A study conducted by two accounting professors at North Carolina State University on the SEC’s pilot XBRL program found significant flaws in the data. The study examined filings submitted by 22 companies during the SEC’s voluntary program, and raises concerns about data quality ahead of the mandatory XBRL filing deadline for the largest 500 companies, beginning with quarter-ending June 15, 2009.
But, while the XBRL concept is promising, the study from NC State found that reports from companies that participated in the voluntary pilot program contained multiple errors. “They were poorly tagged,” [Dr. Eileen] Taylor says, “and there were fundamental errors of accounting. One report, for example, contained too many zeros – turning millions into billions.” In their abstract, the researchers note that “These errors are serious because since XBRL data is computer-readable, users will not visually recognize the errors, especially when using XBRL analysis software.” In other words, users won’t be able to spot that something is wrong.
The study, “A Comparison of XBRL Filings to Corporate 10-Ks – Evidence from the Voluntary Filing Program,” examined XBRL filings by 22 companies that participated in the SEC’s voluntary pilot program in 2006. The study was co-authored by Taylor, Drs. Al Y. S. Chen and Jon Bartley, who are both professors of accounting at NC State. The study will be presented at the American Accounting Association Annual Meeting being held in New York City, Aug. 2-5.