SEC Proposes Rules Requiring XBRL Tagged Filings
May 14, 2008. The Securities and Exchange Commission (SEC) adopted, but did not release, a notice of proposed rulemaking, that proposes to change the SEC's rules to mandate over time that certain filings with the SEC be in interactive data format. The SEC's interactive data program is currently voluntary. See, SEC release.
Interactive data format means inserting into the source code of electronic filings eXtensible Business Reporting Language (XBRL) tags that enable software to read and extract information from those filings. See, SEC's web section on XBRL.
Few companies are now participating in the voluntary program. However, these volunteers include Comcast, Infosys, Microsoft, Xerox, and XM Satellite Radio.
SEC Chairman Chris Cox stated that "The proposal we will consider today, if it is approved, will set us on a journey to significantly transform the SEC's business model. Making interactive data the backbone of the SEC's system of company registration will be true to this agency's early 20th-century roots in disclosure and transparency, while decisively changing to an unmistakably 21st-century approach." See, prepared statement.
He continued that "we are considering requiring the disclosure of the same information that has long been required -- but in a new format that will make this information better, faster, and cheaper -- for companies to disclose and for investors to use".
He concluded that "Like ASCII and HTML before it, XBRL can be viewed as nothing more complicated than a computer language. But if we embrace its potential, it can truly revolutionize the benefits that investors derive from corporate disclosures. It will enable analysts at the SEC and in private industry to vastly improve their comparative capabilities. It will replace the current time-consuming methods involved in retrieving corporate shareholder information and put that information at the fingertips of every investor within seconds, exactly as they wish to see it. Nothing could be more in keeping with the SEC's mandate to provide investors with important information they need, while encouraging better tools for analysis that can be used to make better investment decisions."
Jeff Lopez, Chief of the SEC's Division of Corporation Finance's Legal Branch, summarized some of the details of the proposed rules changes. He said that "The proposed rules would apply to domestic and foreign companies using U.S. GAAP and, eventually, to foreign private issuers using International Financial Reporting Standards as issued by the International Accounting Standards Board." See, statement.
He continued that "Interactive data would be required with a company's annual and quarterly reports, transition reports, and Securities Act registration statements, and on its corporate web site, if it maintains one. The disclosure in interactive data format would supplement, but not replace or change, disclosure using the traditional electronic filing formats in ASCII or HTML."
The SEC would phase in the new requirements over three years. In the first year, the new rules would only apply to about 500 companies that are "domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public float above $5 billion".
In the second year, said Lopez, "all other domestic and foreign large accelerated filers using U.S. GAAP would be subject to interactive data reporting". And, in the third year, "all remaining filers using U.S. GAAP, including smaller reporting companies, and all foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB would be subject" to the new reporting requirements.
Comments will be due within 60 of publication of a notice in the Federal
Register. As of the May 15, 2008, issue of the Federal Register, this
publication had not yet occurred.