A House subcommittee considering an exemption from XBRL for smaller companies has decided to hold off and see if it can broker a deal to make XBRL less burdensome to companies and more useful for regulators and investors.

Rep. Robert Hurt has said he will not introduce a draft bill he was circulating in advance of a hearing that would direct the Securities and Exchange Commission to exempt companies of $1 billion in revenue or lower -- almost 80 percent of all public companies -- from the requirement to submit financial statements in XBRL, says Hudson Hollister, executive director of the Data Transparency Coalition. Instead, Hurt's staff is working on a more narrow exemption, perhaps only for “emerging growth companies” as defined under the JOBS Act, while hoping to work with the SEC to improve the accuracy and utility of XBRL-formatted data, Hollister says.

“We're hoping the skeptics of XBRL will work with the supporters,” says Hollister, founder of the coalition that is committed to advocating data reform for the U.S. government. “We think there's room for a compromise bill that would provide a limited exemption but also push the SEC to fix the error-prone submission process. The coalition will certainly try to bring members of Congress together who are interested in this issue to discuss a compromise.”

The Coalition is hopeful Congressional action will inspire SEC's Division of Corporation Finance to begin issuing comment letters for filings that have errors, just as it points out concerns over the content of financial statements. Through speeches and other interactions, the SEC has pointed out that it's noting persistent, routine errors, but it hasn't taken more definitive action to require issuers to clean up such mistakes. “That is the main reason most investors don't use XBRL data, and the main reason it's not proving beneficial to investors themselves,” says Hollister.

The SEC also needs to be more explicit about its future plans for all the data it is gathering in the XBRL format, says Hollister. “Does it plan to continue indefinitely with what should be a temporary stage?” he asks. “Or does it intend to switch all the way over to structured data for financial statements? You could ask the same question about all the other things companies are filing,” such as proxy statements, earnings releases, and other routine filings.

The SEC began in 2009 requiring the largest public companies to begin submitting financial statements in the XBRL format in a three-year phased process. The smallest public companies began submitting in XBRL in 2011. The SEC said it planned to give companies plenty of time to get up to speed on the process before coming down hard on companies for whatever problems would emerge.

The House Committee on Oversight and Reform has already tasked the SEC to answer a formal request explaining how it uses information gathered through XBRL filings, and how it will enforce the quality of those filings. The committee wants to understand what the SEC plans to do to correct data quality problems, and where and why the SEC might still rely on paper filings. The SEC recently called for bids in search of a contractor to help the regulatory agency develop an inline XBRL software solution, or a way that companies could submit both paper and data-interactive filings in a single submission.