In 2004, the SEC initiated the “Interactive Data Voluntary Program,” which encouraged publicly traded companies to voluntarily submit SEC filings using the Extensible Business Reporting Language (XBRL), in addition to their traditional HTML filings. XBRL is a markup language that provides for each individual item of data, or element, in financial reporting to be tagged. This feature of XBRL makes financial reporting data both human- and machine-readable, facilitating the access and use of financial information. With the aim of improving the comparability of information across companies and industries, regulators have deemed it necessary to standardize the information in financial reporting—an XBRL taxonomy is used to serve this purpose. XBRL US helped the SEC create the first U.S. GAAP Taxonomy in 2008; subsequently, the SEC mandated XBRL filing, beginning in 2009. This article examines the extent to which data comparability has been achieved by analyzing the use of taxonomy extensions in XBRL filings. The analysis reveals opportunities for CPAs in the XBRL reporting area.

The XBRL Taxonomies

An XBRL taxonomy is a hierarchical list of all the potential accounting terms companies may choose from when preparing an XBRL filing (see the 2018 U.S. GAAP taxonomy, The elements of a taxonomy mostly correspond to line items in financial statements; the taxonomy groups elements by statement/disclosure. To find the specific label for an element, a preparer can start with the statement/disclosure, and then drill down to the categories to which the item belongs. For example, in the user interface shown in Exhibit 1, to find the label for “Prepaid Insurance,” a preparer can click “Statement—Statement of Financial Position, Classified,” and then “Statement [Line Items],” which includes two categories: “Assets” and “Liabilities and Equity.” Clicking “Assets” and then “Assets, Current” opens the “Assets, Current” group, which includes all the current asset line items, including “Prepaid Expense, Current.” “Prepaid Insurance” is the first element under “Prepaid Expense.” The taxonomy provides details about the element “Prepaid Insurance”—its labels, brief definition, and references to FASB’s codification system.

Exhibit 1

Finding the Label for Prepaid Insurance

Over the past 20 years, FASB, together with the SEC and XBRL US, has developed a taxonomy for companies that prepare their financial statements in accordance with U.S. GAAP. SEC Rule 33-9002, Interactive Data to Improve Financial Reporting(, mandated that large accelerated filers using U.S. GAAP with over $5 billion public float should begin XBRL financial reporting in 2009, followed by all other large accelerated filers using U.S. GAAP in 2010 and most other filers in 2011. Preparers are responsible for using the latest two versions of the taxonomy; for example, before the 2019 version comes out, they can use either the 2017 or 2018 version. Once the 2019 version is released, however, the 2017 version is permanently superseded for SEC filing purposes.

FASB took over the maintenance of the XBRL U.S. GAAP taxonomy from XBRL US after the 2009 release, updating it every year since except for 2010. The current version, U.S. GAAP Taxonomy 2018, contains over 15,000 elements representing commonly reported financial concepts for U.S. GAAP financial statements. Annual revisions of the taxonomy occur for reasons such as the actual use of the elements, issuance of new FASB guidance, and technical corrections.

According to FASB’s annual XBRL taxonomy release notes, the 2011–2013 releases were significantly influenced by the significant amount of Accounting Standards Updates (ASU) issued during that period and preparers’ feedback on their use of the taxonomies as the XBRL mandate phased in, both of which resulted in a large increase in new elements and definitions. For the 2014–2015 releases, much fewer changes were made, as the emphasis shifted from reliability to stability. The 2016 release simplified the taxonomy by removing elements with low and inappropriate use and reducing redundancies and inconsistencies, resulting in an increase in deprecations and changes to definitions. For the 2017 and 2018 releases, the emphasis shifted slightly to structural design changes and topical project reviews to improve usability, as well as new elements to accommodate a significant number of ASUs.

According to Rule 33-9002, foreign companies using IFRS were expected to submit their XBRL financial reports beginning in 2011; however, the IASB did not release its first IFRS taxonomy until 2014. The SEC accepted the IFRS taxonomy in 2016 and requires IFRS filers to submit their XBRL financial statements beginning in 2016. The current IFRS taxonomy version is 2018.

