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SEC proposes using XBRL within three years for all public companies

The SEC proposed that all U.S. companies use XBRL to provide financial information within three years – with the largest companies beginning next year.

Companies using U.S. GAAP with a worldwide public float over $5 billion – that’s approximately the 500 largest companies – would have to make financial disclosures using XBRL for fiscal periods ending in late 2008.

In a statement from the AICPA’s Center Audit Quality, the Center offered their support for the proposal, but also advised the SEC to gather feedback, specifically to monitor costs.

“The CAQ supports the objectives of enhanced electronic financial reporting to provide better, faster, cheaper and more consistent financial information to support more informed business and investing decisions. However, it is imperative that the Commission seeks input during the three-year phase in period from preparers about their experiences and the related costs, and from investors about their experiences and the related benefits. These insights would allow the SEC to make a more informed decision about whether broadly mandating XBRL is likely to generate benefits in excess of costs.”

At the center of the SEC proposal is "interactive data" — computer "tags" similar in function to bar codes used to identify groceries and shipped packages. The interactive data tags uniquely identify individual items in a company's financial statement so they can be:

Easily searched on the Internet
Downloaded into spreadsheets
Reorganized in databases
Put to any number of other comparative and analytical uses by investors, analysts, and journalists

If adopted, the first interactive data provided under the new rules would be made public in early 2009. The remaining companies using U.S. GAAP would provide this disclosure over the following two years. Companies using International Financial Reporting Standards (IFRS) would provide this disclosure for fiscal periods ending in late 2010.

Comment deadline is 60 days after its publication in the Federal Register. The full text of the rule proposal will be posted to the SEC Web site as soon as possible.

Issue Monitoring

The Ohio Society is actively following the progress and path of XBRL. Visit the Society’s Issue Monitoring page for more details, including:

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