Washington, D.C., Dec. 5, 2007 – LAWFUEL – The Legal Newswire – The Securities and Exchange Commission’s Office of Interactive Disclosure today heralded the release for public comment of computer labels that will help companies make their financial disclosures more useful for investors.
The labels are already supported by at least nine software companies whose products will enable public companies to make quarterly and annual financial reports available in interactive data form instead of text form. Interactive data concepts allow companies to present their financial information in an electronic format that investors, analysts, and others can use to more easily locate and analyze desired information. The interactive data is encoded in a format known as eXtensible Business Reporting Language (XBRL), which allows companies to map their financial information to a set of computer codes that represent U.S. GAAP accounting standards. This standardized list of codes used to represent U.S. GAAP is known as a taxonomy.
The SEC’s Office of Interactive Disclosure, created in October to lead the transformation to interactive financial reporting by public companies, encourages broad public review of the taxonomy and the corresponding instructions about how to create a financial statement in XBRL.
“We’ve been saying that interactive data is on the brink of transforming the review and analysis of financial information for the benefit of investors and public companies alike,” said David Blaszkowsky, Director of the SEC’s Office of Interactive Disclosure. “With the release of this taxonomy today, investors can now begin to visually see the progress being made, and so will every public company that uses GAAP. Interactive data is no longer merely an up-and-comer, it’s becoming reality. We encourage both users and preparers of financial information to participate in this public review so we can advance interactive data to be recognized as, not only amazing technology, but a superior way of doing business and making faster, cheaper, and more informed investment decisions.”
The SEC launched its interactive data filing initiative in April 2005 to make filings more accessible and understandable to the common investor. A test group of public companies have since been voluntarily submitting XBRL documents as exhibits to periodic reports and Investment Company Act filings. Through feedback from these voluntary XBRL filers and a global collaboration of technologists, the XBRL US project team created tags for a financial reporting taxonomy that covers every U.S. GAAP accounting concept – virtually every fact that a company might want to report on its financial statements and in its footnotes.
The SEC will use the initial financial statements prepared using the new taxonomy to help it update its electronic filing system to seamlessly accept and render the filings.
A free taxonomy review tool is publicly available on the Internet at http://usgaap.xbrl.us along with other information, including the nine software companies whose products are compatible with the new draft taxonomy. The public comment period ends on April 5, 2008.List your legal jobs on the LawFuel Network