`Case 1:19-cv-00859-RTH Document 122-8 Filed 08/12/24 Page 1of8
`
`EXHIBIT G
`EXHIBIT G
`
`
`
`Case 1:19-cv-00859-RTH Document 122-8 Filed 08/12/24 Page 2 of 8
`
`The SEC’s Increasingly Sophisticated Use of XBRL-Tagged Data
`
`Featured Interview
`
`An interview with Mike Willis, SEC, Office of Structured Disclosure
`Mike Willis is Assistant Director of the SEC’s Office of Structured Disclosure. He oversees the design and implementation of
`technological processes and tools that support the SEC’s use of structured data, such as XBRL-tagged financial information.
`Mr. Willis moved to the SEC in 2015 after many years as a partner at PricewaterhouseCoopers, where he worked on process
`enhancements involving standards-based architectures, both within the firm and for clients. He has also held several positions
`at XBRL International, including founding chair, chair of its steering committee, and chair of its board of directors. Dimensions
`spoke with Mr. Willis on the SEC’s growing use of the XBRL-tagged data submitted in corporate financial disclosures.
`
`Q Before you joined the SEC, you worked in the
`
`private sector as an expert in accounting and
`financial reporting, including XBRL. What led you to
`accept the position at the SEC?
`
`This is something I have wanted to do for a long time, as I
`am passionate about process enhancements enabled via
`supply-chain standards. This role provides opportunities:
`to work on policy matters that enhance the leverage of
`the Internet and structured data for analytical insights; to
`enhance the transparency of company disclosures so that
`the wave of Baby Boomer retirees – and I am in that boat
`– may more effectively make better informed investment
`decisions; and to apply my market experiences.
`
`Q You head one of the
`
`SEC’s specialized
`offices, the Office of
`Structured Disclosure
`(OSD), within the Division
`of Economic and Risk
`Analysis (DERA). What
`does your role entail?
`
`Mike Willis
`Securities and Exchange Commission
`
`OSD works with the
`divisions and offices within
`the Commission to assist
`in their respective roles
`and responsibilities. We
`listen closely to others to
`understand their needs and find related opportunities
`to leverage structured data for analytical purposes. OSD
`develops, implements, and enhances analytical capabilities.
`We also assist with rulemaking where structured information
`would enhance required disclosures and reuse of information
`for analytical purposes. We do risk assessments via proactive,
`persistent monitoring and ad hoc analysis.
`
`This role provides a great opportunity to work with a very
`talented group of professionals: data scientists, CPAs,
`developers, economists, analysts and attorneys – a very
`diverse group of skills. We also engage market-standards
`bodies and consortia relevant to structured disclosure
`topics. Overall, we try to increase awareness of the benefits
`from the use of structured disclosure in the market.
`
`
`
`Case 1:19-cv-00859-RTH Document 122-8 Filed 08/12/24 Page 3 of 8
`
`SEC’s Increasingly Sophisticated Use of XBRL-Tagged Data
`
`Q You undoubtedly had an impression of the SEC
`
`before you joined it. Now that you are on the inside,
`how does the reality of the SEC differ from your prior
`impression? What has surprised you about the SEC?
`
`The first thing would be the commitment to structured
`disclosure. In the last 18 months, ten rules with structured
`data components have been proposed or adopted, which
`is a clear sign of momentum – and that was not previously
`obvious to me.
`
`What has surprised you about the SEC?
`I thought that no one was using XBRL. I
`was stunned at the level of use for a broad
`range of analytical purposes.
`
`Second, I thought I would be answering the “why” question:
`Why structured data? I find that I am answering the “how”
`question: How can we use it? How can we leverage it?
`
`Third, I also thought that no one was using XBRL. I was
`stunned at the level of use for a broad range of analytical
`purposes. Your readers are probably aware of the recent
`XBRL subscription service RFP and award. There are roughly
`150 people in the Division of Economic and Risk Analysis,
`and many of them use the ‘as reported’ XBRL structured
`disclosures almost daily. Commission Staff recognize that
`data quality is an important issue. With increased use of
`XBRL, the awareness of data quality increases.
`
`Moreover, I used to think that few in the Commission paid
`much attention to comment letters or e-mails, when in fact
`the exact opposite is true. Those items carry significant
`weight, and your readers are encouraged to make their
`opinions known. Rest assured that those letters are read.