Challenges in Achieving Data Comparability

XBRL technology is intended to make it easier for investors and analysts to compare information across companies and industries and over time; however, issues arising from XBRL implementation have hampered data comparability.

Use of third-party XBRL service provider.

From the perspective of filers, XBRL reporting generates no more value than traditional HTML reporting but incurs additional preparation costs; it tends to be viewed as merely another format of HTML submission. In addition, the fact that XBRL financial statements are not subject to public audit reinforces filers’ inclination to outsource the tagging work to a third party that generally has limited knowledge of the company’s business. As a result, the meaning of the financial data may be misinterpreted by the third party, which leads to inaccurate use of elements and labels, thus lowering data quality.

Use of taxonomy extensions.

If the preparer (either the company or the third-party service provider) believes that a financial statement item does not match up with an existing taxonomy element, it can add an extension element. This ability to customize data detracts from the goal of standardization. In addition, many company-specific extensions may be created even when they can be addressed by elements from the existing taxonomy. The use of extensions significantly complicates data analysis, especially when comparing reporting across companies.

Current Use of Taxonomy Extensions

Use of extensions over time.

To gain some insights into the comparability of XBRL data, the authors analyzed the use of extensions in XBRL filings, especially Form 10-Ks. Taxonomy extensions data for U.S. GAAP filers was retrieved from the XBRL Cloud website ( When the data was retrieved in early October 2018, 48,079 10-Ks or 10-K/As and 151,383 10-Qs or 10-Q/As were filed. Exhibit 2 shows the results. On average, 21% of the tags in an annual report are not selected from the taxonomy. The use of extensions was 9% in 2009 and climbed to 16% in 2012. It increased significantly to 25% in 2013 and 24% in 2014. Since then, extension use has been stable at approximately 21%. The trend over time is somewhat surprising, as one would reasonably expect that the need for extensions would eventually decline as the taxonomy matures.

Exhibit 2

Extent of Use of Taxonomy Extensions

10-K and 10-K/A; 10-Q and 10-Q/A Year; Filings; Extension Use; Filings; Extension Use 2009; 42; 9%; 893; 10% 2010; 550; 12%; 3,149; 14% 2011; 1,760; 17%; 15,224; 11% 2012; 7,324; 16%; 21,592; 17% 2013; 7,070; 25%; 21,133; 21% 2014; 6,910; 24%; 20,819; 19% 2015; 6,716; 22%; 20,071; 18% 2016; 6,311; 21%; 18,608; 17% 2017; 5,979; 21%; 17,811; 17% 2018; 5,417; 21%; 12,083; 18%

In contrast, the use of extensions in quarterly reports is lower than in annual reports, at approximately 18%. The overall trend of using extensions is similar to that seen in annual reports, but to a lesser extent. In 2009, it was 10%, and then jumped to 17% in 2012 and further to 21% in 2013. Since then, the use of extensions has been approximately 18%. The authors suspect that the higher level of extension use in annual reports is partly due to the more comprehensive nature of the 10-K. The use of extensions is higher for annual reports in all recent years, though it was higher for quarterly reports in the early years of mandate. It is worth noting, however, that tagging in the notes to financial statements was not mandatory until 2013, and that from 2009 to 2012 filers were mainly tagging the face of the financial statements; this may skew the data for those early years.

Use of extensions by industry.

Industry characteristics may drive the degree of conformity to the XBRL taxonomy (Exhibits 3 and 4). Focusing on 10-K filings and comparing across industries, the heaviest use of extensions is found in the tobacco (30%), utilities (29%), real estate (26%), insurance (25%), and financial trading (25%) industries. The industries that use extension the least are measuring and control equipment (16%), textiles (17%), recreation (17%), consumer goods (18%), and electronic equipment (18%). This suggests that information in the latter group is more comparable than that in the former group, and filings from regulated industries are difficult to compare.

