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TechTalk Blog - US Securities & Exchange & FASB Increasing Use of XBRL for Better Rule Making To Protect Investors

By David Colgren posted 03-08-2016 10:40 AM


Great story in a recent issue of CFO Magazine how XBRL is being used by both the US Securities and Exchange Commission and by other agencies such as the Financial Accounting Standards Board (FASB) to make better rules or determine the cost and burden of various regulations on the private sector.

FASB is using XBRL data to sort out the leasing disclosures from information contained in public company financial statements to make better rules are determine if this information is reported correctly to the capital markets.

Today, close to 15,000-20,000 data elements contained in the financial statements of a public company is tagged (The DNA of a public company) and linked to accounting rules for better comparison and analysis for better company transparency and accountability. Tagged information is machine-readable and can be put into detailed spread-sheets without re-keying for immediate analysis.

For example, one large global bank will report on credit card fees -- which make up a sizable revenue spread -- while another will not report such fees in their financials. Investors have a right to know this information – and now investors can see which banks -- for example -- are more transparent and accountable than others.  They can see gaps in reporting…

Many workers – more than 50% -- have their retirement nest-egg in a 401(k) that contains public company stock and they have a right to know the financial condition of a public company and which companies are more transparent then others. The financials provide an important picture of a company instead of a back-office deal with a financial advisor and a company executive regarding a company pick in a investment portfolio. XBRL provides this transparency/ accountability since this information is also placed on the US SEC EDGAR SYSTEM when investors around the world can look at and make better financial and in some cases – social/ governance decisions regarding company selection in investment portfolios.

Hopefully the US SEC will allow public companies to disclose and use XBRL data tags for environmental, social and governance data that goes beyond the financial data to include information about the racial composition of boards of directors and senior management or the number of women holding senior board positions or their composition and if a company has an LGBT pension or employment policy.  The public has a right to know and more and more companies are disclosing non-financial information and hopefully in the not-too-distant future the US SEC will allow companies to tag this important information in XBRL and post on the US SEC EDGAR System.  

I suspect we will be seeing more public examples of data sets contained in financial statements that could also be examined. Stay tuned. 

#LGBT #XBRL #NACD #CSR #ESG #USSEC #FASB #ClimateFinance #ClimateChange