Are Small Companies Responsible for Inaccuracy in XBRL Tagging?

The financial industry has made it very clear that accuracy in XBRL tagging is still a major problem in financial reporting. A consortium was even created to solve this issue. Although there are a few different theories explaining why XBRL tagging contains so many inaccuracies, one obstacle we can all agree on is that smaller companies continue to outsource their work to third-party providers that have little interest in doing anything but the bare minimum to ensure compliance, according to an article in investing.com. We agree, but we also wonder why these smaller companies aren’t researching their filers more closely. The article in investing.com claims that larger companies have the resources to ensure XBRL accuracy, while smaller companies contract their XBRL work to cheap third-party providers. In our opinion, the main problem starts with the smaller companies not being aware of how their filing agents work. Not all third-party filers work under sub-par standards. Unfortunately, some quality filers get lumped in with other sub-standard ones when referring to outsourced XBRL work. So, be sure to interview your filing agent before your next filing to determine which side of the coin your filer operates. Check our blog for the right questions to ask. Last week we posted an article on our blog, listing the types of answers you should be asking your filer to ensure your documents are accurate, as well as compliant. We believe the key to accuracy in XBRL reporting lies with your filer’s proofreading skills. Be sure you know how their operations are run, even visit their office if you get a chance. Don’t rely on loyalty or even recommendations. Rely on the facts and your personal experience during a trial run. Among other factors, third party filers also use too many custom tags instead of the assigned GAAP taxonomies, the article states. There are more than 17,000 GAAP taxonomies to choose from, but because financial statements can be extremely large it is sometimes easier for the filer to create its own. This makes company comparisons much more difficult. With smaller companies, about 10% of the tags used are custom tags. Meanwhile, some tags are just completely wrong. Many times these small errors could have been avoided during the proofreading process. The article in investing.com claims that some software systems can detect these small errors, such as incorrect positive/negative signs, required values not getting reported, or a data point getting attributed to the wrong corporate entity. But, even the article admits that for now, there is a large dependence on human interaction to find and rectify the errors. Therefore, your filers’ proofreaders need to be exceptional. Before your next filing, you might want to know how your filing agent handles its daily operations. How familiar are their proofreaders with the XBRL GAAP taxonomies? You might even ask for evidence. Is their proofreading staff from the industry? What qualifications do their proofreaders have? These questions will not only ensure your documents are accurately tagged, but you will be helping the industry to improve on the XBRL tagging process. Finally, the article claims that XBRL tagging is improving, but needs more work. We can agree with this statement, but we also know our agents are highly skilled and strive to be 100% accurate every time, regardless. To learn more about our services and daily operations, speak to one of our agents at 732-780-5036. Also, visit the Edgar Agents site at www.edgaragents.com.

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We’d like to take a few minutes to thank you, our client, for trusting us with your filings this past season. We processed and successfully filed hundreds of Qs with the SEC, and appreciate your business. And now that August filings are done, you have time to take a break before the summer ends. But, before you head over to the tiki bar for a much needed cocktail, let us update you on the latest Edgar Agents services. Over the past year, Edgar Agents has posted several tips on our blog to help you file successfully and with less stress. We’ve also touched on legislative issues and trends that are pertinent to SEC reporting and financial printing. As we continue to gather information to help you with your filing and printing procedures, we’d like to invite you to peruse our past blog posts as a refresher. If there is anything you’d like to discuss, please do not hesitate to call or email me directly. Our office works round the clock. Open 24 hours a day, 7 days a week, including holidays at no extra charge to you. No matter what part of the world you currently reside, if you file with the SEC we are ready to work on your documents. In addition, we offer many other services such as financial printing, typesetting and newswires, to name a few. We provide all the necessary SEC mandates such as XBRL widgets, and offer many other resources for you to stay compliant and informed. Visit our site at www.edgaragents.com to learn about our services. We also understand that you are busy growing your business so let us service your needs at your convenience. Ask about our flat rate pricing and our customized packages. We welcome any suggestions you might have that would help you succeed in your goals because we know everyone has a unique situation. We work with each of our clients individually, offering you the best customer service. So, #GetToKnowEdgarAgents today, and talk to one our agents at 732-780-5036 about our products and services.

Can You Rely on Your Filer’s Proofreading Skills?

