Today, the XBRL US Data Quality Committee released a report showing the immediate and measurable impact of its XBRL validation rules on the quality of recent XBRL filings. As Vice Chairman of the DQC, I’m excited to share that since the late-2015 release of the validation rules, tagging errors tracked against the DQC rules dropped more than 64 percent.
XBRL errors dropped more than 64% since release of DQC rules
The report tracked XBRL tagging errors for those errors that the DQC rules cover across all SEC XBRL filings since the beginning of 2015. You can see the slow downward trend in tagging errors through the first three quarters, as filers and service providers gained basic familiarity with the proposed XBRL rules. But that trend dramatically accelerates with the introduction and release of the DQC validation rules in Q4 2015. The rules officially became effective on January 1, 2016 and that was followed by an outstanding 64-percent drop in errors in Q1 2016 versus Q1 2015. The graph shows that SEC XBRL quality is truly improving.
Here’s how you can take your XBRL data quality to the next level
I was heavily involved in the creation of the validation rules, and I’m thrilled and proud to see the rules already driving consistent data quality improvement. But I also see plenty of room for improvement. Along with the optimistic outlook, I’d like to offer two important caveats:
- A large number of tagging errors are still occurring despite the DQC validation rules which flag those errors. This suggests many organizations still fail to check their SEC XBRL filings against these rules. I can’t say it too many times: All organizations should take advantage of the DQC’s free tool to mitigate simple XBRL errors that can bring embarrassment and unwanted SEC attention.
- Just because a company properly applies the DQC rules doesn’t mean the XBRL files are correct. There are still many aspects of XBRL filings for which automated software cannot check for errors, and it will be always be difficult to develop a standardized error-checking tool that can catch those errors. I still recommend that organizations engage a sufficient level of XBRL expertise, using either internal or external resources, to prepare or review the XBRL. This expertise ensures the XBRL-formatted financial statements are correctly disclosing the same information as the traditional HTML financial statements.