SEC Requiring Big Companies Use XBRL By Mid-2009

XBRL electronic tags, which are like bar codes, can be attached to each piece of financial data such as earnings per share and revenue.

By Reuters
InformationWeek
December 18, 2008 11:30 AM

WASHINGTON - Some of the largest U.S. companies will have to file financial reports next year using technology that makes it easier for investors to read and analyze the data under a rule adopted by U.S. Securities and Exchange Commission Wednesday.

The SEC voted 4-1 to require 500 of the largest public companies to begin filing financial reports using the technology known as XBRL, or extensible business reporting language, by mid-2009.

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The rest of the companies will be phased in over a two-year period, the SEC said.

Companies will be required to use XBRL electronic tags, which are like bar codes and can be attached to each piece of financial data such as earnings per share and revenue.

SEC Chairman Christopher Cox, who has championed interactive data and pushed the agency to make more use of Internet, said the new format would make it easier for investors to analyze data.

The SEC also voted 4-1 in favor of requiring mutual funds to file their risk and return information using XBRL to make it easier for investors to analyze funds' performance, risk and fees.

The mutual fund's risk and return summary includes information about a fund's investment objectives and strategies, risks, expenses and performance.

The SEC said funds will be required to file the data using the electronic tags by Jan. 1, 2011 -- about a year later than its previous proposal -- to give funds more time to prepare for the transition.

The mutual fund industry had urged the SEC to slow down and said a fund could potentially face liability under the securities laws for providing an XBRL file that was not identical to the official filing.

Commissioner Luis Aguilar was the sole dissenter and said he could not support the rules because it would compromise investor protection.

"In these times of market turmoil, investors need to know that the SEC is looking out for them," Aguilar said. (Reporting by Rachelle Younglai, Editing by Leslie Gevirtz and Andre Grenon)

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