preview

Benefits Of Interactive Data To Improve Financial Reporting

Decent Essays

Answer: It is reasonable to exempt small companies with revenue under $250 million from filing in XBRL format for a short period (3-5 years) for the cost of preparation, but it is not a good idea to implement this exemption for long time. 1) XBRL has significant benefits for the transparency improvement of financial report. As Du and Vasarhelyi et al., (2013) stated, there has been over one decade of studies and evaluations on Internet-facilitated financial reporting in general and XBRL in particular (Ashbaugh et al. 1999; Debreceny et al. 2002; Ettredge et al. 2002; Debreceny et al. 2005; Kelton and Yang 2008; Debreceny et al. 2010). These studies explored, advocated, and generally supported the idea of using the Internet to …show more content…

Potential users include regulators, accountants, banks, analysts, investors, management, and any other member of the financial information supply chain. The XBRL report can offer a platform to use an interactive language to communicate with each other informatively. The third benefit is the XBRL process and savings. Based on the old financial reporting system, company information is hosted on their website in PDF or HTML format, and this information is costly to retrieve, manipulate and utilize by other interested and concerned parties. Companies spend billions of dollars on this method of data presentation and transfer. Implementation of XBRL will result in cost savings and the data will be cheaper, better, and faster. 2) The cost of XBRL report for small companies The main reason for this exemption is the cost to prepare and file the XBRL report. But, as the two papers mentioned in the question argued, “A recent study of smaller filers by the AICPA showed that the median cost to file in XBRL in the US for the companies that would be covered by the exemption is USD $8000 annually, covering the detailed tagging of 3 quarterly financial statements and 1 annual financial statement, so it’s fair to say that the savings claims by the proposal’s supporters are somewhat overblown.” It is not too much. So, in my opinion, some potential costs would happen in this time, but these costs would decrease step by step. The first cost is the psychological cost for small

Get Access