US SEC Plans Mandatory XBRL Beginning in 2009
WASHINGTON, May 14 (Reuters) - U.S. companies may soon be required to file their financial results using XBRL computer tags, a format that should make it easier for investors to analyze financial data, under a proposal put forth by the U.S. Securities and Exchange Commission on Wednesday.
About 500 of the largest public companies would begin filing their financial data in XBRL, or extensible business reporting language, in early 2009 as part of the SEC's proposed timetable.
Most of the remaining companies would have to comply within the following two years, the SEC said.
XBRL electronic tags are like bar codes and can be attached to each piece of financial data. The SEC currently has a voluntary pilot program in which more than 70 companies file their financial data in XBRL.
China, Japan, the Netherlands and some other countries already require XBRL use or are about to do so.
"Interactive data will let the sunshine in as never before," SEC Chairman Christopher Cox said at a meeting where he and the other two Republican commissioners voted for the proposal. The Senate has yet to approve two Democrats nominated to the five-member SEC.
Cox also noted the potential for investors and analysts to use XBRL tagging to compare financial figures for specific companies over time or across industries. Further, XBRL could give smaller companies more exposure because industry analysts will be able to do their jobs more efficiently, he said.
The initial annual cost to companies will likely be in the thousands of dollars, but that will drop as more software products become available, he said.
"(The cost) will be almost not noticeable after year one for most companies," Cox said.
However, before requiring many smaller companies to adopt XBRL, the SEC is prepared to conduct a cost-benefit analysis after the second year of mandatory implementation by larger companies, Cox said.
The agency will accept suggestions from companies, business groups and others on the proposal until mid-July. After reviewing public comments, the SEC will finalize its plan.
(Reporting by Karey Wutkowski; editing by Jeffrey Benkoe and Gerald E. McCormick)
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