The Genius Behind XBRL for Dummies (Part 2)

See "The Genius behind XBRL for Dummies (Part 1)" here.

Wilson So, the director of Hitachi America's XBRL business unit and the co-author of XBRL for Dummies book (available for free) responds to questions about XBRL's impact on companies in the second part of a Q&A:

Eric Krell: What will likely be some of the most difficult and expensive facets of implementing XBRL?

Wilson So: At this stage, the time needed to come up to speed with XBRL and be comfortable with the use of it is probably the most expensive facet because the proposed rule does not limit the tagging to the major financial statements.

EK: Do you expect that the adoption of XBRL might affect small and large companies differently. How so?

WS: It will benefit large companies more than smaller ones.

Larger companies can use XBRL to streamline its accounting workflow (if the company consists of multiple divisions or subsidiaries and/or it has multiple platforms), thus automating internal reporting for company performance management as well as external reporting for regulatory compliance.

Likewise, large companies can use XBRL as a data standard to integrate disparate systems.

Small companies may face greater adoption challenges, but they may also enjoy greater benefits -- because XBRL will deliver better internal data control and provide better visibility to analysts and investors. Smaller organizations typically have difficulty catching the attention of investment analysts. XBRL will help them relay their stories to investors more effectively and more cost efficiently.

EK: If you were a CFO whose company was affected by this likely rule change, what three or four things would you do and when would you do them?

WS: If I were the CFO, I would ask my external reporting team to immediately begin getting their hands dirty with XBRL: join the voluntary SEC XBRL filing process even if my company is not the first batch of global companies mandated by the SEC.

And I would start now so that I could give my external reporting team time to ramp up. I would not stop just at the 10Qs and the 10Ks statements. I would also look at doing earning releases, 8Ks, etc. Once the above is mastered, I would start to explore XBRL's use beyond SCE filings. I would talk to vendors about using XBRL data for analysis by getting data from various sources.

EK: Anything else companies should keep in mind?

WS: XBRL is a business reporting language, not merely a financial one; it is a truly international language that the world is moving to, not just the US. XBRL can not only enhance traditional financial reports, but it also can improve enhanced business reporting (including KPIs), narrative reporting and sustainability reporting.