US Securites and Exchange Commission Open Meeting Fact Sheet

May 14, 2008
(Lawfuel) – At this morning’s public meeting, the Securities and Exchange Commission will consider whether to propose a rule and timeline to bring new technology to financial reporting and get important information to investors faster, more reliably, and at lower cost.

Under the proposed schedule being considered, about 500 of the largest public companies would begin making financial disclosures using interactive data starting in early 2009. Most of the remaining companies would be phased in within the following two years.

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

The 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 would 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.

Background

Financial reporting in interactive data format consists of “tags” that uniquely identify particular business facts so they can be easily moved among Internet tools, spreadsheets, databases, and other software for use by investors, analysts, and journalists. These business information tags are similar in function to bar codes used to identify grocery products, shipped packages, and airline luggage.

As in those sectors, interactive data is expected to make business information available in real time, with enhanced efficiency at reduced cost. Investors, investment professionals, and companies using interactive data are expected to benefit from cost savings, improved reporting, and better business processes because data tags permit users to move from manual, document-centric processes that require considerable human effort to automated data processing that can be accomplished virtually instantaneously by computers.

In addition to voluntary interactive data submissions by corporate filers, the SEC voted to accept voluntary filings of mutual fund risk return information in this format in June 2007, and has been doing so since August 2007. Also last year, the SEC itself 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.

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