SEC Digitisation Benefits Met with Optimism
The SEC’s recently expanded requirements to report in Inline XBRL have been met with optimism, with the change being linked to increasing simplicity, improving data quality and use and enabling financial analysis.
Craig Clay, president of global capital markets at Donnelley Financial Solutions, has highlighted how companies are looking to automate and streamline compliance reporting, saying ‘The adoption of Inline XBRL will help achieve greater efficiency, deliver higher quality and pave the way for growing use of AI and machine learning solutions.’
One of the SEC’s goals for mandating iXBRL for financial statements was to build a base of accurate, organised financial data that can be easily analysed. The SEC have reported that humans are no longer the primary consumers of regulatory data, with 85% of enquiries into their EDGAR database coming from bots – and clean, machine-readable data will enable automation, machine learning and AI algorithms to analyse information in novel and useful ways. As Emily Huang, CEO at securities filing research service Idaciti Inc., has said, the introduction of XBRL for reporting ‘provides the opportunity to bring the data alive for consumption.’
As well as facilitating digitisation, standardised reporting is also useful for introducing efficiency, accuracy and simplicity. With Inline XBRL, companies will eventually only need to produce one report, reducing the burden, especially for smaller companies. The simplicity of one report containing machine readable and human-readable data allows data to be put front and centre for investors – making financial analysis simpler and improving transparency.
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