SEC XBRL Check #2: Custom Tags and Labels

The second bullet point of data quality issues the SEC mentions in the proposed corporate ruling is:

• Identify, count, and provide the staff with easy access to non-standard special labels and tags

This one cuts to the heart of the tagging process itself (even though the SEC in typically understated fashion puts it a #2) and a book could be written on it. I'm sure books will be written on it. We may write a book about it.

But the first thing to point out is that the SEC is going to count the number of custom tags (custom definitions) that you create. I think we should assume that also means they will compare that number with other filers, probably your peers, as well as how your use of custom tags changes over time. Your mission, whether you choose to accept it or not, is to use standard tags wherever possible and create new tags only where you need to in order to support the way you currently report your financial information.

We believe the best way to accomplish that is to combine your own expertise about your company's accounting policies with taxonomy expertise. Perhaps you will take the time to familiarize yourself with the new GAAP taxonomy or hire some outside help. But the combination and a close review of the output are essential to completing this task.

The next point is that the SEC intends to look closely at custom 'labels'. This probably takes two forms:

• the custom captions or stub labels that you apply to the data so that the viewable XBRL reads exactly like your official report
• the custom definitions you apply to custom tags

The first one is pretty straight forward: Apply your own captions to all the tags. Don't rely on the available captions in the standard taxonomies.

The second one is pretty straightforward as well and means providing an adequate definition for any custom tags you create. It's probably best to follow the standard taxonomy's lead and make it as verbose as possible so that SEC reviewers can understand exactly what you're talking about. If they're going to take the time to look at the definition it may be worthwhile to keep them happy. And not just SEC reviewers but anyone looking at your data will have access to those definitions because they go with the data wherever the data goes. If the tag is the bar code then the definition is the nutritional information.

Next up, Preparers Guide practices.

-- Ed Hodder