBRL team will be tasked with knowing the SEC’s Interactive Data rule [PDF], the EDGAR Filer Manual (Volume II, Chapter Six), all relative U.S. GAAP Taxonomies and of course, the XBRL rules themselves. It will also be this team’s responsibility to set the XBRL timeline and recommend an approach (do-it-yourself vs. outsource) for your organization.

Question One: Should we tag XBRL in-house with a piece of software or outsource XBRL to a vendor? Do-it-yourself tagging is a long, long (long) way from perfect. This is because the software on the market today is not mature. While many of the XBRL software packages possess a nice graphical user interface (GUI), a solid GUI does not equate to high-quality XBRL. As a matter of fact, the XBRL filings that possessed the highest number of errors in Q2 originated from issuers who attempted to tackle XBRL on their own.

The problem with the in-house approach to XBRL is twofold. As stated earlier, the XBRL software community is maturing and, in my opinion, still has a way to go. Secondly, while XBRL is a computer language that should be easily handled by a computer program, today high-quality XBRL requires a human mind to make determinations on best practice use of taxonomies (e.g., to extend or not to extend a line item) and the EDGAR Filer Manual and XBRL rules. It is no wonder that several software vendors have changed their model to consulting.

Therefore, my recommendation is to not attempt XBRL on your own at this time. And, if you do opt to purchase a piece of software and tag your XBRL filing, work with a partner like Business Wire to QA the tags and assure that the XBRL exhibits validate properly prior to SEC submission.

Question Two: We’ve opted to outsource XBRL to a vendor. What questions should we ask when selecting a partner? Selecting an XBRL partner is important; this is one project where I dare say you get what you pay for.

First, ask where and how the XBRL services are being performed. This includes initial mapping and tagging, creation of the XBRL exhibits; and for those issuers who outsource EDGAR, ask if the XBRL team is in the same location as the EDGAR operation. We are aware that in order to scale, many vendors are outsourcing work to myriad locations in myriad manners. I disagree with this approach wholeheartedly.

An issuer must maintain control when outsourcing. Outsourcing to a vendor who outsources stymies the process and adds unnecessary variables, variables that are not welcome when working with material, non-public information.

Furthermore, the corporate XBRL team must be engaged because nobody knows the nuances of its financials better. Therefore, when selecting a vendor you will want:

  • First, the ability to speak with your taxonomist, who knows both U.S. GAAP accounting and XBRL , when you want;
  • And second, the ability to update your EDGAR filing and associated XBRL exhibits seamlessly, down to the last minute.

In essence, you must find a vendor that becomes an extension of your financial reporting team.

Nobody wants to make last-minute Author’s Alterations to an EDGAR filing, but it happens, and if it does, make sure your vendor can handle the XBRL and EDGAR changes in real-time. At Business Wire we have our EDGAR and XBRL teams located in one secure office to ensure updates are made in real-time and there are no version control issues.

You must also ask prospective vendors about the knowledge level of their XBRL staff. Be sure to speak with the individuals who will make tagging decisions on your financial statements. Confirm that these taxonomists are knowledgeable and that you will be able to work with them in a collaborative manner, at your pace. For example, at Business Wire we only hire CPA-level staff on our XBRL team.

Lastly, here are several additional questions to ask prospective vendors: At what level do you validate (e.g., XML, XBRL, EDGAR Filer Manual)? How much does the entire process cost (e.g., beware of hidden fees)? What sort of XBRL experience do you have and is the vendor financially stable?

In conclusion, one could easily argue that I am biased on this particular subject. The frank answer is that I am. From my seat, I can see the issuers who have attempted XBRL on their own and the errors they have made, I can see the vendors who outsource XBRL to foreign partners, I can see the vendors that have turned XBRL into an assembly line, I see the challenges of detailed footnote tagging ahead and then look at the brilliant XBRL minds who sit alongside me at Business Wire and think: Who in their right mind would not want to outsource XBRL to a partner like Business Wire?


XBRL Update: September 2009

September 24, 2009

The biggest lesson learned from the first wave of XBRL filings is the importance of proper validation. Depending on the validation tool used, results show that virtually every filing has at least one EDGAR Filer Manual error. Furthermore, 44% of all filings have two errors or more and the average number of errors per filing is 12.  Given the changes coming forth from the SEC and XBRL US, filers will need to quickly adopt procedures to better meet the upcoming challenges.

