Risk & Compliance

SEC to Vote on Data Tagging

The three commissioners will consider an XBRL financial-statement interactivity proposal covering all public companies.
Sarah JohnsonApril 16, 2008

The Securities and Exchange Commission has scheduled an open meeting for next Monday to vote on a proposal that could mandate the use of data-tagging XBRL for publicly traded companies.

Also known as extensible business reporting language, the XBRL technology could be a boon to information-hungry investors and analysts who would be able to more easily search and compare companies’ financial statements, according to advocates of the technology.

It could also cause headaches for CFOs, depending on how long the SEC gives them to turn their traditional, static financial statements into interactive, searchable documents. Some of those companies that have already tested out XBRL in the SEC’s voluntary program see no near-term benefits for preparers, according to Financial Executives International.

However, eventually, the technology could “improve the integration of company operating and reporting data,” according to the SEC’s Committee on Improvements to Financial Reporting (CIFR), which recently recommended that the commission mandate XBRL’s use. Companies will be able save money, the CIFR believes, by being able to internally tap their electronic financial data for use in areas outside of SEC filings, such as taxes, industrial filings, benchmarking, and internal-management purposes.

In February, CIFR suggested the SEC require all publicly traded companies to data-tag their financial documents using a phased-in schedule based on company size. The SEC’s meeting notice for Monday says the commissioners will consider a near and long-term schedule.

XBRL data-tagging has been one of SEC chairman Christopher Cox’s pet projects. He will be joined on Monday by just two commissioners, his fellow Republicans, Paul Atkins and Kathleen Casey. It’ll be their first open meeting since President Bush nominated Luis Aguilar, a partner with McKenna Long & Aldridge, and Elisse Walter, a senior vice president at the Financial Industry Regulatory Authority, to fill the SEC’s open Democratic seats. They have not yet gone through confirmation hearings.