Over the last two weeks, numerous peers sent me links to the bold, open letter to the SEC from a small-but-hot new tech startup, idaciti, which provides simple software tools for consuming structured data. The letter calls out antiquated SEC disclosure requirements and issues a call to action for better data quality.
To me, the most important part of the letter is the underlying message: We’re seeing new technologies from innovators like idaciti make XBRL data easier to consume. As more people begin using the data, filers need to make data quality a top priority.
EDGAR is outdated, and data quality is suffering
I couldn’t agree more with the letter’s assertion that “it takes a rich dataset to make financial decisions” today, and that EDGAR must be updated to enable the data to tell the entire financial story of a company. I was also happy to see the company call out the importance of structured data in making financial information easier to consume. More importantly, I’m glad they recognize just how critical data quality and consistency are in ensuring their product (and their customers) can readily utilize the data. The idaciti product works to make it easier to compare financial information, but the tool isn’t magic. Bad data is bad data.
New tools making XBRL data accessible, usable for anyone
For me, the “big news” isn’t the content of letter itself. I don’t foresee the SEC immediately revamping EDGAR based on the letter. But it’s exciting to see tools like idaciti’s making it simple for a broader range of business users to consume financial disclosure data. They’re creating tools that automatically turn structured data into easily understandable information.
I’m a big believer in the potential of data. So I’m eager to see products like idaciti’s gain adoption and open up a wider range of use cases for XBRL data. Investors are turning to these products to understand a company’s complete story. Analysts are using them to get a big-picture perspective on an industry. Executives at companies big and small are using the data to see where they stand, and how to set goals for growth.
With more eyes on your data, make sure it’s telling the right story
I still talk to plenty of companies who think only individuals like me bother to take a closer look at their XBRL-tagged disclosures. Companies like idaciti are changing this. The company's leaders, Emily Huang and Christine Tan, whom I first met while working on XBRL at the SEC's office back in 2008, are moving data consumption forward.
I hope all filers realize that more eyes than ever are scrutinizing the data, and it pays to make sure that data tells the right story — the whole story — about your organization.