SEC Votes To Release Proposed Rule That Would Mandate XBRL; Largest Co's First, Smaller Co's and Foreign Filers Phased In

Earlier today, the SEC voted to release for public comment a proposed rule regarding requirements for public companies to file certain data with the SEC using data tags in eXtensible Business Reporting Language (XBRL).

Bill Sinnett, Director of Research, Financial Executives Research Foundation and I listened to the SEC webcast of the open commission meeting, and following is a summary of key points:

The SEC’s XBRL proposal calls for a phased-in approach, with the largest 500 companies in the U.S. (specifically, those that file in U.S. GAAP and have a worldwide public float of over $5 billion) being required to provide financial statements in XBRL for fiscal periods ending on or after December 15, 2008. In that first year, the SEC would permit footnotes to be provided in blocked tags. Thereafter, the detail within each footnote would have to be individually tagged. Smaller U.S. companies and companies filing in IFRS would be phased in during the following two years. The SEC noted that it will monitor initial adoption by the largest companies to determine if any change to the remaining phase-in schedule is necessary for the smaller and foreign filers.

The filing deadline for XBRL data would be the same as that for the related SEC filings currently (annual reports, interim reports, registration statements, transition reports). However, an additional 30 day ‘grace period’ would be provided for the initial XBRL filing of the financial statements, and a similar grace period would be provided for the initial filing of the detailed footnotes required in the second year. Companies that fail to file their XBRL information on time

The SEC did not specify during today’s webcast if the information would be ‘furnished’ vs. ‘filed,’ but SEC staff said the same liability- limited liability – would be applied as under the current XBRL voluntary filer program. SEC staff said the XBRL disclosures would be provided as additional exhibits to annual and quarterly reports, transition reports, and registration statements.

There was no discussion on the webcast as far as the auditors' role relating to XBRL information.
Companies also would be required to post this information on their websites. SEC staff added that the XBRL submissions “would not replace ASCII and HTML data.”

The required tagged disclosures would include companies’ primary financial statements, notes, and financial statement schedules. Initially, companies would tag notes and schedules as blocks of text, and a year later, they would provide tags for the details within the notes and schedules.
Reference should be made to the rule proposal when published.

We understand there will be a 60 day comment period on the proposed rule.

A number of FEI member companies, including from FEI’s Committee on Finance and Information Technology (CFIT), and Committee on Corporate Reporting (CCR), were among the 76 voluntary filer companies, the SEC thanked the voluntary filers today for providing important information.

Links to material posted by the SEC (we will update this as more links are added):
SEC Press Release announcing vote to release rule proposal for public commentSEC Chairman Christopher Cox Opening Statement at May 14 open meetingDescription of proposed rule provided in Statement of James Lopez, Legal Branch Chief, Divison of Corporation Finance

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