`
`based swap data. Broadly speaking, various standardized
`languages can enable structured disclosure; and thus, the
`more general term structured data.
`
`Q Do you think people understand the concept
`
`better if you say structured data?
`
`It is somewhat like asking your mom whether she likes
`using HTML. My mom would say: “No, I don’t know what
`HTML is, but the Internet is really great.” It is more important
`that we talk about the process implications rather than the
`technology. The process implications reflect benefits that
`are very useful, from a cost, transparency, analytical, timing,
`and quality perspective.
`
`Q Since joining the SEC, what new insights and
`
`perspectives have you acquired on the quality of
`XBRL data filed with the SEC?
`
`The most obvious is that the SEC Staff care about quality
`and that their interest increases along with their use of the
`data. One of my first tasks upon joining the Commission was
`to prepare an analysis using XBRL data for one of the Senior
`Officers in another division. About five minutes after I sent
`the analysis, an e-mail came back to me with a question: “Is
`this number correct?” I called him and said: “Yes, that number
`is exactly what the company reported. Of course, it cannot
`possibly be correct, but that is what the company reported.”
`The blunt insight for your readers: with increasing use of
`XBRL data comes increasing awareness of XBRL errors.
`
`The blunt insight for your readers:
`with increasing use of XBRL data comes
`increasing awareness of XBRL errors.
`
`Q You use the term structured data instead of XBRL.
`
`Is that the term XBRL advocates should be using?
`
`Different information types may dictate different types of
`structure. XBRL is a language designed for business
`information, and sometimes that may not be specifically
`on point. For example, other types of standardized
`languages may be used for different information types:
`FpML and FIXML were recently proposed for security-
`
`My prior market experience has included first hand
`encounters with XBRL-data errors including: negative values;
`scaling problems, with companies reporting values in the
`quadrillions; company-specific extensions for basic concepts
`such as cash and cash equivalents; the lack of any structured
`disclosure where it is clearly required; the use of improper
`dates that do not align with the company’s reporting; the
`inappropriate use of axis extensions when suitable options
`are available in the US GAAP Taxonomy; and others.
`
`
`
`Case 1:19-cv-00859-RTH Document 122-8 Filed 08/12/24 Page 4 of 8
`
`SEC’s Increasingly Sophisticated Use of XBRL-Tagged Data
`
`The data quality issues can both inhibit use of the data and
`result in analytical errors. For example, there are vendor bots
`parsing real-time XBRL web-service feeds and dynamically
`publishing articles based on companies’ structured
`disclosures. Some of those articles are either humorous or
`misleading, or both, when the bots produce stories based
`on incorrect data.
`
`Q What is the SEC doing to improve XBRL quality?
`
`Will the SEC continue to be proactive?
`
`Let me first step back and provide a broad perspective. Data
`quality issues are a fact of life; even prior to any structuring
`of company disclosures, there were plenty of quality issues
`in company paper and ASCII formatted reports. Balance
`sheets that did not balance, missing disclosures, amounts
`that did not tie out, and many other basic quality issues that
`we still see today.
`
` Steps being taken by the SEC to improve XBRL quality.
`
`1 Focusing on data-driven regulation
`2 Developing data quality tools
`3 Working with the FASB on US GAAP Taxonomy enhancements
`
`In general, there is a focus at the Commission on data-driven
`regulation, and the use of structured data will continue to
`increase as a result of that focus. And, as I noted before, as
`the use of data increases, so does the awareness of quality.
`In 2009, the SEC Staff started publishing its observations
`on data quality topics – negative values, unnecessary
`extensions, etc. Those topics are still problematic in
`company reports today. Your readers should “stay tuned”
`for more Staff Observations.
`
`We are developing data quality tools, including some open-
`source tools that we think will be useful in helping preparers
`identify quality issues. We also continue to study and
`evaluate the use of company-specific extensions and their
`effect on the usability of structured disclosures. In 2014, the
`SEC Staff published an assessment that highlighted the use
`of custom extensions by filers of different sizes. Again, stay
`tuned for more on data quality topics.
`
`We are also working closely with the FASB on enhancements
`to the US GAAP Taxonomy, in an effort to simplify and
`remove ambiguities in the taxonomy. Further, we recently
`updated the rendering engine and began publishing warning
`and error messages as part of the EDGAR filing process.
