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1. Cate Long wrote:

   SEC Proposes New Way for Investors to Get Financial Information on Companies
   FOR IMMEDIATE RELEASE
   2008-85

   Washington, D.C., May 14, 2008 — The Securities and Exchange Commission today voted unanimously to formally propose using new technology to get important information to investors faster, more reliably, and at a lower cost.

   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, and put to any number of other comparative and analytical uses by investors, analysts, and journalists.

   The proposed rule would require all U.S. companies to provide financial information using interactive data beginning next year for the largest companies, and within three years for all public companies.

   “This is all about bringing investors better, faster, more meaningful information about the companies they own,” said SEC Chairman Christopher Cox. “It would transform financial disclosure from a 1930s form-based system to a truly 21st century model that taps the power of technology for the benefit of investors.”

   John White, Director of the SEC’s Division of Corporation Finance, said, “These steps will represent real progress, both for SEC filers and investors. All of the technology is coming together to make electronic filing a true analytical tool. The staff has gathered valuable experience during the almost three years that public companies have been submitting interactive data in our voluntary filer program. This helps give us a strong foundation for moving forward.”

   Conrad Hewitt, the SEC’s Chief Accountant, said, “Accounting is the business language of the world, and interactive data will become an easy and reliable technology to improve that language worldwide, just like many other tools available on the Internet. The SEC’s Advisory Committee on Improvements to Financial Reporting has been studying the benefits of interactive data and has proposed that the Commission proceed with a mandatory adoption schedule. Over the long term, preparers are expected to benefit through better internal management information and applications, and investors will benefit with improved analytical methods to analyze financial information.”

   Corey Booth, SEC Chief Information Officer, said, “Interactive data represents the logical next step in the evolution of company disclosure, just as HTML and Internet access were the next logical step a decade ago. And like a decade ago, this move will usher in a quantum leap in helping companies explain their business to investors.”

   David M. Blaszkowsky, Director of the SEC’s Office of Interactive Disclosure, said, “Information — meaningful, accurate, timely, easy-to-use financial reporting — always has been the driver of commerce and markets. This proposal provides the critical regulatory framework by which interactive data will make financial reporting more easily and quickly available, and help transform the relationship between filer and investor.”

   Since 2005, companies have voluntarily submitted to the SEC financial information in interactive data format. The rules proposed today would require companies to provide this information according to a phase-in schedule.

   The SEC’s proposed schedule would require companies using U.S. Generally Accepted Accounting Principles with a worldwide public float over $5 billion (approximately the 500 largest companies) to make financial disclosures using interactive data formatted in eXtensible Business Reporting Language (XBRL) for fiscal periods ending in late 2008. 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 as issued by the International Accounting Standards Board would provide this disclosure for fiscal periods ending in late 2010. The disclosure would be provided as additional exhibits to annual and quarterly reports and registration statements. Companies also would be required to post this information on their websites.

   The required tagged disclosures would include companies’ primary financial statements, notes, and financial statement schedules. Initially, companies would tag notes and schedules as blocks of text, and a year later, they would provide tags for the details within the notes and schedules.

   Companies filing under the proposed rule that use U.S. GAAP will use upgraded data tags issued April 28, 2008, by XBRL US, Inc. that were developed based on U.S. GAAP and on the review of hundreds of actual SEC filings. The SEC’s EDGAR system will accept test filings using a February 11 version of these tags later this month, with the final April 28 version of the tags becoming usable in June. In addition, an interim system is expected to be announced shortly that will enable companies immediately to provide interactive data submissions to the SEC using the April 28 version of the tags.

   The SEC has had an interactive data pilot program for three years, beginning in 2005. It covered the financial statements of corporate filers. In addition, the SEC began an interactive data filing program for mutual fund risk return information in August 2007. Also last year, the SEC created an online database tagging executive compensation data for 500 large companies. Filers seeking a head start on data tagging are invited to formally join these SEC voluntary filing programs or informally practice with the new data tags.

   More information is available at http://www.sec.gov/spotlight/xbrl.shtml.

   Public comment on the proposed rule should be received by the Commission no later than 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.

   http://www.sec.gov/news/press/2008/2008-85.htm

   Wednesday, May 14, 2008 at 10:24 pm | Permalink
2. Cate Long wrote:

   S.E.C. Moves Toward Requiring Interactive Data Filings

   By GRANT GROSS, IDG News Service\Washington Bureau, IDG
   Published: May 14, 2008

   The U.S. Securities and Exchange Commission has taken a major step toward requiring publicly traded companies to submit their reports to the agency in an interactive data format, with backers saying the change will make financial reports easier to analyze.

   All three SEC members voted to publish a proposal that would require public companies to file reports in eXtensible Business Reporting Language, or XBRL, a programming language related to XML that’s being developed by a nonprofit consortium of about 450 companies. Under the proposal, which still needs final approval from the SEC after a public comment period, the transition from text and HTML reports to XBRL would take three years, with about 500 of the largest U.S. and foreign companies required to start filing XBRL reports after Dec. 15.

   The smallest public companies and foreign companies not using U.S. generally accepted accounting principles (GAAP) could wait until the third year to file reports in XBRL.

   SEC Chairman Christopher Cox said the change will make SEC reports easier to read and analyze. XBRL will benefit investors and public companies, he said. With XBRL, companies will use XML data tags to describe financial information in the SEC’s online Edgar database.

   In many cases, company financial data has to be re-entered by hand before it can get online at the SEC’s Web site, Cox said.

   The XBRL proposal will “transform the SEC’s business model, making interactive data the backbone of the SEC system,” Cox said during a commission meeting. “We can make that information easier for investors to get, easier for investors to use and more efficient and more cost-effective for companies to disclose.”

