Continuing its persistent promotion of eXtensible Business Reporting Language, the Securities and Exchange Commission has unveiled plans for its own Web tools, which it says would “let investors and analysts exploit interactive data to analyze mutual fund and corporate information.”
The SEC published a request for proposals from software vendors, seeking estimates to develop Web-based analysis software that would enable investors and analysts to access XBRL-tagged documents on the SEC Web site.
Ciesielski
“It’s a welcome development,” says Jack Ciesielski, owner of investment research and portfolio management firm R.G. Associates and publisher of the Accounting Observer. “I think we’ve had a bit of a circular, chicken-egg problem: Firms won’t write software for using XBRL until they think there’s a market for it, but there’s no market because there aren’t enough companies reporting using XBRL, and the SEC wants all of it to happen but doesn’t make things happen by requiring an XBRL standard.”
“As far as I can see, this is a logical step in getting XBRL demand stimulated,” Ciesielski says. “Then maybe more companies will voluntarily file using it.”
That may be a long shot. Since joining the Commission last August, SEC Chairman Christopher Cox has championed the reporting language, contending that it will make the financial statements of public companies easier for investors and analysts to search and compare. So far, however, adoption of XBRL has been sluggish. Only two dozen companies have agreed to participate in the SEC’s XBRL pilot program, tagging their financial statement filings with XBRL in exchange for expedited reviews of their registration statements and annual reports.
“Looking down the road, we expect that commercially available software products will serve customers in many more sophisticated ways to take advantage of interactive data,” Cox said in announcing the RFP last week. “We’re enthusiastic about our own plans for the Web, and we look forward with equal enthusiasm to the development of a variety of private-sector applications for both professional and retail use.”
Details and related coverage—including Compliance Week editor Scott Cohen's critical look at XBRL—can be found in the box above, right.
Nasdaq Proposes Amending Director Independence Standard
Nasdaq has filed a rule proposal with the SEC that would modify some of its corporate governance standards, including its definition of “independent director.”
Among other things, the proposals would clarify that acceptance of compensation—rather than “payments”—of more than $60,000 by a director or family member would taint independence. They would also clarify that a director who served as an interim executive officer for less than a year isn’t disqualified from being considered independent. The director would not, however, be considered independent while serving as an interim officer, and the board would still have to consider whether the former employment and compensation would interfere with independence. In addition, if the director participated in the preparation of the company’s financial statements while serving as an interim officer, he or she would be precluded from audit committee service for three years.
Nasdaq said that the focus on payments in the existing rule, which was approved in November 2003, aimed to address a concern that the rule might omit certain payments identified as tainting independence. But since those current rules were adopted, Nasdaq says its staff has been “confronted by several examples of ‘payments’” that don’t fall within the original intent of the rule that are unlikely to taint independence.
Nasdaq noted in the proposal that the change would bring its definition of independence more in line with New York Stock Exchange rules. The rule proposal is similar to one filed last August and later withdrawn in anticipation of Nasdaq’s transition to a national securities exchange.
While the proposed new rules would be effective immediately upon approval by the SEC, Nasdaq wants to include a 90-day transition period for directors who would no longer be considered independent as a result of the new standards.
The SEC has yet to publish the rule for comment, but the text of Nasdaq's proposal can be found in the box above, right.
Four Years On, Most CEOs Still Razz SOX
Four years after its passage, Sarbanes-Oxley is still taking heat from chief executives as too much burden and too little benefit.
According to the second annual survey of chief executives of the New York Stock Exchange’s listed companies, nearly all of the 205 CEOs polled (97 percent) say their company’s expenses to comply with regulatory requirements have increased since SOX went into effect. One in three say expenses have more than doubled, and companies with market capitalizations under $3 billion have been the hardest hit.
Some CEOs say that the regulatory costs of SOX don’t only hit companies in the wallet; nearly four in 10 (39 percent) say compliance costs have come at the expense of efforts to expand business. Among those who said say compliance costs have caused them to delay or cancel growth efforts, chief casualties cited included strategic planning (64 percent), infrastructure investment (56 percent) and marketing (26 percent).
The survey also shows that CEOs are feeling more pressure than ever. Virtually all of the CEOs polled (99 percent) say their job involves greater personal legal risk today than three years ago, 96 percent say their job is more time-consuming, and 91 percent say it’s more stressful. Most CEOs also reported spending more time dealing with regulatory or compliance issues (89 percent) and meeting with the board of directors (72 percent) than they did three years ago.
Still, some saw a silver lining to SOX. When asked what they see as the single most positive outcome of Sarbanes-Oxley and NYSE governance rules, 30 percent of CEOs said board members are more engaged, 27 percent said investor confidence improved, and 12 percent said board members are more informed.
No comments yet