The Securities and Exchange Commission is considering a simplification to the financial report filing process by allowing companies to file under a single method instead of two separate methods.

Currently, public companies submit their financial information under both the traditional HTML format and the newer, data-interactive XBRL format, which more readily facilitates financial research and analysis. In-line XBRL is a hybrid approach where companies can tag their HTML documents with XBRL tags to produce a single document that features the best of both formats.

During a recent meeting of the Center for Audit Quality's SEC Regulations Committee, SEC staff signaled to committee members that they are exploring the possibility of recommending a rule change to give companies an option to forgo separate filings and file their financial information in a single, in-line XBRL submission.

Mike Starr, deputy chief accountant at the SEC, says there is merit to the idea. “It would allow issuers to tag data in the HTML document, eliminating the need to coordinate the same information in two separate documents and making the review process easier,” he says. “It would enable issuers to make changes much more easily.”

The in-line XBRL approach also would address another concern that has persisted at the SEC, where companies develop custom extensions specifically to achieve a particular rendering. SEC staff has alerted companies that the creation of custom extensions specifically to produce a particular image distorts the utility of the data, but the problem has not gone away.

The Corporate Reporting Committee of Financial Executives International asked the SEC to consider allowing inline XBRL when it submitted a letter in November to SEC Chairman Mary Schapiro appealing for a number of changes to the current XBRL filing requirements. Companies that file financial information in the United Kingdom are already using in-line XBRL to submit financial and tax information.

Starr says the staff is interested in hearing from companies whether they would favor having an option to submit XBRL-formatted information using in-line XBRL. “A lot of people are not familiar with in-line XBRL, and it sounds perhaps more complicated and technical than it really is,” he says. “As people become more aware of what it is, the benefits should be readily apparent.”

Campbell Pryde, president and CEO of the XBRL US consortium, says in addition to the simplification for reviewing and filing financial statements, the in-line XBRL approach would reduce the opportunity for error, and U.S. companies would have the benefit of learning to use in-line XBRL from U.K. companies that have already figured it out. “The U.K. has been using it for public and private companies, so it's already been rolled out,” he says. “It's not like this is a risky experiment.”