The 10Q deadline is fast approaching, and many of you might still be working on the final changes to your document. Just remember, in the chaos of preparing your final documents, it is very possible to make mistakes. Now would be a good time to ask your filer about their proofreading strategies. Below are some questions to ask your filer before filing your 10Q. What qualifications do their proofreaders have? A proofreader’s skills can vary by industry experience, education or natural talent. If you are lucky, your filer has hired reviewers that possess all three. An educated reviewer will know how to use and read the proper proofreading marks that are necessary when dealing with handwritten edits to a document. Also, if they are experienced in the industry, they’ll quickly spot inconsistencies that might not fly with the SEC. Finally, nothing beats natural talent and attention to detail. If the proofreader is able to quickly spot inaccuracies otherwise not seen by the filing agent or client, wasted hours and money in amendments will be avoided. How long does it take to review a document? Obviously, every document is different. The time it takes to review a document depends on many factors. For instance, a document that is 200 pages might take longer to review than a 20 page document. But, the same attention to detail is pertinent in both cases. Also, a document that has been revised significantly from the original version might take longer to review as well. In any case, reviewing a document shouldn’t take more than an hour in general. Is there an extra charge to review larger documents? In a nutshell, the answer to this question should be no. Some filers might need to charge extra in order to pay for two or more reviewers to work on one large document. Although understandable, this should not be common practice. Better put, it is not good customer service. Find out if your filer hires extra help during busy seasons. This cost might be getting handed down to you. Are their proofreaders industry people? As I mentioned before, a good proofreader will consist of the three skills described earlier. So, of course it is best to have an industry person review your document. An industry person will know what to look for and what to overlook. During crunch time, this skill is especially important. You’ll need to have some one quickly, yet thoroughly, review for inaccuracies that are most significant to the SEC. In contrast, smaller details like missing commas that should have been addressed in earlier versions, will need to be overlooked when there is only five minutes left to file a document. What do proofreaders look for? Proofreaders should follow a manual created by the company that lists a number of items to look for. For example, one of the items a reviewer would check is the consistency in the dates and signatures. The dates and signatures in the document should be consistent with the date the document is filed and the signature of the person who is required to sign the document. Another detail a reviewer might notice is inaccuracies in the table of contents once the document has been formatted into EDGAR. The document might have been altered to fit into the EDGAR system, which in turn changes the page numbers. The page numbers in the table of contents will then need to be updated. There are many elements proofreaders are trained to look for, but the key is to have an in-house checklist of items that all reviewers should be required to review and address when proofreading a document. Are their proofreaders familiar with XBRL GAAP Taxonomies? Yes. Reviewers should be aware of at least the most recent and commonly used XBRL GAAP taxonomies, although knowing ALL taxonomies is not humanly possible. If anything, proofreaders should at least know where to look to verify proper taxonomies if they are not sure. Recent news has shown that too many XBRL filers use the wrong taxonomies when tagging documents. This has resulted in inaccurate reporting and difficulty comparing company financials. Industry has since requested a closer look into this problem, and XBRL US, a non-profit consortium for XBRL reporting standards, has taken the responsibility to find a solution. So as you address the final touches to your 10Q document, take a few minutes to learn more about your filer’s proofreading strategies. The effort could save you hundreds of dollars in amendments and overall aggravation. To learn more about Edgar Agents and its services, please visit our site at www.edgaragents.com. You can also call us at 732-780-5036.

Why Conduct a Regulation A+ Kick-starter Campaign?

Why should companies conduct a kick-starter campaign under Regulation A+? … Simply to raise more capital through equity crowdfunding. Title IV of the JOBS Act (Regulation A+) allows entrepreneurs to market their offerings to any investor in an equity crowdfunding campaign, despite their income or accreditation status. What does this mean for companies raising capital? Only that the pool of investors is staggering and the potential to gain significant capital is highly likely. In 2013, when Title II of the JOBS Act was introduced, an estimated $250 million in capital funding was raised online in the first year alone. This type of investing has grown to more than $16 billion worldwide in the past few years. And, because the recent legislation in Regulation A+ doesn’t discriminate against any type of investor, it is likely that these numbers will increase significantly this year. An article in Forbes predicts that the crowdfunding industry will double to $34 billion in 2015, spread across several types of funding models like rewards, donation, equity and debt/lending. And with the new crowdfunding laws opening doors to more capital, even the venture capitalist industry could see a decline this year. So why should companies conduct a kick-starter campaign? The question should be, “Why are companies NOT conducting kick-starter campaigns?” To learn more about Regulation A+, read our latest blog posts at www.edgaragents.com. To learn more about Edgar Agents and our services, do not hesitate to call us at 732-780-5036 or visit our site.