SEC:  First Phase of XBRL Filings to Launch in Second Quarter

Beginning later this year, approximately 500 domestic and foreign large accelerated filers will be the first required to provide financial statements using interactive data formatted in eXtensible Business Reporting Language (XBRL) under the final XBRL rule issued by the Securities and Exchange Commission (SEC) on Jan. 30.

XBRL utilizes data tags to identify and describe information in a company's financial statements and schedules.  Investors in particular are expected to benefit from the use of XBRL by making financial data more accessible, timely and easier to analyze. 

“By enabling filers to further automate their financial processes, interactive data may eventually help filers improve the timeliness of, and speed at which they generate, financial information, while reducing the cost of filing and potentially increasing the accuracy of the information,” states the SEC. 

For example, the use of XBRL is expected to reduce the time it takes to gather information and review registration statements and periodic and current reports.  XBRL may also enhance the ability of an issuer’s in-house financial professionals to identify and correct errors in registration statements and periodic and current reports filed in traditional electronic format. 

“Filers also may gain benefits not directly related to public financial disclosures.  For example, filers that use interactive data may be able to consolidate enterprise financial information more quickly and potentially more reliably across operating units with different accounting systems,” states the SEC.  “However, we recognize that at the outset, filers will most likely prepare their interactive data as an additional step after their financial statements have been prepared.”

Under the new rule, large accelerated filers will be the first required by the SEC to tag financial statements, including footnotes and schedules to financial statements.  Interactive data will be required with a filer's annual and quarterly reports, transition reports and Securities Act registration statements.  It will also be required on the corporate website, if one is maintained.

The rule will be phased in over a three-year period, beginning with domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public common equity float above $5 billion as of the end of the second fiscal quarter of their most recently completed fiscal year.  These companies will be required to provide the required XBRL data in an exhibit to their SEC filings beginning with a periodic report on Form 10-Q, Form 20-F or Form 40-F containing financial statements for a fiscal period ending on or after June 15, 2009.

All other domestic and foreign large accelerated filers using U.S. GAAP will begin using XBRL with financial statements for fiscal periods ending on or after June 15, 2010.  XBRL will be required of all remaining filers using U.S. GAAP and all foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB for fiscal periods ending on or after June 15, 2011. 

The tagging of financial statement footnotes and schedules is also subject to a phased-in schedule.  While footnotes and schedules initially will be tagged individually as a block of text, after the first year companies will be required to tag quantitative disclosures.

The final XBRL rule is available on the SEC website at http://www.sec.gov/rules/final/2009/33-9002.pdf.
 

ALSO IN THIS MONTH'S ISSUE:

Recent Scandal Shines Light on Need for Improved Outsourcing Oversight

Social Networking and Web 2.0 in the Workplace