Exhibit 3

Top Five Industries with Heaviest or Lightest Use of Extensions

Heaviest use of extensions; Extension use; Lightest use of extensions; Extension use 1; Tobacco products; 30%; Measuring and control equipment; 16% 2; Utilities; 29%; Textiles; 17% 3; Real estate; 26%; Recreation; 17% 4; Insurance; 25%; Consumer goods; 18% 5; Financial trading; 25%; Electronic equipment; 18%

Exhibit 4

Top Five Industries with High Variations in Use of Extensions

Industry; Variations in extension use 1; Nonmetallic and industrial metal mining; 18% 2; Financial trading; 17% 3; Precious metals; 16% 4; Real estate; 16% 5; Fabricated products; 16%

Narrowing the comparison to filings within an industry, however, reveals that filings are least comparable in the nonmetallic and industrial metal mining, financial trading, precious metals, real estate, and fabricated products industries. Investors in these industries have more barriers to overcome because of the high variation in extension use across companies within the same industry. To reduce information processing cost, investors should select companies with more standardized data. Companies with highly customized data risk losing capital.

Perfect conformity to taxonomy.

Given the comprehensive list of taxonomy elements, the authors expect that most companies will be able to tag their information using the existing labels. The yearly update of the taxonomy should further reduce the need to develop company-specific extensions. As seen in Exhibit 5, almost no companies fully adopted the labels from the taxonomy in the first two years (2009 and 2010); however, 44 companies (3%) were able to tag their information in full conformity to the taxonomy in 2011. The number of conforming companies climbed to 335 (5%) in 2012. Surprisingly, the number of perfectly conforming annual reports then dropped to just over 100 for the next three years, and between 60 and 75 for the three years following that.

Exhibit 5

Perfect Conformity to Taxonomy (Zero Use of Extensions)

Year; Filings; Zero Use (Filings); Zero Use (Companies) 2009; 42; 0%; 0 2010; 550; 0%; 2 2011; 1,760; 3%; 44 2012; 7,324; 5%; 335 2013; 7,070; 1%; 101 2014; 6,910; 2%; 118 2015; 6,716; 2%; 107 2016; 6,311; 1%; 75 2017; 5,979; 1%; 60 2018; 5,417; 1%; 64

The highest percentages of conforming reports primarily come from the recreation (5%), precious metals (5%), mining (4%), printing and publishing (3%), and financial trading (3%) industries (Exhibit 6). In terms of number of conforming annual reports, the business service (190) and financial trading (126) industries lead. Interestingly, manufacturing industries dominate the weak conformity group; no companies in the shipping containers, coal, rubber and plastic products, tobacco products, and candy and soda industries are fully in line with the taxonomy. Several industries have only one or two companies in perfect conformity.

Exhibit 6

Top Five Industries with Cases of Perfect Conformity

Industry; Zero Use of Extensions; Industry; Zero Use of Extensions (Filings) 1; Recreation; 5%; Business service; 190 2; Precious metals; 5% Financial trading; 126 3; Mining; 4%; Retail; 47 4; Printing and publishing; 3%; Metallic and industrial metal mining; 41 5; Financial trading; 3%; Wholesale; 41

Software that generates high extension use.

In total, 56 software products have been used to generate XBRL files related to annual reports. The top five products are Workiva (6,455 filings, 13%), RR Donnelley (5,625 filings, 12%), WebFilings (5,542 filings, 12%), Novaworks Software (4,189 filings, 9%), and Ez-XBRL (2,821 filings, 6%).

Ranking the products based on the prevalence of extension use shows that the heaviest use comes from Vistalytics (49%), Compliance Xpressware (49%), NeoClarus (37%), IBM Cognos FSR (29%), and IBM Cognos CDM (28%). Focusing on programs with more than 500 filings, highest extension use comes from Compliance Xpressware (49%), NeoClarus (37%), IBM Cognos FSR (29%), WebFilings (24%), and Merrill Corporation (23%).

Comparing the first and the most recent 10-K filing.

