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Technology: XBRL Mandatory by mid-2009
The SEC voted 4 to 1 to require the largest 500 public companies to use XBRL when filing financial reports by mid-2009. Other companies are required to follow in 2010, and foreign companies doing business in the US will need to use XBRL by 2011. Mutual fund companies will also need to use XBRL to file their risk and return information by January, 2011.
The XML-like format will make searches for specific components of financial information dramatically faster than is currently possible. Examples of tagged information would include earnings per share and revenue. Many believe that the new format will allow investors, analysts and auditors much easier access to company data.
The SEC had asked companies to start voluntary compliance with using XBRL, but less than 100 companies attempted to use the new format. The new ruling will make use of the format mandatory.
SEC chairman said that XBRL is a “giant step in the SEC’s full-disclosure mission, making information more available to capital markets and easier to compare facts between companies and mutual funds and similar filers. The SEC is based on the idea that investors are best protected when they have access to information about particular investments. Data disclosure will make the markets far more fair for honest participants.”
