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HOT TOPIC: XBRL Mark Up Language for Corporate Reporting Introduction
Regulators have been encouraging wider use as interactive data; the Securities & Exchange Commission (SEC) announced in September 2006 a $54 million investment to transform the Commission’s public company disclosure system from one that is form-based to a dynamic, real-time search tool with interactive capabilities and to help build out the US GAAP line item terms (also called “taxonomies”).
The Commission is moving away from the familiar -- two decades-old -- EDGAR system to an interactive type system using XBRL. An experience investor relations professional, David Blaszkowsky, was hired to oversee the process (he heads the Office of Interactive Disclosure).
XBRL US, Inc. (“XBRL US”), formerly a special committee of the AICPA and primarily volunteer-driven, spun off from the parent organization and is established as a separate non-profit, legal entity (“the national consortium for XML business reporting standards and developers of the XBRL US GAAP Taxonomies”). XBRL US has a dedicated professional staff (President and CEO, other senior managers handling Internet Strategies and Member Services, Domain and Taxonomies, and Adoption and Communication. Their first significant task (over the past year-plus) was managing the US GAAP taxonomy build out as announced by the SEC.
Very quickly, XBRL has become a global platform for expanded business and financial reporting, and has been adopted by organizations throughout the world -- such as regulators, software companies, database aggregators, public and private companies and others. Consider the overall advantages for users of issuer data:
XBRL data from public companies provides analysts with:
The use of XBRL could enhance the telling of a public company’s story to key market players. Adoption of XBRL could also help issuers lower internal financial reporting costs because data created within their financial reporting systems can be created once and then used many times by both internal and external audiences.
While today the use of XBRL for EDGAR filing is still voluntary, this could change if the SEC after its public process and wider input to the dialogue then decides that investors are better served through more widespread use of interactive data. A year ago Gartner Group researchers projected SEC mandating XBRL use by the end of 4Q 2008.
Many other gatekeepers have announced adoption of XBRL, including the Australian Tax Office, Chinese Securities Regulation Commission, Bank of Japan, National Tax Agency of Japan, Tokyo Stock Exchange, UK Companies House, and (important for financial services organizations) the US Federal Financial Institutions Examination Council (including the FDIC). The adoption of IFRS early this year in the UK and European Union countries has been a factor in the wider adoption of XBRL by issuers, users and regulators.
The year 2008 is an ideal time for public companies to adopt XBRL voluntarily – the SEC program is at this writing still voluntary, and there is little liability attached to the filing itself, giving financial preparers and investor relations officers opportunity to become more familiar with the new standard before there is more widespread use – or the expected mandated use of XBRL. With the support from the financial regulators and the investor and analyst communities use of XBRL could be poised for rapid deployment and growth after official adoption among United States issuers.
The Editors of Accountability Central have created this Hot Topics special focus on XBRL to help you understand the plan for the implementation of this breakthrough system of interactive financial reporting.
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April 2008 update: Where is XBRL in the USA right now? The SEC has just scheduled an open meeting – following “Government in the Sunshine Act” – for April 21, with this notice:
SECURITIES AND EXCHANGE COMMISSION
Sunshine Act Meeting.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94-409, that the Securities and Exchange Commission will hold an Open Meeting on Monday, April 21, 2008 at 10:00 a.m. in the Auditorium, Room L-002.
Chairman Cox, as duty officer, determined that no earlier notice thereof was possible.
The subject matter of the Open Meeting scheduled for April 21, 2008 will be:
The Commission will consider whether to propose amendments to provide for corporate financial statement information to be filed with the Commission in interactive data format, and a near- and long-term schedule therefor. (SP)
At times, changes in Commission priorities require alterations in the scheduling of meeting items.
For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact:
The Office of the Secretary at (202) 551-5400.
Nancy M. Morris
For more information:
XBRL US: http://www.xbrl.org/us
Check the SEC Web site at: http://www.sec.gov/spotlight/xbrl.shtml
SEC contact: David Blaszkowsky
Director- Office of Interactive Disclosure
US Securities and Exchange Commission
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