16, 2008 5:00 PM PDT
SEC plans XBRL standard to liberate financial data
WASHINGTON--Financial information about
companies is sometimes difficult to uncover, and even more difficult to
It's buried in footnotes to earnings reports
and sometimes almost seems intentionally obfuscated. The Securities and
Exchange Commission thinks it has the answer: a type of language for
business data that could be to finance what HTML was to the Internet.
That was the plan, at least. There have been
no fewer than 17 conferences so far to advance the Extensible Business
Reporting Language, or XBRL, standard, and it still is not mandatory for
U.S. companies. (The SEC started a
voluntary XBRL filing
program, and in May 2008 published a
would require companies to submit their financial statements in XBRL format
starting in the first quarter of 2009.)
At the 18th International XBRL Conference
held here on Thursday, the SEC was expected to officially establish new XBRL
filing rules. However, the rules were not set, and embattled SEC Chairman
Chris Cox--Sen. John McCain has
called for his resignation as a result of the recent
financial crisis--did not appear at the conference as scheduled.
In general, regulators claim that adopting
XBRL is essential to improving the efficiency and transparency of the public
reporting process and has far-reaching implications for keeping track of the
corporate world both domestically and internationally. But publicly traded
companies don't like the uncertainty created by the SEC's delays.
"We have hundreds of companies sitting on the
fence," said John Yapundich, executive vice president of EDGARfilings.
The SEC maintains an online database called
EDGAR--the Electronic Data
Gathering, Analysis, and Retrieval system--so investors can review public
companies' financial reports.
EDGARfilings is a vendor that provides
software for filing documents with the SEC, and the company has invested
heavily in XBRL software, Yapundich said.
Even so, "people are only slowly adopting the
XBRL format because they're waiting to see the rule sets from the SEC," he
The conference appeared to be peopled not
with representatives from public companies who will file in XBRL format--but
instead government regulators and vendors like EDGARfilings, Fujitsu, and
Rivet Software that are pitching their XBRL software.
XBRL filings use XML data tags to describe
business and financial information, making the documents much more
searchable than the current official EDGAR filings, which are submitted in
HTML or plain text format. Elements of a report, such as executive pay, are
much more accessible, and the new format allows for more extensive
"The benefit is better analysis, better
understanding--it's the transparency virtue we're shooting for," David
Blaszkowsky, director of the SEC office of interactive disclosure, said
Thursday at the conference.
Politicians, shareholders, and the public
alike are clamoring for more transparency and accountability from Wall
Street, the panelists at the conference said. Eisuke Nagatomo, president and
CEO of Japanese company EN Associates, said that in the past year, the term
"corporate governance" appeared 575 times in the Wall Street Journal--the
same as the previous six years combined.
With so many large companies collapsing under
poor management, high executive pay has been a particularly hot issue. The
House of Representatives in April 2007 passed a
providing shareholders with an advisory vote on executive compensation, and
Democratic presidential candidate Barack Obama sponsored
on pay" legislation in the Senate. With McCain also expressing his
support for shareholder advisory votes, the legislation will likely make
it into law during the next administration.
"That tightens the need for better and faster
information," said Patrick McGurn, special counsel for RiskMetrics Group.
"Investors will be looking at hundreds of thousands of these 'say on pay'
By providing standardization from company to
company and across markets and making elements like executive pay easy to
find in a report, XBRL has the potential to eliminate the time crunch
involved in that process, he said.
"There's a need for XBRL to serve as the
horse in front of the cart on the disclosure issue," McGurn said. "Once
investors have information for one market, they'll want it for every
|Stephanie Condon is a
staff writer for CNET News focused on the intersection of technology
and politics. She is based in Washington, D.C., and can be reached at
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