Here are several items you should be aware of:

SEC’s EDGAR system update with upcoming EDGAR Release 9.17:
On September 28, 2009, the SEC will update the EDGAR system to enhance its Interactive Data (XBRL) file validation capabilities. The updated EDGAR system will validate an increased number of technical requirements found in the EDGAR Filer Manual.

The first set of mandated XBRL filers were allowed to submit their XBRL filings without meeting all of the EDGAR Filer Manual requirements. It is important to note the enhanced EDGAR system may now strip out XBRL files that do not comply with the requirements of the EDGAR Filer Manual. Accordingly, the SEC highly encourages filers to have their XBRL filings tested in advance of the required submission dates.

FASB Codification & XBRL US GAAP Taxonomy:
On July 1, 2009, the Financial Accounting Standards Board (“FASB”) launched the FASB Accounting Standards Codification as the single source of authoritative non-governmental US GAAP, replacing existing authoritative accounting pronouncements including those issued by FASB, EITF, AICPA and other organizations. The Codification is effective for quarterly and annual reports ending after September 15, 2009. The Codification does not change GAAP, rather it introduces a new structure, which is organized into an easily accessible online research system and can be accessed at http://asc.fasb.org. To ensure the US GAAP taxonomy is up-to-date with the latest accounting references, on August 4, 2009, FASB and XBRL US revised the XBRL US GAAP Taxonomy to include links to the FASB’s Accounting Standards Codification for XBRL elements.

SEC XBRL FAQs:
Staff Interpretations and FAQs Related to Interactive Data Disclosure:
http://www.sec.gov/spotlight/xbrl/staff-interps.shtml

Compliance and Disclosure Interpretations on Interactive Data:
http://www.sec.gov/divisions/corpfin/guidance/interactivedatainterp.htm

For further information regarding XBRL, please listen to our Webinar or contact Business Wire’s Vice President of Global Disclosure and Financial Reporting Services, Michael Becker.


Expert XBRL Panel to Discuss Guidance for Successful Filings at Business Wire Webinar

September 16, 2009

More than 400 companies have now filed their first XBRL exhibits with the SEC, and there are important lessons to be learned from this first wave of filings.

Business Wire has assembled an expert panel to discuss these lessons and other tips for successfully transitioning your company to XBRL.  This hourlong webinar, “XBRL Update: Guidance for Successful Filings,” will be held on Thursday, Sept. 24 at 1pm ET.

The panel will be moderated by Michael Becker, Business Wire Vice President, Global Disclosure and Financial Reporting Services, and includes:

Don’t miss this opportunity for valuable insight on the XBRL creation process, best practices, recommendations and next steps for current and first time filers.  Register for “XBRL Update: Guidance for Successful Filings” today.

For more information on XBRL, visit XBRL U.S. For more on Business Wire’s XBRL products and services, visit the XBRL section on BusinessWire.com.

Business Wire VP Michael Becker on IROs and XBRL

July 15, 2009

Michael Becker, Business Wire’s Vice President, Global Disclosure and Financial Reporting Services, recently contributed an article called “IROs Need a Seat at the XBRL Table: Simple Steps You Can Take to Be Prepared Now” to Bulldog Reporter’s IR Alert.  The piece takes a look at the potential relationship between investor relations officers and their companies’ XBRL implementation, urging IROs to go beyond simply complying with web posting requirements and get involved from the ground up.

  • Read the article at IR Alert.
  • Download this article as a PDF.

Upcoming Business Wire Events – June 1 Edition

June 1, 2009

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Join Business Wire experts in your area for media breakfasts, panel discussions and other insightful events. We bring local media members and industry thought leaders to your market to discuss today’s most relevant topics, from writing for SEO to marketing with social media. Best of all, Business Wire events are usually free of charge. Check out some of our upcoming events in your area:

Breakfast with The South Florida Business Journal

Hosted by Business Wire Florida

Join Business Wire Florida for an in-depth discussion with Kevin Gale, Editor of the South Florida Business Journal. Enjoy continental breakfast while learning about the Journal‘s news operations in South Florida. This event is free for all attendees.

Tuesday, June 2 at 9:00am ET
Broward College
Willis Holcombe Center
111 East Las Olas Blvd. #1208 Boardroom, Ft. Lauderdale, FL 33301
To register: Please RSVP to Claudia Perez-Bonilla at Claudia.Perez@businesswire.com or call 954-474-8833 with the subject line “Media Breakfast: Breakfast with The South Florida Business Journal”

Press Releases: The Road Not Taken

Hosted by Business Wire Nashville

There’s a whole new world beyond the text press release. A little extra effort may net you big media results. Join Business Wire Nashville in this enlightening workshop where we will show you how multimedia, stylistic elements and SEO techniques can breathe more life into your release. This event is free for all attendees.

