According to the Financial Times, Christopher Cox announced yesterday that the SEC is going to formalize a new rule to require all companies to report financial information in XBRL.

This is not surprising, especially considering the consistent messages we’ve been hearing from Cox regarding the benefits of interactive data (aka XBRL) it seemed just a matter of time until it was to be mandated. As of today there’s been no mentioned about when this rule will be put in place and it’s not formally listed on the SEC web site.

Cox said the formalizing of the rule was part of the SEC’s ‘war on complexity and said the new format would ‘enable investors to find what they need quickly and reliable, without having to pore through pages and pages of documents.’

XBRL and structured data will bring many benefits to the market and the only way this will happen is if it’s mandated by the SEC. We look forward to seeing this finalized as soon as possible.

Technorati Tags: SEC, XBRL, Disclosure, Corporate reporting, EDGAR, Q4 Web Systems, Q4, Christopher Cox, Investor Relations

A great post by Hitachi XBRL (one of the leading xbrl groups out there). 

Another example of expanding XBRL beyond financial statements is the work being done by a nonprofit group called the Enhanced Business Reporting Consortium.  The EBRC is attempting to organize a market-based initiative involving the collaboration of companies, investors, and a wide range of intermediaries like sell-side analysts, rating agencies, and accounting firms.  Recently members of this group met with SEC Chairman Christopher Cox to talk about how XBRL could be extended into broader narrative reporting, such as for the MD&A and 10K, and for industry-specific key performance indicators.  

A very rough draft XBRL taxonomy for the Enhanced Business Reporting Framework Version 2.0 has been developed. 

Here at Q4 we’ve been extending and building out our systems and in the coming months we will release the next version of Q4 Web and another exciting Enterprise 2.0 type product. From these you’ll begin to see how we are working to bring the value of structured data like XBRL and now EBR to the world of corporate reporting and disclosure in general.

Technorati Tags: Disclosure, SOX, XBRL, Corporate reporting, Q4 Web Systems, Q4

Following the lead of the SEC’s voluntary XBRL program success last year, the CSA has introduced a similar XBRL voluntary filing program effective May 2007. 

Reporting issuers participating in the voluntary program will file financial statements in XBRL format on SEDAR. Under the current continuous disclosure requirements, these issuers must also continue filing their official financial statements in PDF format on SEDAR. The CSA will make the XBRL financial statements available to the public through the SEDAR website at www.sedar.com.

I think it’s great that Canadian regulators (and SEDAR) are putting this program in place. With continued worldwide support for xbrl and electronic disclosure it’s important for Canada to continue to evolve and remain competitive. This effort has been put in place as a follow up to CSA’s XBRL survey from June 29 to September 30, 2006. They received 150 responses from various stakeholders, including accountants, investors and analysts.

If you don’t know about XBRL you can learn more here:
www.xbrl.org
www.xbrl.ca
www.sec.gov/spotlight/xbrl.htm
 
And for more details on the program check the OSC posting or BCSC web sites.

Technorati Tags: Securities Regulation, XBRL, Investor Relations, OSC, BCSC, CSA, Corporate Reporting, Electronic Disclosure, e-disclosure

There is a lot of material to go over and I certainly haven’t done that yet but I have read some very interesting parts. One of the recommendations introduces MERIT (”Model for Effective Regulatory Information Transfer” - catchy eh). MERIT is a system for extending and viewing XBRL documents that include all disclosure activities. I’ve heard people speak about XBRL as an extensible implementation (I know how XML works) many times but I have yet to see evidence that it has been extended to include non-financial reporting data in any real way. What are these people talking about? The goal of extensively tagging up corporate relations/ investor relations/ governance etc… is very interesting and is something that we’ve been working on for a good while. Although I have doubts that what we are doing is creating a natural extension to XBRL. Personally I would like to see something like XDML (extensible disclosure modeling language) but the domain is taken already

I read the MERIT chapter from the task force - something like 16 or 19 pages of “stuff”. It solves everything including world peace. The only barrier now is that no one has even started to design the taxonomy of what that would look like - not even the task force. After a quick call to the task force office I found out it was nothing more than vaporware with a cute flash demo that demonstrated very little. Oh, and that the task force has disbanded now that the report is done - so that settles that.

• Task Force to Modernize Securities Legislation in Canada
• Executive Summary of Recommendations
• MERIT – A New Paradigm for Electronic Disclosure

1. XBRL is not programming - True

XBRL tags content (financial data) in an open format that makes transporting, storing, and sharing data very easy because it is an open standard, well documented, and structured. Sometimes this documented structure is referred to as a “taxonomy”.

2. XBRL is hard for [most] humans to read - True

XBRL is an implementation of XML. Why should this matter to you? It really shouldn’t. XBRL is not meant for humans to read like the morning paper; it is meant to be created (generated most likely) and consumed by tools that make your analysis easier and more flexible. When an issuer posts XBRL to their website (which is good) they should also offer a human readable version as well. Tools and viewers will make both these tasks very easy.

3. XBRL is going to make reporting hard and expensive - False

Millions of research and implementation dollars and years of planning and organizing will be realized to the vast majority as tools become available. These tools will come from accounting software packages; analysts; subject matter specialists, commercial tool providers, open source, hobbyists, designers, industry leaders, grass roots organizations, exchanges, etc. You have to remember that XBRL maps to the way you do things now and that this format provides new opportunity for every issuer to attract analysts.

4. Buyers/analysts don’t need to be educated about XBRL - False

Even though XBRL is a technical specification buyers/analysts need to be educated of the benefits it provides. Files will be “transmitted/ loaded/ installed/ exported/ imported/ downloaded/ programmed/ beamed” in and out of tools that offer perspectives of data that just wasn’t there before. Wide adoption will be as fast as the clients’ understanding of the tools that expose the benefits of XBRL so that a new class of tools can be easily recognized.

5. XBRL is an Internet-Language - False

XBRL is a reporting language made for computers to consume. The fact that many, or even most, types of electronic transmissions happen over the internet shouldn’t be confused with its purpose - which is the cheaper, easier, standardized, equal opportunity for financial disclosure.

[edited: October 5, 2006]
Now you are ready to read articles like this: The Good and Bad About XBRL’s Future