XBRL and Interoperability of Financial Statements in the U.S

In the wake of global financial crisis, there is a pressing need for improving transparency and interoperability of the financials of public companies. XBRL and XBRL taxonomies have the potential of helping us accomplish this objective. In the U.S., the SEC has mandated that all publicly listed companies must file their financial statements using XBRL and the US GAAP taxonomy beginning mid 2009 to late 2014 according to a phased-in schedule. Are the XBRL-based financial statements interoperable? We address this question by analyzing all the annual XBRL financial statements filed to SEC as of this February. We find that the statements still lack interoperability, which is partly caused by issues related to the GAAP taxonomy and misuse of the taxonomy by companies. On average, only 37% data elements are directly comparable between a pair of statements. Our timely findings have practical implications that will ultimately help improve the quality of financial data