In a sign of growing confidence in XBRL (extensible reporting language), we reported last month that Cartesis, the supplier of performance management systems had entered into a partnership with EDGAR Online, a US based provider of public company information to render financial data in XBRL format in Cartesis' consolidation, planning and reporting applications. In this article, FSN examines the implications and benefits of this development for company analysis and reporting.
XBRL has had a chequered history. It's path to prominence as the only credible global standard for financial digital reporting has not been smooth. In the recent past, its progress in the market has largely been driven by interest form regulators around the world seeking to streamline their data collection processes and enhance their analytical capability. Few, if any benefits have flowed through to corporate users.
However, the joint announcement by Cartesis and EDGAR Online is a defining moment in the development of XBRL because it offers companies, primarily in the US (for the moment), the prospect of detailed performance benchmarking, for example, KPI comparisons with competitors.
Trevor Walker, of Cartesis told FSN, "The trouble with XBRL is that it has suffered from an information technology focus rather than a CFO viewpoint. Most of the attention has been from regulators such as the FSA, HMRC and Companies House in the UK and for example, the SEC and FDIC in the United States . So CFOs have been asking where is the benefit for us? What this initiative does for the first time is to put real capability in the hands of the CFO."
Sue Childs, of EDGAR Online confirmed that the company, which is licenced to use the EDGAR brand and data, is building a significant store of XBRL tagged financial data. She told FSN, "XBRL data is available for annual returns (10K), quarterly 10 Q's and many other standard returns and we they have worked through around 8,500 companies tagging the data. This is irrespective of whether the companies concerned filed XBRL data under the SEC voluntary scheme."
For the moment, the taxonomies being applied to the data are US-GAAP based with industry specific taxonomies, such as commercial and industrial or banking, being used where these are available. Whilst there are no immediate plans to create a similar database of IFRS tagged data for European quoted companies, EDGAR Online is considering European expansion and partially pinning its hopes on US-GAAP to IFRS convergence.
Data held in XBRL can be surfaced in Excel through an Excel add-in developed for that purpose. Childs told FSN, "The Excel add-in can read XBRL instance documents. It's as simple as entering a ticker symbol into a wizard screen to call information from our database, with filters, straight into a spreadsheet."
However, the XBRL data can also be drawn down into Cartesis 10 where it can be compared with actuals data held within the Cartesis integrated data model and shared with other applications such as Cartesis Planning.
Cartesis' Walker said, "At the moment you can do quite high level comparisons in US-GAAP but the situation will improve as more data becomes available." But in the two weeks following the announcement, Cartesis reports some significant early interest and Walker says that four engagements are already underway.
Crispin Read, CMO of Cartesis is enthusiastic about the prospects for XBRL. He told FSN, "Yes, you can interpret this as a vote of confidence in XBRL. Understandably, many CFOs have taken the view that they will embrace XBRL when regulators compel them to but we are delivering something that CFO's will find useful right away. The data can be used not only for direct peer-group comparison, but also to drive performance metrics throughout the enterprise. Cartesis 10 enables companies to automate the external benchmarking process and operationally drive performance that is based on outwardly facing metrics, thus improving their financial profile."
Chris Rodgers, Chairman of XBRL UK welcomed the move. He told FSN, "It's a positive development and it's good to see commercial suppliers offering useful solutions to end users."
John Turner, a member of the XBRL International Steering Committee and CEO of XBRL start-up, Corefiling, also welcomed the Cartesis move. He told FSN, "It is a first and an excellent development that Cartesis will be able to perform analytics in this way taking advantage of the information available from EDGAR online. Hopefully, the XBRL tagging will eventually be based on actual XBRL submissions from the companies themselves."
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