The trend of extension use based on filing year analysis may be misleading, given that implementation was phased in. Therefore, the authors compared the use of extensions in a company’s first 10-K filing with that in its most recent 10-K filing. On average, the two filings are 3.75 years apart. Companies have increased the use of extensions on average from 14% on first filing to 20% in the most recent one. Assuming that more data are tagged in the most recent filing, the higher level of extension use means that more items are unique to the company. This makes comparison across companies more difficult than ever, despite nearly a decade’s worth of effort to improve the taxonomy. Consistent with this, the percentage of perfect conformity to the taxonomy has dropped from 5% of the first filings to 2% in the most recent filing.

It is worth noting that 64% of the companies switched software between these two filings. The number of software products used was 52 for the initial filings and 49 for the most recent. Although that is not much of a change, the market share of each product has changed significantly. The top five leaders in market expansion are Workiva (from 2% to 24%), Donnelley Financial Solutions (1% to 8%), Novaworks Software (8% to 12%), Thunderdome (just over 0% to 3%), and DataTracks (1% to 4%).

The leading product in the most recent filing group is Workiva, with 24% of the market, double the market share of runner-up Novaworks Software (12%). Following them are Donnelley Financial Solutions (8%), Ez-XBRL (6%), and GoXBRL (5%). An examination of Workiva clients reveals that 39 firms were in perfect conformity with the taxonomy in their first filings, when they were using other software, but have created extensions for their most recent filings while using Workiva. Out of 2,412 filings, only two of Workiva’s clients did not use extensions in their most recent fillings. It is unclear whether the competition among software products has played a role in the increasing use of extensions in XBRL filings.

Opportunities and Suggestions for CPAs

On June 28, 2018, the SEC passed amendments that require companies use inline XBRL (iXBRL) (, which will reduce the need to separately submit HTML and XBRL filings by embedding XBRL data directly into the HTML filing. Using iXBRL will avoid inconsistency between HTML and XBRL filings completely, which enhances the usefulness of XBRL data. The effective date for large accelerated filers using U.S. GAAP starts with fiscal periods ending on or after June 15, 2019; for accelerated filers using U.S. GAAP, periods ending after June 15, 2020; and for all other filers, periods ending after June 15, 2021. The iXBRL requirement significantly raises the bar for XBRL reporting. Companies will have to devote more effort to the quality of XBRL data, which brings opportunities for CPAs. CPAs can add value for their employers by contributing more to the preparation of iXBRL and better communicating with the third-party provider about the company’s business. The communication will be even more effective if the accountants also understand the taxonomy of XBRL. Another option will be for companies to keep iXBRL in house so that they gain more control over data quality. CPAs working on these initiatives can advance their own technology skills, increasing their involvement in the preparation of iXBRL filing.

Currently, CPAs are not responsible for the contents of a client’s XBRL filing. With the iXBRL effective date approaching, however, CPAs will play a role in reviewing or auditing iXBRL information, because it will become part of the internal controls and financial reporting. CPAs will have a head start on iXBRL if they become aware of the procedures and challenges related to it. Suggested steps include the following:

  • Understand the information the company provides.
  • Focus on fully understanding the tax onomy of XBRL.
  • Once the first two steps are accomplished, bridging the gap between the taxonomy and a company’s financial information will be easier, facilitating the data tagging process. CPAs should strive to reduce the use of extensions to enhance the comparability of financial information desired by investors.
  • CPAs can also contribute to high-level data comparability by actively participating in refining the taxonomy. The annual update of the taxonomy will be more effective if CPAs communicate issues in implementation from either the preparer’s or the auditor’s perspective, as well as suggest possible solutions to FASB.
  • CPAs will benefit from familiarizing themselves with the leading software programs used to prepare XBRL.
Qianhua Ling, PhD, CPA (China, inactive), CMA is an associate professor of accounting at Marquette University, Milwaukee, Wisc.
Zhenfeng Liu, PhD is an assistant professor of accounting at the University of Michigan–Flint.