With the SEC's recent rule requiring the creation of XBRL auditor tags (including the name of the firm, and its location) the importance of XBRL data quality has never been more apparent. By leveraging publicly available rule sets (such as those created by the XBRL US Center for Data Quality) as well as proprietary analysis (such as those created by NeXtBRL), it is now possible to more fully understand the quality of the financial audits being performed by overworked 22 year olds at CPA firms across the US.
Consistent or structural issues within a publicly traded company's XBRL filings may point to deeper issues within the quality of the data being audited and reported. Consequently, the importance of the XBRL data set continues to increase. By zooming out from a single data set, and understanding XBRL data quality trends on a firm by firm, or office by office level, investors and regulators alike can start to more fully understand which firms, and even specific offices, are overlooking issues within the reporting practices.
Audit teams and Financial Reporting Managers alike will need to spend more time more fully understanding what is being reported to regulators, and the broader investment community.
Interested in learning more? Check out our sources below:
https://www.sec.gov/rules/final/2021/34-93701.pdf
https://xbrl.us/news/xbrlus-dqc-3-new-data-quality-rules/
