The Securities and Exchange Commission has awarded a trio of contracts totaling $54 million to transform the financial statements in its Edgar database into interactive information.Included in that strategy was some $5.5 million earmarked for XBRL US Inc. to complete the writing of XBRL taxonomies, so that every item in a company's financial statement, such as net income or gross sales, can be assigned a unique, computer-readable label.
The company, originally formed as a volunteer committee of the American Institute of CPAs, also announced that it will operate independently in the future - as a nonprofit, member-supported entity of XBRL International Inc. XBRL US will have responsibility for the development of the computer standard in America, and is expected to complete the SEC work within a year.
The investment is a likely precursor to widespread adoption of interactive data filing by companies that report their financial information to the SEC, which has been part of a voluntary pilot program that was loudly praised by SEC Chairman Christopher Cox.
Financial organizations such as the Federal Deposit Insurance Corp., the Federal Reserve and the Comptroller of the Currency all already require banks to use the Extensible Business Reporting Language format. XBRL is a technology that tags financial information through disparate applications and carries it through the business reporting chain.
"With XBRL US Inc. becoming an independent organization, the two main goals I had for the group are coming to fruition - ensuring the development of the U.S. GAAP taxonomies to 'commercial strength' and continuing the maturity of the XBRL organization in the U.S., through the establishment of XBRL US Inc. as an independent, not-for-profit entity," said Dan Roberts, chairman of the XBRL-US Steering Committee and the national director of assurance innovation at Grant Thornton.
The SEC hasn't required companies to file their information in an interactive format largely because the XBRL labels haven't all been completed, and because the commission's own database can't utilize the capabilities of the programming language.
The remaining contracts were awarded to:
* Keane Federal Systems Inc., for $48 million, to modernize and maintain the database. The contract covers up to a six-year period - an initial three-year contract term, plus three additional one-year terms. As part of the contract, Keane will partner with other technology firms, including BearingPoint, Microsoft, Rivet Software, EMC and Akamai.
* Rivet Software and Wall Street on Demand, for $500,000, to create a new generation of interactive investor tools on the SEC's Web site.
The existing Edgar system is already one of the largest U.S. government presences on the Internet. Over 700,000 documents and data sets are filed on the system each year.
However, the information that Edgar stores is locked in essentially the same kinds of forms that the SEC has used for 72 years, since it first introduced Form A-1 for securities registration in 1934.
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