By Anne Rosivach
Calcbench, an open source application that consumes corporate eXtensible Business Reporting Language (XBRL) data and performs comparative analytics, was named the grand prize winner of the XBRL Challenge at the XBRL and Financial Analysis Technology Conference on February 29, 2012. The XBRL Challenge is a contest for developers of applications that leverage XBRL-formatted data in the Securities and Exchange Commission (SEC) Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) database. The developers of Calcbench were awarded $20,000.
All public companies in the United States listed with the SEC are required to attach exhibits containing the computer-readable XBRL data tags to their filings.
"The XBRL Challenge was created both to raise awareness about XBRL and to create a new generation of tools to make it as useful and widely adopted as possible", said Paul Ratnaraj, director of Advanced Initiatives at Wharton Research Data Services (WRDS) and judge for the XBRL Challenge.
Calcbench's cofounders, Pranav Ghai, who is based in New York, and Alex Rapp, based in Cambridge, Massachusetts, first met as students at Bates College in Lewiston, Maine. They are both working in the financial services industry.
It has taken years for the potential of XBRL to be realized",and we are not there yet", said conference keynote speaker, Mike Starr, deputy chief accountant for policy support and market monitoring at the SEC. Right now, over 9,000 companies have submitted XBRL exhibits containing over ten million discrete financial facts to the SEC EDGAR database, he said, and that number will increase exponentially in July when all of the tagged footnote information has been submitted.
The SEC, which is already using the data to analyze information in real time, is looking to improve efficiencies. The SEC has seen a decline in the number of extensions and is looking to use inline data tags at some point in the future so that viewers will be able to look at one document.
Terri Polley, president and CEO of the Financial Accounting Foundation (FAF) and a panelist at the conference, said that the Financial Accounting Standards Board (FASB) had used XBRL data for the first time in their post-implementation review of FIN 48, which was published in January 2012. "It is a great process", she said. "We were able to accomplish in days what had previously taken months."
"XBRL data will help FASB to be a better standard setter", Polley said. She stated that the standard-setting process could be improved for private companies and governments when they incorporate XBRL into their reporting. The FAF is the oversight body for the Government Accounting Standards Board (GASB).
Another panelist compared the potential of XBRL data analytics for investors to the change that occurred with the introduction of the EDGAR database. One company found that it had been able to identify accounting issues over its many divisions. In addition, the company was able to identify discount rates and compare them to market conditions.
Financial analysts have yet to embrace XBRL, one panelist said. Issues remain with consistency - the number of extensions - and analysts would like real-time earnings release data, which is not yet in XBRL.
"Among a very strong pool of applications, the judges chose Calcbench because it offers the broadest appeal and the most comprehensive use of data with XBRL and other sources, all within a simple interface that is easy to use", Ratnaraj said. "It also offers a good framework on which to build other analytical tools."
Calcbench allows users to perform multi-company comparisons annually and quarter to quarter. Users can add their own notes and formulas, export to Excel, and share their work with others.
The XBRL and Financial Analysis Technology Conference was sponsored by XBRL US and the New York Society of Securities Analysis (NYSSA).
The XBRL Challenge was launched in July 2011 and had eighty-four initial applicants. It was sponsored by the CFA Institute, WRDS, and XBRL US. A panel of five judges was assembled to review the entries and select the winner.