XBRL Quality Assurance | RDG Filings

Archive for the ‘XBRL Quality Assurance’ Category

Don’t Rely on Software Alone to Build and Validate Your XBRL Filings

Thursday, August 22nd, 2013

There is no XBRL without computer software. The entire endeavor is designed to allow for corporate financial statements to be machine readable and comparable by automated analytical software.

Computer code is the foundation of XBRL, and a large number of companies are selling excellent tools for the creation, utilization, and validation of XBRL code. However, an equally large number of companies have touted the ability of their software to be the only tool necessary to ensure the compliance, quality, and accuracy of XBRL filings. Without denying the centrality of software, RDG believes that the promotion of automated tools alone overlooks the importance of the most important and powerful tool available – the human brain.

It may be trite, but it’s also true. Corporate filers that rely solely on software systems to build and validate their XBRL filings do so at their own peril. The Limited Liability period is over, and the SEC has already rolled out three new fraud detection initiatives all made possible by the RoboCop automated enforcement tool that will automatically trawl through XBRL filings immediately upon filing.

After your XBRL filing is submitted to the SEC, it will be analyzed by computers for both government enforcement and financial analytics purposes. Computers will be picking over your XBRL code, do you really want it to have been built and validated by computers alone?

The fact is that due to the nature of XBRL (and of course to the nature of corporate accounting), there is no way to remove the human element from the process altogether. Even the creators of the most robust validation software tools available admit that software can only go so far in checking the accuracy of XBRL code. To properly analyze and ensure the highest quality XBRL, a person with experience and expertise must be involved. To be sure, RDG employs the assistance of numerous validation software tools, but we consider the close attention of a XBRL Professional CPA to be the most important aspect of our Quality Assurance processes.

Just as it would be impossible to audit financial statements with automated software, XBRL code cannot be properly vetted by machines alone. RDG Filings has the knowledge, expertise, and experience to ensure that the AQM-RoboCop tool being deployed daily by the SEC is far less likely to flag your XBRL filings.

Posted in SEC Compliance, XBRL Filings, XBRL Quality Assurance | Comments Off on Don’t Rely on Software Alone to Build and Validate Your XBRL Filings

XBRL Is Increasingly Becoming The New Standard

Thursday, August 15th, 2013

Back in April – in a development that RDG Filings was rather excited about – Citi, The Depository Trust & Clearing Corporation (DTCC) and XBRL US announced that Citi had begun “sending XBRL-formatted dividend announcements related to ADRs for which it is the depositary bank to DTCC through The Depository Trust Company.”

While this development was not directly related to RDG Filings day-to-day work as a SEC Filings agent that specializes in full-service XBRL filing for corporate and mutual fund filers, we were pleased to see the value and importance of XBRL financial reporting enthusiastically endorsed by Citi and the DTCC.

Alan Smith, Managing Director, Citi Securities and Fund Services (SFS) said, “We’re pleased that Citi has taken a key role in an initiative that ultimately will result in better, faster and much less expensive data for the marketplace.”

And Dan Thieke, DTCC Managing Director, Asset Services said that with the DTCC receiving “thousands of announcements from issuers and intermediaries every day. XBRL enables us to take that information directly into our systems without manual intervention, thereby reducing risk and cost and boosting efficiency and accuracy.”

XBRL is the future of financial reporting, and the value of this relatively new tool is contingent upon the quality of the code created. RDG Filings is committed to the present and future of XBRL reporting, and as major part of that commitment, RDG is committed to creating the highest quality XBRL possible.

Posted in XBRL News, XBRL Quality Assurance | Comments Off on XBRL Is Increasingly Becoming The New Standard

The Truth About The SEC’s RoboCop & The Importance of XBRL Data Quality

Monday, August 12th, 2013

If you find the deluge of information on the internet (and filling up your inbox) regarding XBRL, SEC Compliance, and the end of the Limited Liability period for SEC Filers, to be a bit overwhelming — you are not alone. We here at RDG Filings think so much of this information glut stems from certain sales tactics that hope to benefit from hysteria and misunderstanding. However, every now and then we find an article or a blog-post that is truly helpful and important. John Carney and Francesca Harker’s recent online article for Forbes is a valuable resource to anyone seeking to pick the value from the online rubbish.

