XBRL training needed for better understanding

NEW YORK: The Securities Exchange Commission's (SEC) ruling last February that companies implement eXtensible Business Reporting Language (XBRL) has seen the first wave of electronic tagging take place.

NEW YORK: The Securities Exchange Commission's (SEC) ruling last February that companies implement eXtensible Business Reporting Language (XBRL) has seen the first wave of electronic tagging take place. An estimated 500 public companies are already adhering to the mandate to create a consistent practice of reporting financial figures, but with the completion of compliance set by the SEC for 2011, some insiders say there needs to be more education on how to use the program.

During last week's XBRL US Conference in New York, more than 200 financial and IR professionals convened to learn about how companies can use XBRL and train their employees to understand the electronic language.

Jeff Morgan, president and CEO of the National Investor Relations Institute (NIRI), spoke at the conference. While Morgan noted that XBRL can be an asset in providing full financial disclosure, he cautioned the audience that users must find a way to connect investors with firms to make sure the coding is providing real communication.

“From an investor relations standpoint, what we're not seeing is that increase in two-way communication between investors and companies. What I would like to see is investors using the XBRL data to create a better dialogue with companies,” Morgan told PRWeek. “I think we will [get there] though, and I think that is the desire of the SEC. It just takes time.”

Michelle Savage, VP of communications for XBRL US, said one important component to successfully implementing XBRL is full understanding of the coding.

“The focus of the conference was issuing practical advice on responding to the SEC mandate for external reporting. There's a learning curve; education is the biggest hurdle. We definitely encourage training programs for employees,” Savage said. “XBRL will help IR officers better communicate and understand their peers. It can also be used internally to share information between departments. It can be used to a lot of different advantages.”

Beth Saunders, MD and head of the capital markets practice at FD, said she is more skeptical about XBRL's significance.

“The majority of investor relations officers who have been faced with a comparison problem have already fixed it in a way that works best for their companies. Most IR officers I speak with think XBRL will create more questions, not lessen them,” Saunders said. “The idea of having one way of reporting figures across the board is Nirvana. We all want it to happen but I don't know how it could. It's just so involved.”

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