`While these are not 100% data quality validation rules, filers
`that encounter these errors or warnings would be wise to
`stop and check whether the disclosures in question are
`properly structured.
`
`We welcome your readers to send comment letters or
`e-mails (StructuredData@sec.gov), or just call us on topics
`relevant to XBRL data quality (202-551-5494).
`
`Q Is the SEC Staff calling issuers about problems with
`
`the XBRL tagging in their filings?
`
`The Staff may reach out to the company in cases where they
`become aware of material XBRL reporting errors. That may
`happen more frequently than some of your readers might
`perceive is the case.
`
`Q Is the Staff calling just about XBRL or about other
`
`things as well?
`
`It depends on the situation, it can be both – and it can be
`just about XBRL.
`
`Q Does the Staff also include feedback on XBRL in
`
`comment letters to issuers?
`
`Yes. How the Staff communicates will vary – letters, phone
`calls, office visits. Some of those may or may not be as public
`as others, but communication is ongoing. The company is
`responsible for the quality of its reports. It is not a great idea
`for a company to rely on comment letters from SEC Staff
`and/or third-party vendors to identify quality issues that may
`exist in the company’s own structured reports.
`
`It is not a great idea for a company to rely
`on comment letters from SEC Staff and/
`or third-party vendors to identify quality
`issues that may exist in the company’s
`own structured reports.
`
`
`
`Case 1:19-cv-00859-RTH Document 122-8 Filed 08/12/24 Page 5 of 8
`
`SEC’s Increasingly Sophisticated Use of XBRL-Tagged Data
`
`Q In the recent past, the SEC has broadly issued staff
`
`observations, updates to filer practices, and even
`“Dear CFO” letters on XBRL quality and usability. There
`have not been any of these in the past year or so, but
`will there be more in 2016?
`
`I cannot confirm or deny any future “Dear CFO” letters. I
`would encourage your readers to stay tuned.
`
`Q
`
` How is the SEC using XBRL data internally?
`
`While the word on the street may be that the SEC is not
`using XBRL, that is simply not true.
`
`One way the SEC uses XBRL data is for economic analysis.
`When an analysis is looking across all SEC companies – and
`I repeat that: all companies, from the largest to the smallest
`– that is when the XBRL data is very useful. Some data
`aggregators may focus on the largest filers. When we need
`an answer that covers all companies, XBRL data is the only
`game in town for assessing information from the entire set
`of corporate filers.
`
`Text analytics and sentiment analysis also use XBRL structured
`disclosures. The reason is that textual-analytical engines are
`wildly more effective at analyzing structured disclosures when
`they know what they are looking at versus attempting to
`consume and analyze an entire unstructured report.
`
`In general, given the focus on data-driven regulation at the
`Commission, the use of structured data continues to grow.
`That is a useful backdrop as to why the Commission is
`looking to enhance analytical capabilities.
`
`If I were a preparer, I would not want to be
`a case study based on a structured data
`error that might mislead any potential user.
`
`Q
`
` Are your analytical tools now using XBRL data?
`
`Yes. Our analytical applications and dashboards use various
`sources of data, including XBRL, to paint a complete and
`clear picture. Our analytical platforms have evolving features
`and capabilities as we continue to find new ways to leverage
`XBRL structured disclosures in support of the Commission’s
`mission by listening to the needs of the Staff.
`
`QDoes the SEC’s Division of Enforcement use XBRL
`
`data? Could XBRL-tagging errors ever be egregious
`enough to involve the Division of Enforcement?
`
`I am aware of individuals in Enforcement who do use XBRL
`structured disclosures to inform their activities, but I cannot
`comment on what Enforcement may or may not do. If I were
`a preparer, I would not want to be a case study based on a
`structured data error that might mislead any potential user.
`
`Q What is the arrangement that the SEC now has with
`
`Calcbench to use its XBRL data tool? How do the
`different SEC divisions use that tool?
`
`The arrangement was to procure an XBRL subscription
`service that enables the SEC staff to use XBRL data in its
`regulatory work. I cannot comment on what Commission
`Staff in various divisions do with this XBRL subscription
`service; but your readers should know that it is being used.
`
`Q Does the SEC plan to replace more of the
`
`information that it now purchases from third-party
`vendors with tools that consume and analyze XBRL data?