The article from 8/09/2013 is titled “How SEC’s New RoboCop Profiles Companies For Accounting Fraud.” Carney and Harker offer an excellent explanation of the SEC’s new fraud detection tool—Accounting Quality Model (aka: AQM or RoboCop)—operates, and how corporate filers can avoid being flagged as potential wrongdoers by automated system. The authors also briefly profile Mary Jo White, who was recently appointed the Chairman of the SEC, and discuss the “renewed commitment by the SEC to seek out violations of financial reporting regulations” that she brings to the SEC.

When President Obama introduced Mary Jo White as the new Chairman for the SEC, he warned that “You don’t want to mess with Mary Jo.” To back that up, Ms. White, in an interview with the Wall Street Journal after her appointment said: “I think financial-statement fraud, accounting fraud has always been important to the SEC. It’s certainly an area that I’m interested in, and you’re going to see more targeted resources in that area going forward.”

You can read about some of the new initiatives the SEC has recently introduced under Mary Jo White’s leadership in a previous blog post by RDG Filings, but all the new initiatives are made possible primary by Accounting Quality Model (“AQM” or “RoboCop”) and the advent of XBRL filing. According to the Forbes Article, RoboCop “is an analytical tool which trawls corporate filings to flag high-risk activity for closer inspection by SEC enforcement teams.”

As Carney and Harker explain it, “RoboCop’s objective – to identify earnings management – is not a novel one.” It is not the analytical strategy that is unique, and it would not in-and-of-itself be concerning to SEC Filers. However, it is RoboCop’s “proficiency that should worry filers.” The SEC’s RoboCop is capable of extending the traditional earnings management approach “by including discretionary accrual factors in its regression.” Additionally, it is the speed with which RoboCop can raise potential red flags about a filing that is revolutionary for the SEC’s enforcement teams. As the Forbes article explains: “RoboCop is a fully automated system. Within 24 hours from the time a filing is posted to EDGAR, it is processed by the AQM and the results are stored in a database. The AQM outputs a risk score which informs SEC auditors of the likelihood that a filing is fraudulent.”

RDG wants to highlight this article for you because it not only offers a good explanation of the AQM-RoboCop system, but it also explains how it will affect SEC Filers. It could be easy to overlook the fact that all of the SEC’s new enforcement tools and initiatives are made possible by XBRL, and creating quality, compliant, and clean XBRL filings will only become more important as the SEC moves forward with these new strategies. Filing excellent XBRL documents will be the first and most important line of defense against the AQM-RoboCop system flagging your company for further SEC attention. Carney and Harker write that “because RoboCop is an automated system looking for oddities, it is unable to account for mistakes made. This is particularly important because the AQM relies on the newly-mandated XBRL data which is prone to mistakes by the inexperienced. Sloppy entries could land your company’s filing at the top of the list for close examination.”

As Carney and Harker state, software is unable to account for mistakes made. The next logical deduction is that it doesn’t matter which of the various software programs you use, because what’s more important is the person using the software, and their expertise in creating the documents.

Yes, we at RDG Filings are pleased that this article so strongly validates of our service model. Additionally, we think this article highlights this fundamental truth about XBRL reporting — If you do not know what you are doing, you are prone to XBRL mistakes that will put your company at risk of being flagged. It takes human understanding, experience, and expertise to build excellent XBRL filings; software cannot do it alone.

RDG Filings has years of experience doing XBRL tagging and filing, and we offer unparalleled Quality Assurance Services that will ensure your filings far exceed the standard of SEC compliance. RDG Filings has the knowledge, expertise, and experience to ensure that the AQM-RoboCop tool being deployed daily by the SEC are far less likely to flag your XBRL filings. Additionally, RDG can give you the support you need should the SEC’s examiners contact you with questions, because as Carney and Harker explain, the SEC’s “increased reliance on an automated model means examiners will come across filings with high risk scores which have not engaged in any fraudulent activity.” This means that “exam teams will be in more frequent contact with filers and will also more readily accept legitimate explanations for filing decisions. “ RDG Filings will ensure your XBRL filings are held to the highest standards, and we will also be a resource to help you “respond quickly to inquiries with a reasoned explanation for accounting choices.”

