Question

Please provide 4-5 reasons as to, how does XBRL affect the timeliness of reports? And if so, does this necessitate new controls/pose new risks?

Answer 1

XBRL basically provides practical solutions to data exchange between multiple information systems. XBRL works similarly as XML, however, XBRL is developed specifically to handle the complexity of accounting data.

When financial statements are XBRL-enabled, computer can easily manage each data in the financial statements. Therefore, each data can be readily aggregated and disaggregated. Ease of data management will affect the timeliness of financial statements disclosure. Instead of focusing on manually providing multiple format of financial statements, organizations can use XBRL format for their financial statements and let the information systems provide the intended financial statement formats to the intended or potential users.

When XBRL-enabled financial statements are complemented with semantic web language and web programming, this will produce great platforms that allow decision makers to readily analyse financial statements (e.g., Financial Statements from XBRL.

, Contexxia - SEC filings made easy ). For example, interactively-enabled financial statements permitting decision makers to compare multiple financial statements from multiple companies.

The analysis also permits decision makers to specifically compare specific financial considerations. Such kind of analysis is tedious when using paper-based financial statements, however, when using XBRL-enabled financial statements, the complexity of financial analyses can be mitigated.

Risks associated with XBRL

Companies are required to ensure that their XBRL files completely and accurately represent their disclosures. Assuch, the primary risk associated with XBRL is providing data that is incomplete, inaccurate, or inconsistent withthe corresponding financial statements.

For many companies, reporting errors go undetected due to ineffectiveprocesses and/or inadequate review procedures.Another risk is that XBRL-formatted information will fail to comply with the SEC's Edgar Filer Manual rulesresulting in missed filing deadlines and/or amended filings.Reporting processes and controls weaknesses may be the most significant risk management faces.

The output ofreports with material errors; inadequate review procedures; inappropriate access and IT controls; lack ofunderstanding controls and related documentation; and others are clear indicators of process and controlweaknesses.

How to mitigate/control risks

Have you thought about what a material XBRL error constitutes? What are the possible items that could go wrongin your XBRL filings? How do you identify these errors before you file? Is your current process optimized andoperating effectively? Which of these items concern you?

Having a plan to address these questions and others offers a way forward to mitigate your risks and ensure aquality submission to the SEC.Realizing opportunity comes from looking beyond the compliance aspect andleveraging the ability of structured information to optimize your reporting effectiveness and efficiency.