XBRL Implementation Strategies: The Bolt-on Approach, Strategic Finance, May 2009

My XBRL column in the May 2009 issue of IMA’s Strategic Finance discusses in more detail one of the three XBRL implementation strategies outlined in the March 2009 column: the bolt-on approach. In brief:

• With the bolt-on approach filings and reports are created following the existing process and converted to XBRL once finalized, either in-house or by a third party;
• This approach is a fast and relatively inexpensive way to react to the SEC - or any other – XBRL mandate, and it is also the only approach promoted and supported by the vast majority of XBRL consultants and vendors;
• On the other end, it has limitations that have to be taken into account in its evaluation:
  • It turns XBRL into just an additional format to print the report once it is created, and it does nothing to make the advantages that XBRL offers in terms of greater efficiencies and lower costs in the process of creating the reports available to the company;
  • It poses change management issues: if a change in a particular report occurs, it will typically have to be implemented twice, once in the generation of the report, and once in the conversion to XBRL;
  • Evolving reporting requirements, either new – such as the convergence of US GAAP with IFRS - or already embedded in the SEC rule – the “year 2″ additional tagging requirements – will soon challenge its efficiency and even its viability.

Check the complete article at the IMA website (members only). Alternative approaches – Built-in and Deeply Embedded - which enable to achieve the primary goal of compliance but also offer significant benefits for the filer, will be discussed in two upcoming columns.