Carney and Harker conclude that it “is more important than ever for corporate filers to understand SEC enforcement strategies, especially the AQM, in order to decrease the likelihood that their firm will be the subject of an expensive SEC audit.”

We at RDG could not agree more with these conclusions, and we can help any SEC Filer who wants to know that their XBRL filings exceed SEC validation requirements, and will be in line with the enhanced standards, protocols, and guidelines already put forward by the FASB, the AICPA, the US-GAAP, XBRL.US, and others.

This is what we do at RDG Filings. Please get in touch if we can be of service.

Stewart Walker – SVP, Director of Sales. 415.643.6017

Posted in EDGAR Quality Assurance, SEC Compliance, SEC EDGAR Filing, SEC News, XBRL Filings, XBRL News, XBRL Quality Assurance | Comments Off on The Truth About The SEC’s RoboCop & The Importance of XBRL Data Quality

XBRL Data & the SEC’s Enhanced Enforcement Efforts

Wednesday, July 17th, 2013

In line with the rumblings we have heard over the past couple of years from SEC representatives at various XBRL conferences and events, the SEC has recently announced three new initiatives that will expand and improve its Division of Enforcement. The official announcement does not expressly mention XBRL, but it is plainly evident that the advent of this data has given the SEC new abilities to analyze filings and to identify inaccurate or fraudulent financial statements.

The SEC is touting these initiatives—the Financial Reporting and Audit Task, the Microcap Fraud Task Force, and the Center for Risk and Quantitative Analytics—as signaling their “increasingly proactive approach to identifying fraud” and improving their ability to “bring more cases aimed at deterring these types of unlawful activity.” RDG Filings has long been convinced that while the primary purpose of XBRL is for use by analysts at the end of the line, XBRL will also provide the SEC with an unprecedented tool in its enforcement efforts. The SEC says that these new initiatives will make particular use of “analytical techniques and computing capacity with special expertise in data mining.” You can read more about these new initiatives in this article from Compliance Week.

RDG Filings is convinced that while companies participating in fraudulent behavior have new reason to fear the SEC, the real takeaway for all public companies is that with the SEC utilizing XBRL more aggressively to find reporting irregularities, it is all the more important to have your financials accurately prepared by XBRL and compliance experts.
Nobody creates better XBRL than RDG Filings, and no do-it-yourself software can provide your company and your Officers the peace-of-mind they need now that the SEC is using XBRL data in their policing efforts. Contact RDG if you would like more information about our full-service XBRL filing and our XBRL Quality Assurance services.

Posted in SEC Compliance, SEC News, Uncategorized, XBRL Filings, XBRL News, XBRL Quality Assurance | Comments Off on XBRL Data & the SEC’s Enhanced Enforcement Efforts

Be Practical, Not Scared of XBRL Limited Liability Expiration

Wednesday, June 5th, 2013

Let’s be practical (not afraid) about XBRL Limited Liability expiration

How the Fear Campaign makes it sound:

Some of our competitors are saying: “Once your company’s grace period ends, your XBRL files have the exact same material error liabilities as your traditional EDGAR HTML files….In the event of a misstatement or omission of a material fact in the XBRL files, the company along with its officers and directors can be held legally liable and be subjected to civil and criminal liability.”

The truth in this statement is “Yes, the documents are both deemed “filed” and liability is assumed for errors between the two formats of EDGAR and XBRL. They should match. If a company is attempting to defraud investors, and cannot prove it was an honest mistake (via Quality Assurance and a trail of some kind) then you are in trouble. More than likely, the SEC will issue a comment letter and ask why something is different or tagged in a specific way. The majority of the time, the worst case is an explanatory Correspondence filing or an amended filing explaining the error. While significant and potentially expensive mistakes, the reality is a world apart from “civil or criminal liability.”

