Some of you may remember Christopher Cox, who served as SEC Chair from 2005 to early 2009, when he was succeeded by Mary Schapiro. His name doesn’t come up often, perhaps because his legacy was a weakened Commission tarnished by, among other things, the financial crisis and the Madoff scandal.
While Chairman Cox may not have been responsible for either of those debacles, he did leave another unpleasant legacy – XBRL. He was among the biggest cheerleaders for XBRL, claiming that it would enable investors to compare companies within and across industries and would perform various other miracles. Suffice it to say it hasn’t done that. Aside from the fact that it’s time-consuming, it has failed to provide the benefits of comparability. As a client recently said,
“[E]ven if two companies use the same taxonomy/tagging for Cost of Sales, they probably are not consistent in the underlying details that go into Cost of Sales. One company might classify certain components as G&A instead. There are many other examples. Consistency is very important for one company’s reporting from period to period, however comparisons of competitors’ financials will always be approximations at best.”