That scenario is probably a year or two away, predicts John Stantial, UTC’s director of financial reporting, since the SEC currently does not accept XBRL reports as the official filing (they can be filed in addition as part of a testing program). In the meantime, companies can use XBRL and convert the data to the SEC’s official format.

Stantial believes an XBRL-based reporting workflow would reduce the time to produce quarterly reports by 20 percent, because the tagged data would let the reporting systems automatically update the financials. Stantial says that companies like UTC typically spend one to three weeks per report on all sorts of government-required information, such as labor statistics, unemployment statistics and tax reporting. “With XBRL, I could push a button and get that in five minutes,” he says.

The SEC is spending $54 million to make its electronic Edgar reporting system XBRL-capable, and the effort to complete the standard SEC reporting taxonomies should be done by June, so Stantial speculates that XBRL-based reporting will begin by 2008. (Gartner has made similar predictions.) And he expects the Department of Labor and the IRS to follow suit.

Beyond making reporting easier, XBRL will improve internal visibility into company financials, Stantial predicts. Although UTC has a fast, five-day close with standard processes, there’s still room for interpretation in what’s reported. For example, an executive may want to know the operating expenses as a percentage of sales for all UTC’s major locations. But “operating expenses” could be interpreted differently. Plus, it can take several days to respond to requests, and the answers may come back in different forms, such as e-mails and Excel spreadsheets, that must then be consolidated manually. But if the various general ledgers and ERP systems in use throughout UTC’s subsidiaries were XBRL-enabled, Stantial wouldn’t have to wait for the financial data to be prepared in UTC’s standard format; XBRL makes it automatically accessible.

Several commercial tools now come with XBRL capabilities, including Hyperion Financial Management, Oracle Financials and Cartesis. Willis and Stantial expect XBRL capability to be built into most commercial financial applications as they are upgraded.

“XBRL is not expensive, and it’s not technical; it’s all there for a layperson. And there’s a very impressive support network out there,” Stantial says, which is why he’s frustrated that few companies have adopted it. Most view XBRL simply as a new data format that no one is required to use, so why spend time looking into it?