Looking through the XBRL industry’s (service & software providers) websites, it is clear that a fear campaign has been the approved method for attracting business. RDG doesn’t believe in taking advantage of being the XBRL experts. Companies should be cautious, yes. However, is instilling fear really necessary? We believe that should be left to the ghosts. First, anyone reading this should note that the same fear campaign was instituted by these same companies when the original XBRL mandate was put into effect. While the task of preparing XBRL is a large one, it is not something to be afraid of. The sky will not fall when limited liability expires, but it is something to prepare for. Proper preparation of your company’s XBRL filing will minimize any impact of more detailed review of XBRL filings by the SEC.

Posted in EDGAR Quality Assurance, SEC Compliance, SEC EDGAR Filing, SEC News, Uncategorized, XBRL News, XBRL Quality Assurance | Comments Off on Be Practical, Not Scared of XBRL Limited Liability Expiration

XBRL Quality Assurance – Layman’s Terms

Wednesday, May 22nd, 2013

Layman’s terms of what should be done to assure quality in XBRL filings:

1. Unless you have years of XBRL tagging and taxonomy expertise in your financial reporting group, a software solution or web filing solution will probably not offer you enough support for quality assurance with regard to the technical and subjective portions of XBRL.

2. There is no one-size-fits-all approach to designing a quality XBRL filing. Regardless of limited liability protection, each company should manage XBRL risks within its risk appetite, define a comprehensive process to identify all the sensitive areas events, and make sure the company utilizes a provider with a clear XBRL quality assurance framework.

3. Since the SEC does not indicate any requirement of audit of XBRL documents, most auditing houses do not provide XBRL tagging services and they are not the experts in taxonomy creation or XBRL creation software. In fact, the SEC specifically omits auditors from having to offer certification of XBRL documents.

4. Companies need to focus on the quality of their reporting as soon as possible. There should be a full review of the tags used by both automated checks and by a person familiar with your XBRL tagging, and with expertise and understanding of your industry. This person should not be completely objective to the taxonomy creation because there are several ways to present XBRL information depending on the circumstance/situation at hand. Even more confusing to a machine is the fact that each of the variations can be compliant with the SEC.

5. Validate the document for completeness and structure, independently, irrespective of whether the document is built in-house or outsourced to an XBRL service provider/ printers.

6. Have a communication record between your team and a way of tracking what improvements and changes were made quarter over quarter, and most importantly, why they were made. This is what will matter. From our own experience in this matter, it helps to have a person involved because computers are not good at explaining themselves to a group or the SEC.

7. In the absence of formal SEC guidance, it is important to establish a policy to assess material XBRL errors and a process to determine whether an amendment filing is required.

8. If you are planning on maintaining control internally, your company should stay current with the latest approved XBRL taxonomy. Upon each release that has been approved by FASB and the SEC (typically between February and May each year), your team should compare and utilize the newest version to the previous version used and look for areas of improvement.

9. Stay abreast of all FASB guidance, SEC staff observations, regulations and the current AICPA exposure draft on XBRL quality attributes. Avoid last-minute surprises by being aware of the latest developments and best practices from the SEC and XBRL US.

10. As XBRL reporting standards and taxonomies evolve, monitoring the changes above is crucial to a continued quality assurance in your company’s filing.

Posted in SEC Compliance, SEC EDGAR Filing, SEC News, Uncategorized, XBRL News, XBRL Quality Assurance | Comments Off on XBRL Quality Assurance – Layman’s Terms

What Does XBRL Limited Liability Expiration Mean to You?

Thursday, May 16th, 2013

The Facts on limited liability:

What is the limited liability provision as stated by the SEC Rule 406T by SEC?

In summary, the rules offer a 24-month grace period where the SEC considered your XBRL as “furnished” not “filed.” That meant that mistakes within your XBRL documents were viewed as errors in good faith, and carried no penalties if corrected promptly.

Example: A smaller reporting filer should have submitted its first interactive data (in a Form 10-Q) for the fiscal period ended June 30, 2011. This would have caused its limited liability to expire, for the filings of fiscal period ending June 30, 2013.