Tuesday, June 2 at 11:30am CT
Chapple Building, Magnolia Room
5115 Maryland Way, Brentwood, TN 37027
615.377.0700
To register: Please RSVP  to Business Wire at na_sales_group@businesswire.com or call 615.661.6123

Business Wire Luncheon: Social Media and Journalism: How Does One Influence the Other?

Hosted by Business Wire Seattle

The coming of social media has caused significant changes in traditional journalism. Social media gives everyone a voice: both average Joes & journalists are talking about organizations online & in print. Join a savvy panel of communications experts, including Todd Bishop of TechFlash.com, Blake Cahill of Visible Technologies, Hanson Hosein from University of Washington and Colleen Moffitt of Communiqué Public Relations and author of Strategic Public Relations: 10 Principles to Harness the Power of PR for an exciting discussion about social media and its relationship to journalism. Learn how journalism and social media influence each other, how our panel is leveraging their online communications and how you can create relevant content online. This event is free for Business Wire members and $20 for non-members at the door.

Follow this event on Twitter! Hashtag: #bwevents

Thursday, June 4 at 11:30am PST
Union Square Boardroom
One Union Square Building, First Level , 600 University Street, Seattle, WA 98101
To register: RSVP to Lauren Linscheid at Lauren.Linscheid@businesswire.com

An Investor Relations Survival Guide: IR Strategies for the New Age of Corporate Transparency and Accountability

Hosted by Business Wire San Francisco

Today’s financial crisis is certain to lead to greater corporate disclosure and accountability standards. Ironically, the definition of transparency itself has become muddied as a result of considerable — and often deliberate — misinformation in the marketplace. This Business Wire Spring Investor Relations Conference Series event will focus on the changing regulatory environment, the role of technology in investor outreach, revisiting Regulation FD, and the compliance challenges ahead. Don Clark, Deputy Bureau Chief, Wall Street Journal will moderate a panel of disclosure experts and thought leaders, including Jim Jelter, Corporate News Editor, MarketWatch; Peter Schuman, Manager, Investor Relations, Intel; Stephen Schrader, Partner, Baker & McKenzie LLP; and Alex Hughes, Director of IR, Dolby Labs. This event is free for Business Wire members and $15 for non-members.

Thursday, June 11 at 8:30am PST
The Palace Hotel
2 New Montgomery Street, French Parlor Room, Second Floor, San Francisco, CA 94105
To register: RSVP to Sandy Donnelly at sandy.donnelly@businesswire.com with the subject line: “Media Breakfast: An Investor Relations Survival Guide” or call 415.986.4422 x561 by Tuesday, June 9th

For more upcoming local Business Wire events or to see what’s coming up in our award-winning webinar series, visit http://www.businesswire.com/portal/site/home/business-wire-events.


Cathy Baron Tamraz Discusses Disclosure and Transparency

April 30, 2009

Cathy Baron Tamraz, Business Wire President & CEO, discusses the challenges facing Treasury Secretary Timothy tamraz_cathy_baronGeithner regarding maintaining and increasing transparency in the financial markets in a new commentary at FinReg21.

Tamraz’s recommendations, combined with new SEC chief Mary Schapiro’s “visceral reaction” to the idea of web-based disclosure in which market participants have to go looking for financial information, are good news for the markets and for investors.  Tamraz talks about the press release as a disclosure vehicle, and how the existing framework for news distribution is already in place to help Sec. Geithner reassess the state of disclosure and help avoid future financial crises.

Go read, and let us know what you think in the comments below.


Dominic: “We’re Just Not That Into You”

February 6, 2009

While we are not in the habit of engaging in discourse with the blogging equivalent of someone standing in the middle of Park Avenue screaming at the top of his lungs that the world will end unless we sinners repent, it is amusing to us that Mr. Dominic Jones seems to become more and more unhinged as we, as is our right, continually highlight and crystallize the many valid benefits of disclosure via our simultaneous news distribution platform.

Everyone is entitled to their opinion, and we would be happy to engage in a serious, reality based dialogue with anyone who wishes to discuss the case for website disclosure.  We’ve done so numerous times, in a highly appropriate and professional manner, with the likes of the SEC, the New York Stock Exchange and Sun Microsystems. Though we may not always agree, we all still respect each other.

