An interview with Campbell Pryde, President and CEO of XBRL US
XBRL US is a nonprofit organization that supports the use of XBRL for financial reporting through taxonomy development and marketplace collaboration. Campbell Pryde, the president and CEO of XBRL US, has been involved with XBRL for almost 15 years. His XBRL experience includes chairing the XBRL US Domain Steering Committee (under contract with the SEC) during the initial building of the US GAAP Taxonomy. Along with an alliance of five companies (in alphabetic order: Merrill Corporation, RDG Filings, RR Donnelley, Vintage Filings, and Workiva), XBRL US recently founded the XBRL US Center for Data Quality to address public concerns about XBRL and to improve the quality and usability of XBRL-tagged financial data filed with the SEC. Dimensions spoke recently with Mr. Pryde for his insights on the current state of XBRL quality and the work being done by the Center.
Why was the XBRL US Center for Data Quality created?
The Center was created to fund the design and implementation of a Data Quality Committee. The Committee is responsible for developing appropriate guidance and validation rules to improve the utility of XBRL data.
The founding members of the Center believe that there is a need to converge the different approaches for tagging data and the different standards for quality. Specifically, the Data Quality Committee will issue guidance to eliminate errors and inconsistencies that prevent or impede the use of XBRL data for automated financial analysis. In addition, the Committee will publish freely available validation rules that provide automated verification of compliance with the Committee's guidance and guidance from the SEC and FASB.
Who is on the Committee, and how does it function?
The Data Quality Committee is comprised of a cross section of preparers and users of data who seek to improve XBRL data. The Committee's primary focus is to ensure that we have participation from the end users of the data, so we wanted to be certain we had the involvement of data aggregators, investors, and other users of the data. In addition, we have the involvement of representative XBRL preparers, namely filing agents who prepare many of these filings.
The Committee includes representatives from Bloomberg, a data aggregator and distributor; Capital IQ, a division of Standard & Poor's and a data aggregator and distributor; Credit Suisse, an investment bank; and the CFA Institute, which represents investment professionals. The Committee also includes a smaller data aggregator, Calcbench, which is a heavy user of XBRL and is familiar with the issues associated with it.
The academic representative is Craig Lewis of Vanderbilt University, who was formerly with the SEC. The filing agents are representatives from the five founding companies that initially funded the Center for Data Quality: (in alphabetical order) Merrill Corporation, RDG Filings, RR Donnelley, Vintage Filings, and Workiva.
We also have a representative from the AICPA on the Committee, which is a member of the Center as well. In addition to the AICPA, DataTracks and Certent have also joined as non-founding members of the Center.
The overarching goal of the Committee is to improve the utility of XBRL data. All of this is being done in a very public way. Meetings are open and can be attended by observers. For example, FASB has an observer on the Committee. The Committee will meet with the SEC on a regular basis to discuss its progress. There will be a 60-day public review period to allow public comments before final approval and the release of the guidance and rules. As part of the public review, people will be able to run the rules on their filings using the open source Arelle XBRL platform or, in the case of software tool providers, create their own implementation of the rules to run on filings.
“The overarching goal of the Committee is to improve the utility of XBRL data.”
Do you think the SEC will get involved with what you are doing?
We have met with the SEC staff on a couple of occasions about the initiative. We plan to have regular meetings to update the SEC staff on the Committee's progress.
Will the SEC be able to use your software to detect errors in company filings?
When the rules are released, they will be made available in the same open source software platform that the SEC uses to validate filings.
Is FASB involved with the Center's activities? Is this seen as something that complements or competes with what FASB is doing?
As I mentioned earlier, FASB has a permanent observer on the Committee. FASB has expressed support for the initiative and believes it is important. The actions of the Committee are not intended to contradict anything that FASB is publishing but to provide more in-depth implementation help. I think to some extent the Committee will be the third leg of the stool, along with the SEC and FASB, to help filers get XBRL data right in a way that is useful for consumers of the data. The Committee gets the voice of consumers to the table, and at the same time, it will give a lot of help to filers so that they can be sure they get the data right.
