The Securities and Exchange Commission voted at an open meeting to propose that companies begin filing financial statements in an interactive tagged format as early as next year.
The requirement for companies to begin filing in Extensible Business Reporting Language would initially apply to about 500 companies with a worldwide public float of over $5 billion. They would make financial disclosures in XBRL for fiscal periods ending in late 2008.
There would be three annual phases as smaller companies were gradually required to begin filing financial statements in XBRL. In the second year, all other large domestic filers with a float of over $75 million would need to file. By the third year, all public companies that file in accordance with U.S. generally accepted accounting principles would be subject to the same interactive reporting requirements.
Those that file in the U.S. in accordance with International Financial Reporting Standards without reconciling to GAAP would also be subject to the rules in the third year, filing disclosures in XBRL for fiscal periods ending in late 2010. The requirement would apply to annual and quarterly reports and other filings. After adoption, the commission could monitor the reporting, conduct a cost-benefit analysis and revisit the deadlines.
There will be a 30-day grace period for the first interactive data exhibit of each filer. Filers not deemed to have adequate information would have a chance to amend their filings. The data would be subject to limited liability. Companies not required to provide interactive data in the initial phases would be allowed to provide it earlier. The proposal would have a 60-day comment period. There will also be a hardship exemption for companies coping with a natural disaster. In the first year, companies could tag their footnotes and schedules as blocks of text, but in the second year they would provide tags for the details within the notes and schedules.
"By improving the methods companies use to disclose information to shareholders, it will be easier for investors to use," said SEC Chairman Christopher Cox (pictured).
He credited the American Institute of CPAs and its CEO, Barry Melancon, along with XBRL International and XBRL US, among others, with helping prepare for the standard.
"Once CPAs can electronically receive, validate and send standardized information, they can more quickly analyze and confidently redistribute it to managers, stakeholders and others for use in better informed decision-making," said Mike Willis, a partner with PricewaterhouseCoopers and founding chairman of XBRL International, in a statement.
David Blaszkowsky, director of the SEC's Office of Interactive Disclosure, noted that the SEC has so far received over 400 interactive filings from companies participating in the voluntary XBRL filing program.
