The Benefits of the XBRL Voluntary Filing Program
Contributed by Bob Schneider, who is the editor of Data Interactive, the Hitachi XBRL blog.

The SEC began its XBRL Voluntary Filing Program (VFP) in April 2005; currently, about 40 or so companies are enrolled. Although the Commission has tried to put the best face on the participant numbers – in September, it released a press release stating that the companies' combined market cap exceeds $2 trillion – there’s reason to believe that SEC Chairman Christopher Cox himself is disappointed in the enrollment rate. The Orange County Business Journal conducted an interview with the Chairman in late October and reported:

Cox expressed frustration with the slow pace of voluntary implementation and the reluctance of businesses to embrace superior technology that he said is demonstrably inexpensive to adopt. “Whatever the SEC says doesn’t go into the part of the business brain that says, ‘Here’s how we earn a profit.’”

With CFOs having so much else on their plates, it's not surprising that many have chosen not to get involved with XBRL before they have to. Nevertheless, I think they are missing out on an excellent opportunity to position their companies for XBRL adoption. Here's how Neal Hannon -- currently Director, Financial Reporting Technologies, Financial Accounting Foundation – describes the advantages of enrolling in the VFP:

...The benefits from filing in the voluntary program will be many. First, the companies that participate will be looked upon as supporting a more transparent financial disclosure system. Studies have shown that if more information is available to capital markets, the risk associated with the company securities will be reduced. Second, the process of preparing a marked-up filing using XBRL tags requires a deep level of understanding about how the company puts financial information together. The benefit to the filing company will come from additional discovery that will happen during the filing process. This in turn will increase the quality of both the official and the voluntary filing to the SEC. Third, the creation of financial data in an XML-based language will prepare the filing companies for the reuse of this data for internal reporting activities. These activities might help a company improve its internal controls, which would benefit compliance with Sarbanes-Oxley requirements.

Neal made his comments shortly before the VFP was introduced, and it’s now apparent several more plusses can be added to his list:
VFP participants can enjoy expedited reviews of registration statements and annual reports;
In a recent article in the Journal of Accountancy, John Stantial -- Director of Financial Reporting for United Technologies -- notes that once the initial learning curve for XBRL filings is eliminated, the company's XBRL filings proceeded smoothly. If UT’s experience is representative, the earlier companies get their initial XBRL expenditures behind them, the greater will be the return on their XBRL investment.
Early XBRL adopters enhance their reputation not only as corporate role models for transparency, but also as technology leaders receptive to innovation. A reputation as a leader in both areas may be particularly useful to smaller firms eager to receive analyst coverage in a time of contracting equity research departments.
It seems more and more probable that XBRL will be mandated for filers within the next few years. With adoption increasingly likely, early adopters can ease the transition to XBRL statements over time and be prepared when XBRL filings are required.

Canada introduced its own VFP in May; most of the benefits enumerated above should also accrue to participants in that program. As the adoption of XBRL for financial reporting comes into clearer view, North American companies will be wise to consider (or reconsider) their participation in the voluntary filing programs available to them.