Tim Mahon and Ernest Capozzoli (Coles College of Business at Kennesaw State University) have just completed a proof of concept study of the use of the new US GAAP Taxonomy and XBRL standard for oil and gas financial reporting. Capozzoli’s team has used publically available information published by Anadarko Petroleum to show how the ‘unique’ reporting requirements of a large oil and gas producer can be captured in XBRL (OITJ September 2007).
The US GAAP financial reporting taxonomy is now complete and has been recommended for filings with the SEC. This new taxonomy will transform the process of financial reporting. Another significant change for the oil and gas industry is the CIFR 2008 recommendation to adopt XBRL for SEC filings. Organizations with a market capitalization in excess of $5 billion must file their XBRL-formatted financial statements for periods ending on or after 15 December 2008. Other publicly traded companies that file with the SEC using US GAAP will have to adopt XBRL by 2009 through 2010.
XBRL is said to ‘vastly improve the timeliness, accuracy and flexibility of data in financial statements and other business reports.’ However, the scope and impact of XBRL on financial reporting is largely unknown. To determine the extent to which oil and gas disclosures are covered in the XBRL taxonomy, Anadarko Petroleum’s disclosures for 2006 were tagged using ‘Dragon Tag,’ an add-on to Excel from Rivet Software. The whole process took only three to four hours.
XBRL ‘scenarios’ were used to distinguish between Anadarko’s US and overseas operations and to differentiate between different operations and aggregates. XBRL’s expressiveness was used to tag a text block explaining in detail Anadarko’s Oil and Gas Reserves, including information about two major acquisitions.
Capozzoli concludes that the US GAAP taxonomy and its XBRL manifestation covers the majority of the information required by SFAS No. 69. Anadarko’s supplemental information was relatively easy to tag and was presented in the same general format as the taxonomy.
Overall, XBRL is still improving but already, as John White, Director of the Division of Corporation Finance at the SEC, stated in a 2007 speech to the AAPG/SPE International Multidisciplinary Reserves Conference, XBRL will allow end users to drill down into the information in XBRL filed documents, and companies to produce and quickly analyze their disclosures. Finally, XBRL has made great strides recently, and with the support of the SEC and release of a new US GAAP taxonomy may soon be the required filing standard for public companies. Read the full paper on www.oilit.com/papers/Capozzoli_0811_1.pdf.
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