Although XBRL has been around for 10 years now ( the history of XBRL ), the adoption and acceptance has only begun to significantly accelerate during 2007 with the support of Christopher Cox and the SEC. As part of the recent SEC draft advisory document “ SEC Advisory on Financial Reporting” there are details on the mandating of XBRL filing (see pages 74 to 87 in the PDF). The full report can be downloaded here (3MB)

From the report:

The Committee believes that the SEC should eventually require all public reporting companies (preparing their financial statements using U.S. GAAP) to tag the financial statements (including footnotes) they are required to file with the SEC as part of their Exchange Act reports using XBRL. The Committee believes such a mandate is necessary in order to encourage the commitment of resources toward the necessary software development for tagging, viewing and reading of the XBRL tagged information, use of XBRL tagged data by users such as analysts and investors, and company use of XBRL tagging internally, The Committee believes that full implementation of mandated XBRL tagged financial statements will require a phase-in over a period of time, as discussed below, to allow for enhanced understanding of XBRL by preparers and users, successful use of the new U.S. GAAP taxonomies, and further development of tagging and rendering software. The Committee believes that such a phase-in should be sensitive to the concerns of smaller public companies regarding mandated XBRL tagged financial statements.

The report then goes on to say that mandatory implementation may not be possible until:

• The testing process for the new U.S. GAAP taxonomy, which is to determine that disclosures are complete and relevant in current market environment (estimated to be complete Spring 2008)
• Ability of SEC EDGAR to “seamlessly” accept XBRL submissions using the new U.S. GAAP taxonomy and other tagged XBRL tagged data and provide an accurate rendered version of all such tagged information. (Currently EDGAR does not accept financial statements with XBRL tags based on the US GAAP taxonomy but considering the pace the SEC has been moving it seems clear that this will coincide with the Spring 2008 timeline)

Regarding the phased in approach the committee recommended:

• The largest 500 domestic public companies based should be required to furnish a document prepared separately from the reporting company’s financial statements filed as part of their periodic Exchange Act reports that contains XBRL tagged financial statements and tagged footnotes to the statements.
• Large accelerated filers (which would include the initial 500 domestic public reporting companies) should be added to the category of companies, beginning one year after the start of the first phase, required to furnish XBRL tagged financial statements to the SEC.
• Third, at the end of the phase-in period described above, and as promptly as practicable after the preconditions to full implementation discussed above are met, the SEC should evaluate the results from the phase-in period to determine whether and when to move from furnishing to official filing of XBRL tagged financial statements for domestic large accelerated filers, as well as the inclusion of all other reporting companies, as part of a company’s Exchange Act periodic reports.

In summary, the growth and adoption of XBRL will certainly impact corporate disclosure and although the timing is not exact, at the moment it seems clear that all individuals involved in corporate disclosure and reporting should be well versed in what XBRL means to their company, to their role and to the entire market of corporate disclosure and the capital markets.

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4. SEC to mandate XBRL for financial reporting
5. Canadian securities regulators launch XBRL voluntary filing program