When the limited liability window closes, XBRL exhibits will have the same liability provisions as regular filings under the anti-fraud provisions of the Securities Law.

(Click here to view the rules)

What this means in plain-English:

After the expiration of limited liability, Rule 406T calls for a “good faith effort” by the filing entities to submit accurate interactive data with SEC. The SEC has not defined what a “material error” is, but they will issue comment letters and request explanations for irregularities that they find, just as they would with EDGAR. The main difference is that XBRL is much easier to search for inaccuracies.

If your company is filing correctly, the data in your EDGAR and the facts required to be tagged in your XBRL filings should match. Simply put, the content should not be different between the EDGAR and the XBRL.

Companies need to focus on the quality of XBRL services prior to filing with SEC.
Your company’s XBRL documents will be validated by SEC and questioned upon expiry of the limited liability window.
Ensuring accuracy of XBRL filings with SEC is gaining traction with the impending expiry of limited liability clause.

Posted in SEC Compliance, SEC News, XBRL News, XBRL Quality Assurance | Comments Off on What Does XBRL Limited Liability Expiration Mean to You?

Wall Street Journal Article & What XBRL Data Errors Mean to Your Company?

Monday, January 28th, 2013

Here is an article from the WSJ we found very interesting:

http://blogs.wsj.com/cfo/2013/01/22/costly-data-go-untapped/

The first fact to keep in mind is that the SEC is not getting rid of the XBRL requirement. XBRL is a real and permanent part of the SEC reporting process.

This WSJ article makes clear that to this point, all the effort, expense, and time that has gone into creating XBRL filings since 2009 has amounted to little more than an exercise in simple SEC compliance, and that the ostensible end-users of XBRL data—investors and analysts—have found little of value in the vast quantities of code.

XBRL is a reality, and it will continue to take a considerable amount of time and some expense. So instead of muddling along merely complying with this SEC mandate, there is an opportunity for SEC Filers to add some actual value to their XBRL filings. Companies can choose to have their XBRL documents created by true professionals. XBRL experts can create documents that go way beyond merely satisfying the SEC’s mandates. If the data is well-built, XBRL actually has the potential to be a value-added expense for companies. As you can see in this article, investors want to be able to use XBRL, and companies that have well-built XBRL are more likely to get favorable attention from investors.

RDG Filings offers two points of great value for our clients and potential clients:

1) Our XBRL code is built by CPAs that are XBRL experts. XBRL creation is their primary focus and core competency. Our XBRL documents are not simply compliant, as we take pains to make the data very clean and as usable to the analysts and investors as possible. Because the data we create is so well-built, using RDG for XBRL actually has the potential to be a value-added expense for companies.

2) RDG Filings offers comprehensive XBRL Quality Assurance Solutions that we believe will be of vital importance. Not only as the limited liability exemption runs out, but also as XBRL become more widely used by investors and analysts, companies doing XBRL in-house or with most any other provider are going to need a very in-depth auditing process that will ensure the accuracy, completeness, and usability of their data for the investors who are the ultimate targets. XBRL is here to stay; it needs only to be better built.

One last point that is certainly not the least:

The article references an SEC filing company that has been paying nearly $100,000 per year for XBRL tagging and filing. That amount of cost is absolutely unnecessary. RDG Filings will add value to your XBRL filings, while diminishing your costs.

Please contact us for more information right away. Your XBRL Filings should be:

1) 100% SEC compliant.

2) Highly valuable to the investors and analysts it is designed to help.

3) A more streamlined aspect of your filing process.

4) Much more reasonable priced.

– Stewart Walker – SVP, Director RDG Filings

Posted in SEC Compliance, SEC News, Uncategorized, XBRL News, XBRL Quality Assurance | Comments Off on Wall Street Journal Article & What XBRL Data Errors Mean to Your Company?

Financial Executives Research Foundation – FERF Survey Highlights

Tuesday, January 15th, 2013

The Annual 2012 Survey on “SEC Reporting and the Impact of XBRL” conducted by the Financial Executives Research Foundation (FERF) has been published, and you may have seen a lot of buzz about it already. We at RDG Filings are certainly very pleased with many of the survey’s findings.

