10 tips for simple XBRL tagging compliance


Most companies--or their consultants in many cases--are in the thick of their XBRL tagging efforts. Most would agree that the year 2 requirements are much more onerous than the initial requirements. Rule 405 of Regulation S-T requires a deeper level of tagging. Specifically, you must tag the so-called "detailed footnotes." Here are 10 tips from EDGAR Online:

1. Plan ahead.
Give yourself a generous window of time in which to meet filing requirements. Also, now is the time to plan for year three: The expiration of the legal liability exemption. Keep in mind that the turnaround time for third-party service providers will also increase.

2. Eat the DFN creation "elephant" by looking at it as many bite-sized pieces.
Rather than looking at DFN creation as one big task, approach it as a lot of little tasks. Each piece of the notes is actually smaller than any one of the primary financial statements.  

3. Your primary financial statements and detailed disclosures are connected.
There is a connection between many of your detailed disclosures and your primary financial statement line items.  These connections must be expressed correctly using the XBRL medium.

4. Recognize that XBRL is simply a different way of expressing the same financial information.
The SEC, HTML and XBRL filing formats are two different mediums for expressing exactly the same information. With the XBRL format, however, you can use automated computer processes to check that information ticks and ties correctly.

5. Cultivate in-house expertise.
XBRL is here for the long term, so it pays to establish a base of in-house XBRL expertise. XBRL is made up of only eight fundamental building blocks: Network, table, axis, domain, member, line items, concept and fact. Learn these, and your XBRL life will be significantly easier.

6. Make the most of any third-party XBRL support you have engaged.
Determine what role your external auditors will play in your SEC XBRL financial filing process.  Leverage what your external auditors bring to the table, but don't spend resources training them. They should already be knowledgeable.

7. Follow best practices.
If you don't understand best practices because you have not yet cultivated in-house expertise, let your third-party providers help you and learn from those filers who have come before you.

8. Prepare all internal stakeholders for the additional effort required by DFN creation.
An internal communication plan gives your internal stakeholders information to help them realize the differences between the year one primary financial statements and block text tagging and the additional effort require for DFN tagging.

9. Leverage automated computer processes.
DFN filings contain a lot of details, but throwing more manual labor at the process just increases costs and potential errors.  Use automated computer processes where you can.  

10. Balance internal and external resources, short-term realities and long-term needs.
There is no one "right" method for creating SEC XBRL financial filings correctly. Identify the best mix of internal and external resources for your needs, and focus on the short-term task of completing your filing. Then you can tackle minimizing risk and keeping process costs in check.