Securities and Exchange Commission plans to transform corporate financial reporting through the use of interactive data are, apparently, on hold for a few more weeks.
The SEC had announced last week that it would vote yesterday, April 21, on whether to propose a rule requiring companies to file financial reports using XBRL technology. Then, just before the close of business last Friday, the Commission delayed the meeting until May 14.
An SEC spokesman told Compliance Week in an e-mail that the meeting was postponed to “accommodate the schedules of the commissioners” and to give the SEC sufficient time to consider testimony from a Senate Banking Committee hearing on credit ratings agencies. That hearing is slated for today, April 22.
Delaying until May 14 will also give the SEC time to ponder any new input from its Committee to Improve Financial Reporting, which next holds a meeting on May 2. CIFR has given a tentative blessing to XBRL, but recommends a phased-in approach starting with Fortune 500 companies, and then expanding to companies of all sizes over the space of several years.
Savage
The delay “appears to just be scheduling issues internal to the SEC,” says Michelle Savage, vice president of communication for the XBRL U.S. Consortium. Savage says the delay gives the group the opportunity to “get more prepared.”
XBRL U.S. is leading the technical development of XBRL in this country. Its primary goal is development of an XBRL taxonomy for U.S. Generally Accepted Accounting Principles—that is, a dictionary of financial reporting terms that companies could use as they “tag” their financial data in XBRL. Users of financial statements could then view the enhanced reports with XBRL software programs, with far more clarity and control than possible with today’s text-based documents.
“We want to make sure that we have enough educational materials and tools to help public company preparers once a rule proposal hits to get themselves educated on XBRL,” Savage said.
SEC officials have been hinting to Corporate America for months that a rule proposal to mandate XBRL would come to a vote sometime this year. In particular, SEC Chairman Christopher Cox has touted the benefits of XBRL technology to just about any group that will listen and stated numerous times that he wants a vote on XBRL by the end of this year. The Commission has also released a small flock of XBRL “reader” programs, freely available on its Website, to show the public how XBRL could help them view and compare financial data—everything from mutual fund performance to CEO pay packages to historical financial performance among rival companies—with ease.
The SEC already operates a pilot XBRL program, in place since 2005, where roughly 60 companies submit financial information tagged in XBRL in exchange for speedier SEC staff reviews of their filings.
All that said, some financial executives have said XBRL won’t provide any benefit to companies themselves, and actually will increase compliance costs and burdens. Others say the technology isn’t yet ready for the hugely diverse world of GAAP financial information.
Hanish
In an April 4 letter commenting on CIFR’s views about XBRL, Arnold Hanish, chairman of the Committee on Corporate Reporting of Financial Executives International, bluntly wrote: “As preparers, we have learned that there are no improvements at this time in our internal processes as a result of creating and providing tagged information and that preparers do in fact experience increased costs and efforts as a result.”
Hanish’s committee, some of whose members participate in the SEC voluntary XBRL filing program, said the SEC should formally test the new, enhanced XBRL taxonomies that were released for comment in December and should gradually migrate companies to XBRL based on size.
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