XBRL (Extensible Business Reporting Language)
David Trainer | Nov 05, 2013 02:12AM ET
Check out this week’s report on disclosure transgressions that I prepared for the Senate Banking Committee in 2009, the SEC is clearly not able to review in meaningful detail every filing submitted by companies. Their processes are almost entirely manual and based on word documents and letters to companies. From what I gathered back in 2009, the SEC had no database for analyzing and comparing financial data.
The SEC should welcome XBRL as a way to manage and analyze the mountain of data they need to evaluate. If they continue to allow blatantly wrong information, however, it becomes dead weight that complicates the process for filers and adds no value for regulators and investors. The potential utility of XBRL as a tool for regulators to fight fraud and investors to better analyze companies makes its numerous flaws that much more of a shame. I can only hope that the SEC realizes the value of XBRL and makes a commitment to ensuring the accuracy and validity of XBRL data.
In the meantime, thousands of disclosures on which the investing public relies flow through the SEC with very little to no review.
Sam McBride contributed to this article
Disclosure: David Trainer and Sam McBride receive no compensation to write about any specific stock, sector, or theme.
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