“The Committee gets the voice of [XBRL] consumers to the table, and at the same time, it will give a lot of help to filers so they can be sure they get the data right.”
How will the Committee's efforts to improve the usefulness of XBRL-tagged data raise public confidence in XBRL data?
The Committee will maintain a database of XBRL-formatted financial data, which is drawn from the SEC EDGAR system and is freely available to anybody.
In cases where there is no clear guidance, we will develop guidance to provide for consistent tagging of the data. In addition, by embedding guidance from FASB or the SEC into computer code and making it available in an automated way, we make it very easy for filers to bring all of that knowledge to bear in a single point of reference. We will give public companies the tools to make it very easy to get their filings correct. Up to now, the marketplace has not really had that.
What about creating guidance for uniform, consistent tagging of financial data?
Initially, we will focus on rules that test for input errors and verify compliance with guidance already issued by the SEC and FASB. Following this initial focus, we will turn to guidance for uniform, consistent tagging (for example, where and when to create extensions), and accompanying that guidance will be validation rules to verify compliance with that guidance.
Do you think the Committee's guidance and rules for making instance documents will eventually save companies time and money?
Yes. A lot of the checks that companies do for their manual HTML filings can be automated in their XBRL filings. When the SEC moves to inline XBRL, then many of the manual checks-basic addition, checking numbers, cross-checking between notes and face financial-can be automated.
Will inline XBRL change the role of the Committee?
No, I do not think so. A lot of what the Committee is trying to do addresses putting financial statements into a usable data format for consumers, and that goal is the same whether we have inline XBRL or not.
How will you determine whether the Committee has been successful in its mission?
The ultimate test is the availability of a robust financial data set encompassing all public companies, that is readily available to all investors and other data consumers and that enables more efficient regulatory oversight.
What is your vision of how the rules and guidance will be used by service providers, corporate issuers, developers of XBRL tools, the SEC, FASB, and marketplace consumers of XBRL data?
We expect the guidance and rules to become the definitive standard for members of the public-company reporting supply chain. Service providers and issuers will follow the rules and guidance during the tagging process. Tool providers will adapt their offerings to incorporate the rules. Consumers of XBRL data will then know that data produced by public companies is consistently developed and, therefore, they'll have greater confidence when using it.
What input does the Committee receive from analysts and investors?
We made sure that these groups are represented on the Data Quality Committee so that we get feedback on what is useful to consumers of the data. In addition, the Committee's first public review just started, and we expect to see feedback from the marketplace that will help us confirm the usefulness of the guidance created.
“The Committee will give public companies the tools to make it very easy to get their filings correct. Up to now, the marketplace has not really had that.”
Are the guidance and the rules published by the Committee replacing the Consistency Suite software?
Yes. Over time, we expect the Committee's guidance and rules to supersede the rules in the XBRL US Consistency Suite. Our goal is to develop the definitive standards for XBRL data quality and to enable all public companies to verify compliance with those standards.
What is your vision of the Center one year from now? Five years from now?
In 12 months' time, we expect to have a significant set of guidance and rules available for preparers, which will serve to increase data quality across the board. This in turn will lead to far greater consumption of corporate XBRL data. In five years, the Committee will likely be in “maintenance mode,” with comprehensive guidance and rules available, but still continually updating guidance and rules each year to accommodate changes in the taxonomy, industry changes, and regulatory changes that impact public company reporting.
EDITOR'S NOTE: The Committee's initial set of seven guidance and validation rules is now available for public comment; visit the XBRL US website at https://XBRL.us/home/data-quality/public-review/.
NOTE: The views expressed here are entirely Mr. Pryde's and do not necessarily reflect those of XBRL US or any other organization.
Click here to access all Dimensions eNewsletters