   The SEC’s move to XBRL, which follows similar efforts in other countries including Japan and China, has faced some criticism. Some companies have suggested the cost may not be worth the benefits.

   The SEC began an XBRL pilot program in 2005, and 76 companies have signed up to deliver data using XBRL since then, SEC staffers said. The average cost for companies to file their first report in XBRL was about US$30,000, but the costs fell dramatically after the first report, according to an SEC survey.

   Commissioner Kathleen Casey expressed concern over the initial compliance costs, but said the SEC would pay attention to any issues encountered by larger companies during the first two years of the three-year phase-in. The SEC will “take stock” of any problems and could make changes to the XBRL requirements if it sees potential problems for small companies, she said.

   Cox suggested that some of the same concerns came up when the SEC began to move financial reports to its online Edgar database in 1985. Companies complained about the extra work, but the benefit was better information for investors, he said.

   “Then, as now, the future had its enemies,” Cox said.

   http://www.nytimes.com/idg/IDG_852573C400693880002574490039DDA3.html

   Thursday, May 15, 2008 at 6:54 am | Permalink
3. Cate Long wrote:

   SEC to big firms: ‘Tag, you’re it’
   Under proposal, biggest would have to use XBRL in financial filings beginning next year

   By Nicholas Rummell
   May 19, 2008

   In a sweeping change in how public companies file accounting statements, the Securities and Exchange Commission voted unanimously last week to require all public companies to file using an interactive data format by 2011.

   The proposed rule, which received a 3-0 vote, would require the roughly 500 companies with market capitalizations above $5 billion to file annual and quarterly reports, as well as registration statements, for fiscal periods ending on or after Dec. 15 using interactive data tags, or XBRL. That means investors could start accessing interactive financial filings by the biggest companies as early as next year.

   In 2010, all large accelerated filers—those with public floats greater than $700 million—would file using XBRL, and by 2011 all public companies—including those working off international financial reporting standards—would be required to do so. There would be some exceptions, however, such as companies that file but don’t use either U.S. generally accepted accounting principles or IFRS, or companies that typically don’t file any financials with the SEC, according to agency spokesman John Heine.

   In addition to the phased-in time frame, the SEC is providing companies with other leeway in adopting XBRL, including a progressive approach for footnotes. In the first year of compliance, companies would only have to block-tag entire footnotes; in year two, they would have to tag the text within the footnotes.

   The SEC is giving companies a 30-day grace period to provide their first XBRL filing and an additional 30-day grace period for their first fully tagged footnotes. And the proposed rule includes the same limited liability currently applied to voluntary XBRL filings, which means the tagged filings won’t carry as much weight in court battles, even after being mandated. Members of the committee the SEC set up to look at ways to improve financial reporting had said such filings should be furnished rather than filed. John White, who heads the SEC’s division of corporation finance, said the distinction could help head off opposition to making XBRL compliance mandatory.

   There is a 60-day comment period on the proposed rule, during which companies could theoretically raise enough concerns so that the SEC changes its approach.

   While there seems to be widespread support for interactive data, a few still have concerns, especially about potential future plans for XBRL, including expanding its use to companies’ internal financial reporting systems. SEC chief accountant Conrad Hewitt said in a statement that “over the long term, preparers are expected to benefit through better internal management information and applications.”

   Bert Ely, a financial services consultant who is leery of XBRL and who called the SEC’s proposal the “accountants’ full employment regulation,” said applying XBRL internally would lead to increased costs for companies and could serve as a straitjacket on internal accounting. The initiative is the brainchild of accounting firms and technology vendors, he said. “But why, that’s the question? I mean, of what public interest is it to help these guys?”

   But broader application of interactive data could be a good thing and lead to cost savings elsewhere, said Barry Melancon, president of the American Institute of Certified Public Accountants, who noted that state and federal tax filing, Department of Labor compliance and other regulatory duties could be made easier via XBRL. However, he noted that such additional uses for interactive data would not be mandated by other agencies, at least not yet. “That would be user-driven, not regulator-driven,” he said.

   Proponents of XBRL see the proposed rule less as a government mandate than as a way to reduce filing costs for public companies and make filings more accessible to investors. “Technology is not just a luxury to this process, it is a necessity,” said SEC chairman Christopher Cox, who has been one of the biggest champions of XBRL. “Interactive data will let the sunshine in as never before.”

   In fact, some go so far as to say that XBRL, had it been in effect in 2007, could have lessened the effects of the credit crisis. Phil Moyer, CEO of EDGAR Online, which has been helping develop XBRL tags, said that by tagging asset-backed securities or municipal bonds in financial statements, investors would have been able to access some of the disclosures about the underlying securities. “It’s a data problem,” he said.

   “Total nonsense, that’s fundamentally absurd,” said Mr. Ely, who argues XBRL may add to the complexity of financial statements as a result of the various industry-specific tags that will be included in the final taxonomies. Furthermore, many asset-backed securities were lacking in disclosure, hence the current SEC and FBI investigations, he said.

   About 150 companies already use XBRL to some extent in the SEC’s pilot program, which began in 2005. Most of those companies, including Microsoft and Dow Chemical, are among the largest, which could ease the transition during the first phase of the move to interactive data.

   The SEC’s system will accept test filings later this month. Interactive data filings for mutual fund risk and return information began on a voluntary basis in August 2007, but the SEC plans another open meeting this Wednesday to issue a formal proposal.

   http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080519/REG/707851112

   Tuesday, May 20, 2008 at 12:16 pm | Permalink

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