`
`Again, I cannot comment on our future use of data
`aggregators and data feeds. I have heard representatives
`
`
`
`Case 1:19-cv-00859-RTH Document 122-8 Filed 08/12/24 Page 6 of 8
`
`SEC’s Increasingly Sophisticated Use of XBRL-Tagged Data
`
`from various data aggregators comment that they are
`interested in companies resolving data quality issues so
`that they can begin to incorporate the XBRL disclosures in
`their data feeds. Those comments reflect market interest in
`improving data quality.
`
`improve the quality of structured disclosures, ease filer
`burden, and facilitate additional Staff review. Staff is also
`working to enable the successful implementation of inline
`capabilities within EDGAR to accept inline filings under any
`prospective inline-filing program.
`
`Q The SEC has been adding requirements for
`
`structured data to many of its newly proposed rules
`and form types. Are there plans to expand the XBRL
`requirement to filings beyond financial statements?
`
`I would point you to the recently proposed executive
`compensation rule on pay versus performance, which was
`the first foray of structured disclosure into the arena of proxy
`disclosure. The Commission makes these decisions, and I
`cannot comment on what the Commission may ultimately
`decide to do or not do.
`
`Q Will a structured data component be considered
`
`for all new SEC disclosure regulations?
`
`I do not know. What I do know is that the OSD team is growing
`and is very busy. Given the recent history of proposed and
`adopted rules including structured disclosures, it certainly
`seems like there is Staff and Commission awareness of the
`benefits of structured disclosures.
`
`Q Any examples of ways in which the SEC is trying to
`
`further the use of XBRL?
`
`Enhancing quality is a key method for increasing use. As an
`example, the rendering engine with its published warnings
`and errors messages identifies potential quality problem
`areas. These are not 100% data quality validation rules, but
`your readers should pay attention to them.
`
`Enhancing quality is a key method for
`increasing [XBRL] use.
`
`We have talked about inline XBRL as an effective way to
`present disclosures so that potential errors are more obvious.
`The SEC Staff is currently developing recommendations for
`the Commission’s consideration to allow filers to submit XBRL
`data in inline as part of core filings rather than filing XBRL data
`in a separate exhibit. The use of the inline format will help to
`
`We periodically meet with data consumers and aggregators
`to better understand the data quality issues that impact their
`use and analysis of structured disclosures. We receive feedback
`from those groups, including that the “Dear CFO” letters
`were a very effective communication and education vehicle.
`
`There is evidence of market demand in the use of XBRL
`structured disclosures. We publish financial statement data
`sets, we make the data available via web services and RSS
`feeds, and we monitor traffic on the entire SEC.gov website.
`The XBRL data feeds are in the top four of all download traffic
`from the Commission’s website. That is pretty reasonable
`evidence of demand for XBRL structured disclosures.
`
`The XBRL data feeds are in the top four of
`all download traffic from the Commission’s
`website.
`
`Q What is the SEC’s involvement with the XBRL US
`
`Data Quality Committee? How does it view the
`Data Quality Committee’s activities?
`
`We have met with the XBRL US Data Quality Committee
`and with other market groups and participants that are
`interested in structured disclosure and quality issues, and
`we plan to continue to meet with those groups. We are
`generally in favor of any efforts that strive to improve data
`quality, and we monitor all developments in that space to
`look for potential ways to improve what we do.
`
`As a regulator, our collaboration with market groups is
`somewhat limited. Your readers should not mistake that
`limitation for a lack of interest. We are very interested
`in market efforts focused on data quality. They provide
`an effective way to learn about data quality topics and
`priorities. Communications on quality are not limited to
`these groups or meetings. We welcome comment letters
`and outreach on quality topics from any of your readers.
`
`
`
`Case 1:19-cv-00859-RTH Document 122-8 Filed 08/12/24 Page 7 of 8
`
`SEC’s Increasingly Sophisticated Use of XBRL-Tagged Data
`
`Q Will the SEC run the Data Quality Committee’s
`
`rules?