However, let us be clear that we will not, from this point forward, get ourselves involved in any conversations, online or otherwise, with any self-styled disclosure evangelists who appear unable to have a reasoned, mature, philosophical discussion about a topic on which we disagree, having instead to resort to childish tantrums of name-calling (surprised we haven’t seen “liar, liar pants on fire” from him yet) and even resorting to characterizing highly respected members of the financial media who do not share his opinions as “pimps”.  We choose not to muck around in that mud.

So let us conclude by saying we believe in the value, validity and integrity of our business, and would gladly continue to go into great detail about that with anyone who wishes to hold a reasoned, adult conversation on the topic.  And if, in the end, we cannot convince you of our convictions, we promise not to call you a liar.

Gregg A. Castano, Co-Chief Operating Officer, Business Wire


Earnings Tables Needed in Releases Say Market Participants

February 5, 2009

With earnings season in full swing, it’s a good time for us to reiterate a critical best-practice issue:  include earnings tables in your press release.  Notice-and-access, the practice of omitting tabular data from a press release in lieu of a link to the data is clearly a step in the wrong direction. 

We have an ongoing dialogue with the major financial wires, news services, regulatory authorities, investor systems, information portals and investor relations officers about this and other disclosure issues to ensure Business Wire delivers the type of content market participants want. 

The incontrovertible evidence is clear: key market participants want releases to include financial tables (‘face financials,’ at the minimum). Additionally, issuers reap tangible economic benefits by including-and broadly disseminating-core financial data to the investment universe. A recent academic study statistically validates the significant return on investment for listed companies that are pro-active in their investor outreach.

In a trading environment where latency and milli-seconds are often critical to success, notice-and-access releases are unnecessary impediments that are disruptive to the seamless workflow procedures favored by both institutional and individual investors.

Providing core financial data to editors, analysts and investors in a freely accessible press release—transmitted simultaneously and in real-time—consolidates material information in a readily digestible format, streamlining both availability and analysis.

An informal survey of key market observers lends independent credence to the argument:

“We would very much like to see the tables included as part of a release,” said Rick Stine, senior editor, Americas, Dow Jones News Services. “Companies that include truncated data in the text of a release are often highlighting the numbers they want you to see, not the GAAP numbers that they are ultimately required to report. We believe it is important for them to continue reporting in the easiest fashion possible the GAAP numbers. Having to make people take extra steps to find them to me isn’t a great idea. I do think convenience for readers is important.”

Martin Howell, news editor, company news, the Americas, Reuters News, said, “We always need the table—it helps us on speed, it helps us to be fair, it helps us to compare and contrast, it helps us to get beyond the spin. Why would anyone drop the tables unless they had something to hide?”

The National Investor Relations Institute [NIRI] arrived at similar conclusions in its recent study of industry “best practices.”  NIRI’s soon-to-be published Earnings Release Standards of Practice makes the following recommendations:

  1. Content    a. Provide sufficient line-item information for the investor to follow the calculation from revenue to net income    b. Use a consistent format to display shares outstanding
  2. Provide a complete income statement, with current and year-ago quarter numbers, and current year-to-date and year-ago year-to-date comparable period numbers. To avoid confusion, label numbers as audited or unaudited, particularly at year-end if the released numbers are not yet audited and could change in the 10-K filing. Income statement should include number of shares outstanding, fully diluted and basic, for each publicly listed stock
  3. Provide a complete balance sheet, with current quarter numbers and end of prior-year numbers, labeled as audited or unaudited
  4. Provide cash flow tables, if possible. Both the CFA Institute and the SEC’s CIFiR Committee recommend inclusion of cash flow tables. However, some companies note that this information may not be finalized at the time the earnings release is issued.
  5. Provide consistent supplemental company or segment information as appropriate.

There also are financial rewards for issuers that are truly committed to communicating with investors.  Eugene Soltes, a doctoral candidate at the University of Chicago Booth School of Business, found a statistically significant relationship between greater dissemination of company-generated news and corresponding capital market benefits, including lower bid-ask spread, increased trading volume and lower idiosyncratic volatility. A key finding: “A reduction in trading costs due to greater dissemination may also contribute to a lower cost of capital.”

As public companies move to adopt recent SEC mandates to XBRL tag financial data, the need and value of these tables will only increase.

Our focus has been on delivering value; we can say with both pride and certainty that we provide tremendous value at a fair price, while also playing a key role in promoting market efficiency. 

