SEC Professionals Groups

ALERT: Today, the SEC signaled that #XBRL scrutiny may be headed your way. A "sample letter" dropped with a series of questions about XBRL quality that the SEC will be reviewing. 

TL;DR: XBRL can be a big problem hiding in plain sight, which is why today's SEC announcement is really important.

If you're not familiar with "XBRL," it's machine readable data that's embedded within SEC filings. This data gets collected, sorted, often cleaned, and is made available on the SEC's website. Importantly, this data is used by analysts, investment bankers and others to almost instantly consume, digest and automatically react to your company's performance. (With all the recent concern over AI, it's interesting that what I just described has been happening for YEARS.)

The SEC posts sample letters a handful of times each year and should be on every public company's radar. If you're keeping track, the last one was about China-specific disclosures back in July, and many will remember the 2021 sample letter on climate change disclosures that triggered a full-scale freak out.

So what questions might you expect if you get a letter? To be super candid, the SEC is asking pretty basic stuff such as: "Why aren't you using the required XBRL format?" or "When used in multiple places, why is the same figure's XBRL presented differently?" And my personal favorite: "Why are you using custom XBRL tags when there's a standard tag available?" (Don't get me started on this one.)

Clearly, the SEC has noticed what Mike Willis called out in an SEC Professionals Group event last year: "Data quality errors are just like cockroaches-there's never just one."

My long-held view is that public companies don't focus enough attention on the XBRL portion of their filings, but from a practical standpoint, it's not surprising. It's a matter of prioritizing time and resources at quarter-end (I've had to make those decisions myself and it's not easy). Earnings press releases don't include XBRL, and your auditor probably doesn't pay much attention to your XBRL, either (ask them if the XBRL is covered in their audit opinion!).

Notwithstanding, my hope is that the SEC's letter is a blunt reminder that the XBRL part of your SEC filings is incredibly important, and now's the time to get it right by prioritizing the expertise and technology to stay ahead of XBRL scrutiny. And if you find yourself in the SEC's crosshairs, don't let this crisis go to waste; argue for the resources that you need to get it right.

I'd love to hear your thoughts and reactions! 

Link to Sample Letter: https://www.sec.gov/corpfin/sample-letter-companies-regarding-their-xbrl-disclosures

For info and resources, search "XBRL" here in the community or on the Workiva blog: https://www.workiva.com/blog

ALERT: Today, the SEC signaled that #XBRL scrutiny may be headed your way. A "sample letter" dropped with a series of questions about XBRL quality that the SEC will be reviewing. 

TL;DR: XBRL can be a big problem hiding in plain sight, which is why today's SEC announcement is really important.

If you're not familiar with "XBRL," it's machine readable data that's embedded within SEC filings. This data gets collected, sorted, often cleaned, and is made available on the SEC's website. Importantly, this data is used by analysts, investment bankers and others to almost instantly consume, digest and automatically react to your company's performance. (With all the recent concern over AI, it's interesting that what I just described has been happening for YEARS.)

The SEC posts sample letters a handful of times each year and should be on every public company's radar. If you're keeping track, the last one was about China-specific disclosures back in July, and many will remember the 2021 sample letter on climate change disclosures that triggered a full-scale freak out.

So what questions might you expect if you get a letter? To be super candid, the SEC is asking pretty basic stuff such as: "Why aren't you using the required XBRL format?" or "When used in multiple places, why is the same figure's XBRL presented differently?" And my personal favorite: "Why are you using custom XBRL tags when there's a standard tag available?" (Don't get me started on this one.)

Clearly, the SEC has noticed what Mike Willis called out in an SEC Professionals Group event last year: "Data quality errors are just like cockroaches-there's never just one."

My long-held view is that public companies don't focus enough attention on the XBRL portion of their filings, but from a practical standpoint, it's not surprising. It's a matter of prioritizing time and resources at quarter-end (I've had to make those decisions myself and it's not easy). Earnings press releases don't include XBRL, and your auditor probably doesn't pay much attention to your XBRL, either (ask them if the XBRL is covered in their audit opinion!).

Notwithstanding, my hope is that the SEC's letter is a blunt reminder that the XBRL part of your SEC filings is incredibly important, and now's the time to get it right by prioritizing the expertise and technology to stay ahead of XBRL scrutiny. And if you find yourself in the SEC's crosshairs, don't let this crisis go to waste; argue for the resources that you need to get it right.

I'd love to hear your thoughts and reactions! 

Link to Sample Letter: https://www.sec.gov/corpfin/sample-letter-companies-regarding-their-xbrl-disclosures

For info and resources, search "XBRL" here in the community or on the Workiva blog: https://www.workiva.com/blog