`
`It may not be helpful for me to attempt to predict the
`future. What may be of interest to your readers is that in
`September we updated the rendering/validation engine to
`enable the application of standardized rules as part of the
`process for EDGAR test filing and EDGAR filing. The
`rendering engine allows visitors to EDGAR to view XBRL
`data as human-readable tables that resemble the classic
`financial statements. The updated rendering engine is
`faster; facilitates diagnostic features; and helps filers detect
`errors before submission, thereby helping to improve data
`quality. The rendering engine’s warning and error messages
`are intended to highlight scenarios where the disclosure
`structures are inconsistent, inappropriate, or deserve
`attention prior to filing. Registrants should pay close
`attention when they receive one of these messages.
`
`Q You mentioned inline XBRL earlier. What are the
`
`benefits of inline XBRL?
`
`First, inline XBRL enables companies to file a single
`document rather than two documents, thereby reducing
`duplicate disclosures and efforts. Second, inline disclosures
`can be viewed with any Internet browser, and they do not
`require special XBRL-viewing software. Third, inline XBRL
`provides a presentation layer for the representation of
`analytical concepts.
`
`Let’s explore that last one. Today, many reporting
`professionals and analysts are basically “texting while
`driving.” They are supposed to be focused on company
`reports, but they are distracted by powerful and useful
`analytical tools that highlight anomalies, focus on potential
`errors and risk, and identify disclosure checklist requirements.
`These may shift the attention and focus of reporting
`professionals and analysts away from a company’s reported
`disclosures and to the tools – hence the “texting while
`driving” analogy.
`
`Inline XBRL provides a method for representing analytical
`results directly “on top” of the company report. Think of
`inline XBRL as enabling a heads-up display right on top of
`reported disclosures. That heads-up display can be used
`to represent all kinds of analytical outcomes, ideas, and
`resources, including:
`
` disclosures that are anomalies;
`
` analytical outcomes directly oriented toward report
`validations;
`
` mathematical validations – where values reconcile, add up,
`and/or where they do not;
`
` highlighting risk assessments;
`
` highlighting disclosures reflecting higher or lower risk
`outcomes when compared to others (e.g., benchmarking);
`
` highlighting potential missing disclosures, an “automated
`disclosure checklist”;
`
` highlighting potential structured-disclosure quality issues;
`
` linking specific disclosures to the FASB standards or the
`SEC regulations or even to the company’s own policies;
`
` linking to training materials or subject-matter experts on a
`particular technical topic.
`
`Inline XBRL can work to improve report quality and process
`effectiveness for both preparers and consumers. There are
`other regulators currently using inline XBRL internally for
`exactly these reasons.
`
`While the word on the street may be that
`the SEC is not using XBRL, that is simply
`not true.
`
`Q What plans does the SEC have to further the use of
`
`XBRL data by the public, especially investors and
`financial analysts?
`
`Sharing knowledge and awareness, as we are doing in this
`interview, about how we are using structured disclosures
`to enhance our analytical process and capabilities.
`Communicating our efforts to the community of preparers,
`and soliciting their feedback on their use of structured
`disclosures for their own benchmarking and best-practice
`reporting/disclosure considerations. Meeting with market
`groups working on data quality, and learning about their
`efforts and ideas. Meeting with other market participants
`on how they may use structured disclosures. Continuing
`to work with FASB staff on enhancements to the US GAAP
`Taxonomy. Soliciting market feedback and input on topics
`related to the use of structured disclosure.
`
`
`
`Case 1:19-cv-00859-RTH Document 122-8 Filed 08/12/24 Page 8 of 8
`
`SEC’s Increasingly Sophisticated Use of XBRL-Tagged Data
`
`QYou are at the SEC during a key time in its broad
`
`acceptance of XBRL data by the SEC and the public.
`What do you want the legacy of your time there to be?
`
`I’d love to look back and see that the policies and rules put in
`place enhanced the leverage of the Internet and structured
`data for improving analytical insights by investors and others.
`Realization of broader supply-chain-standardization benefits,
`
`including lower cost, greater transparency, and higher quality
`would be useful outcomes. Transparency of company
`disclosures enhanced to better inform decisionmakers across
`a broad spectrum of investors, analysts, creditors, regulators,
`and researchers. In general, reinforce what I said earlier about
`the Commission’s orientation on data-centric decisionmaking
`to enhance our primary mission.
`
`NOTE: The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private
`publication or statement by any of its employees. The views expressed herein are those of the author and do not
`necessarily reflect the views of the Commission or of the author’s colleagues on the staff of the Commission.
`
`© Merrill Communications LLC. All rights reserved.
`MC0136_1
`
`