It’s official: XBRL is mandatory in the US
May 14, 2008
Phase-in comes quickly for largest filers
NEW YORK -- There was lots of fanfare today not only from the SEC as it announced plans for mandatory XBRL filing for all US companies, but also from vendors and consultants. A long list of service providers touted their products or their ability to offer expert commentary in press releases timed to coincide with the proposed ruling.
Despite the apparent benefits of using XBRL, companies have been slow to adopt interactive data tagging, perhaps just weary of adjusting to yet another change in the way they must report numbers. But now they must, and regulators and vendors reminded them today that it won’t be difficult.
At the open meeting today, SEC staff said the average price for XBRL conversion at companies in a pilot program was under $30,000 and the project required less than 40 hours of work.
The pressure is highest on the 500 largest US-listed companies. The proposed schedule requires this group, or issuers that use US GAAP and have a public float over $5 bn, to begin filing data in XBRL format for fiscal periods ending in late 2008. The remaining companies using US GAAP would provide this disclosure within three years. Companies using IFRS would provide this disclosure for fiscal periods ending in late 2010.
The disclosure would be provided as additional exhibits to annual and quarterly reports and registration statements. Companies would also be required to post this information on their websites, the proposed rule says.
The SEC is doing what it can to go easy on companies. For example, there is an initial 30-day grace period for filing the XBRL-version of 10Ks and 10Qs. Filers will also be allowed to tag footnotes and schedules as block text in year one, though they will have to provide more detail in subsequent years.
Rob Blake, senior director of interactive services for Bowne, agrees that the proposed rule makes some accommodations, but says it has teeth. ‘You only get two 30-day grace periods, on your year one, filing one, and year two, filing one,’ he explains. ‘For filings two, three and four, there is no grace period. That surprised me.’
The command to tag notes in greater detail after the first round of filings is also giving people pause. ‘Clients are more worried about year two of the mandate,’ Blake says. 'It’s a big eye-opener.’
There is some freeware available, but also more state-of-the art products and consulting services. In the next months, many providers are offering webinars and ‘tag it’ seminars to help companies figure out the transition.
‘Companies don’t have to wait to get started,’ said SEC interactive disclosure chief David Blaszkowsky at the open meeting. ‘The XBRL-US website has a wide array of service providers ready and able to help educate financial managers.’
By Anna Snider