A solution is said to be coming soon to a thorny technical issue that some observers had feared could temporarily render electronic financial reports tagged in eXtensible Business Reporting Language less useful than had been hoped.

The issue revolves around the Financial Accounting Standards Board’s new codification of accounting standards, which is set to launch July 1 and be effective for financial filings made after September 15.

One key advantage of XBRL-prepared electronic reports is that each data-tagged line item displays references to the accounting and regulatory rules applicable to that item. That gives users of the financial statements valuable context for the reported number.

But the current XBRL taxonomy — that is, the set of tags corresponding to the line items — aligns with the precodification organization of the FASB literature. A new taxonomy incorporating references to the codification is scheduled to be released in early 2010. But to prevent users of data-tagged reports filed between Sept. 16 and the date of that release from seeing references to standards that don’t match up with the new codification, an extension to the current (2009) taxonomy is needed.

On Thursday, Mark Bolgiano, chief executive of XBRL US, told CFO.com that his organization and FASB are working on such a solution and that it will be ready in July. A FASB spokesperson told CFO.com that while the accounting standards board is “shooting” to have the fix ready by the end of the month, there is no specific scheduled date.

But unless that release were to be delayed beyond Sept. 15, what some saw as a potential problem will be averted for investors, banks, and other users of financial statements filed by any of the 500 largest public companies.

Earlier this year, the Securities and Exchange Commission required those companies to file financials with XBRL tags for periods ending June 15 of this year and later, and FASB announced in early June that the codification would be effective for fiscal periods ending after September 15. And any confusion about the accounting underlying the information in the reports could, of course, have caused some communications problems for finance executives.

Neal Hannon, senior consultant for XBRL strategies at The Gilbane Group, an information technology consulting firm, called the forthcoming solution “great news.” He said he had been concerned for months that the necessary programming might not prove doable, at least in a reasonable time frame.

Even if the fix were delayed, financial-report users would still be able to locate the accounting standards relating to specific line items. The board’s codification Website contains a tool that cross-references the old organization of generally accepted accounting principles with the new one. “It’s not as though people have to be completely lost,” said Tom Hoey, FASB’s codification project director. “They might just find it more cumbersome for a short period.”

In that case a user would have to run two programs simultaneously, switching back and forth between an XBRL software reader and the cross-reference tool, which Hannon said could prove somewhat unwieldy when performing robust analyses of financial statements.

Meanwhile, there is another speed bump for the early days of XBRL filings: the SEC’s Edgar filing database will not be ready to accept data-tagged reports using the 2009 taxonomy, containing several FASB rules and interpretations published this year, until July 22.

Any company with a scheduled filing date before July 22 for a quarter ending June 15 or later can opt to file its report using the out-of-date 2008 taxonomy. The SEC, though, is encouraging filers to use the current set of data tags. To accommodate that request, a company with a line item affected by new FASB literature will have to create its own extensions to the core taxonomy. Not only would that require extra effort by companies, but Hannon lamented that “a bunch of rogue XBRL elements” not formed the same way from company to company would inevitably hinder analyses of the effect of FASB’s new pronouncements on financial statements.

But that, he said, would be the “lesser of two evils” compared with another option for companies: taking advantage of a 30-day grace period the SEC is allowing for first-time XBRL filings. In that case, a company would still have to file its periodic report on time but could file the data-tagged version after July 22. The problem is, doing that would require filing an amendment to the original report stating that the data-tagged version has now been filed. “What investor-relations officer wants to have to explain to dozens of callers about why an amended report was submitted to the SEC, even if it’s very explainable?” asked Hannon. “It will always be out there that you amended your report.”

He called it “very strange” that the date when Edgar can accept XBRL filings is coming in the middle of a filing season. “You’d have thought the SEC would have wanted to make sure it happened by June 30,” said Hannon. “Maybe they underestimated the programming changes they’d have to make.”

It’s creating extra work and costs for the companies with filing dates before July 22, even those that choose to write extensions rather than use the 30-day grace period. Not only do they have to file a report with those extensions, but as a practical matter they are also preparing an additional report that they will not turn in.

That’s because most XBRL tags, once set up, are reusable for the next quarter, and most financial-reporting software is likewise set up to roll from one quarter to the next. Therefore, to get ready for the next quarter a company must have already created the XBRL tags for the previous quarter. If Edgar were ready to accept data-tagged submissions earlier, companies would not have to prepare two different reports. “Filers are going crazy with this,” said Hannon.

The SEC did not respond by press time to a request for comment.