The survey offers a lot of information, and we have found that the numbers speak for themselves. The survey clearly illuminates the fact that doing XBRL in-house is far more time consuming than utilizing a full-service outsource solution. While the survey has been pushed by interested parties as evidence that doing XBRL in-house is the wave of the future – its findings show exactly the opposite. Those who take a “pro-in-house” reading also miss the fact that utilizing RDG Filings as a full-service solution promises very significant savings over your current provider.

The facts about the amount of time and money spent by companies who have chosen to bring the XBRL tagging and filing in-house are remarkable. The respondents to this survey report having spent as many as five times more hours on their most recent XBRL filings than the respondents who use a full-outsource solution for XBRL filing. That expenditure of time comes in addition to the licensing costs for the software and the costs for any technical support. According to the FERF Survey, RDG Filings flat-rate pricing structure will represent anywhere from 35%-90% cost savings. In addition to the cost savings, RDG’s full-service tagging, consultation, and filing will save you even more time and money.

Additionally, the survey shows that among the full-service XBRL providers, only RDG Filings has 100% of its client responding that they are either “satisfied” or “very satisfied” with their XBRL Solution.

According to the survey, “Respondents cited their internal teams’ level of XBRL competency, getting educated on the technology, and the final review process as contributors to the bottleneck.” If these are the primary concerns of financial reporting executives, how can it be concluded that refusing to utilize a resource like RDG Filings—whose core-competency is XBRL—is not the superior option? A company can either utilize RDG’s full-service solution and benefit from our vast experience, knowledge, and our team of CPA XBRL experts, or a company can choose to bring this process in-house and have to develop all that experience and expertise themselves and maintain that knowledge base for a process they only have to do four times a year. Where is value-add for a company to develop the XBRL precision and expertise that is going to be necessary now that the limited liability exemption is coming to a close? I just can’t see it.

Also ignored by the pro-in-house reading of this survey is the fact that a sizable percentage of companies are going to begin utilizing an external accountant review to audit their XBRL filings. This is understandable given the fact that the SEC will be phasing out the limited liability exemption in the coming months. The need for thorough external review will be all the greater for companies using in-house software to create their XBRL documents because they will have neither the time nor the inclination to develop their XBRL knowledge and expertise to the level that will provide a sufficient degree of confidence in the accuracy, completeness, and compliance of the XBRL document they created. RDG Filings provides each of our clients with a dedicated account manager who is an expert in XBRL and is either a CPA or has extensive auditing experience. The value of outsourcing your XBRL filings to RDG can be measured no place better than in the confidence you will have in the precision of your XBRL filings.

It is clear to us, and judging from this survey, it is also clear to many others, that XBRL is not a task best done in-house. Seeking the expertise of a third party provider with the experience and knowledge of a company like RDG is the best path toward excellent XBRL filings at a reasonable cost.

Please find these highlights and the full survey here.

Please contact us with any questions or for more information.

Posted in EDGAR Quality Assurance, SEC Compliance, SEC EDGAR Filing, SEC News, XBRL News, XBRL Quality Assurance | Comments Off on Financial Executives Research Foundation – FERF Survey Highlights

SEC OBSERVATIONS & ARCHIVE

Thursday, October 18th, 2012

SEC Staff Observations on XBRL Filings

From time to time the SEC releases staff observations regarding XBRL filings and ways to streamline the process for filers.

Access to these observations is available by clicking here:
http://www.sec.gov/spotlight/xbrl/staff-review-observations.shtml

SEC Archive

To see the XBRL filing archive of the most recent 200 filings (excluding today) please click here:
http://www.sec.gov/Archives/edgar/usgaap.rss.xml

1) After clicking on the link, select the company you wish to review
2) Once you are redirected to the registrant’s page for that filing click on the “Interactive Data” button on the left hand side

Posted in SEC Compliance, SEC EDGAR Filing, SEC News, XBRL News, XBRL Quality Assurance | Comments Off on SEC OBSERVATIONS & ARCHIVE