We take great pride in having the industry’s only fully XHTML news platform, ready to deliver XBRL tagged information to market participants.

Neil Hershberg, Senior Vice President, Global Media, Business Wire


New Research Study Finds Causal Relationship Between News Dissemination and Capital Markets Benefits

January 9, 2009

 Business Wire’s deep-seated belief that the dissemination of price-sensitive information over a recognized newswire enhances transparency is no secret. Sure, we take a lot of flack from so-called unbiased industry bloggers for our opinion, but the fact remains: the newswire is not only the most efficient and transparent method of disclosure, it is arguably the most cost-effective segment of the entire financial reporting supply-chain.

Our public stance on full and fair disclosure is nothing new. Back in 2000, just after Regulation FD went into effect, Business Wire was the first newswire to eliminate the 15-minute distribution delay to the financial community. Prior to this time the media received releases minutes before the financial community. More recently Business Wire has taken a strong stand on whether or not Web postings should constitute “disclosure.”

Research seems to indicate that Business Wire is correct in its thinking. After earlier reports citing a correlation between frequent public disclosure and share price stability comes new research indicating a definite causal relationship between news dissemination and capital market benefits.

Eugene Soltes, a doctoral candidate at the University of Chicago Booth School of Business, analyzed more than 9.3 million news releases from the post-Reg FD period and found a statistically significant relationship between greater dissemination of company-generated news and benefits including lower bid-ask spread, increased trading volume and lower idiosyncratic volatility.

According to Soltes, “Greater dissemination of firm news has the opportunity to broaden a firm’s base by attracting investors that were not previously familiar with the firm. The more broadly information is diffused to investors, the more investors who will be aware of this information. Consequently, greater dissemination of firm news is hypothesized to lower information asymmetry (and, by extension, a firm’s bid-ask spread).”

Interestingly, Soltes’ research finds causality: better liquidity and a lower cost of capital are not just statistically related to greater news dissemination, but are a direct result.

This is precisely why Business Wire has worked so hard to help you bring your news not just to investors here in the US, but around the world as well. The wire today is truly ubiquitous. Today we can disseminate your news to the financial community in just about any market, not to mention global retail investors via thousands of popular news and information sites. We also enable clients to meet regulatory requirements in more markets worldwide simultaneously than any other newswire service

Our full suite of investor relations options – including expert XBRL consulting – is yet another opportunity to lower corporate cost of capital and capture liquidity in the global marketplace.

We look forward to hearing your comments below.

-Michael Becker, VP, Global Disclosure and Financial Reporting Services, Business Wire

Michael leads Business Wire’s Investor Relations, Regulatory Filing and XBRL teams. He serves on the NIRI/NY board andthe XBRL-US steering committee and can be reached at 212-752-9600, ext. 1312 or michael.becker@businesswire.com.


Reminder: XBRL Webinar Today – Business Wire Hosts Reps from the SEC, XBRL US, Comcast

November 20, 2008

xbrl_logo from Google ImagesWith the SEC’s proposed mandate, which would require publicly traded companies in the U.S. to adopt XBRL for their financial reporting, looming, we are hosting a panel of XBRL experts today for a free webinar called “Understanding XBRL and the SEC’s Proposed Rule.” The live webinar will begin at 1 p.m. EST at BusinessWire.com.

XBRL-formatted documents are made to be easily searched for online, downloaded into spreadsheets, reorganized in databases and easily compared and analyzed. Notably, despite the fact that, under the SEC’s proposed mandate, Fortune 500 companies would be expected to adopt the format as early as next spring, most companies have yet to convert. A September study by Grant Thornton found that, while more than halfcubes_features_1 of CFOs surveyed were familiar with XBRL, just two percent were actually using the format in their company’s financial filings.

Business Wire, a longstanding member of the XBRL International Consortium and provider of XBRL services, will lead the following distinguished panelists in a discussion on what XBRL is, why this technology is reshaping public company reporting, who within your organization should be preparing for it, and how the investment community will consume financial data in this format:

  • Michelle Savage, Vice President, Communication, XBRL U.S.
  • David Blaszkowsky, Director, Office of Interactive Disclosure, U.S. SEC, and
  • Phillip Gaudreau, Manager, Accounting Projects, Comcast Corporation.

Registration is required for this free XBRL webinar:

“Understanding XBRL and the SEC’s Proposed Rule”
Thursday, November 20 beginning at 1 p.m. EST
Register today at www.BusinessWire.com/cnn/XBRL


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