Earlier today the SEC Chairmen, Christopher Cox unveiled the successor to the form based EDGAR database.   The new system is called IDEA (Interactive Data Electronic Applications) and will be built on an XBRL based platform that will give investors access to faster and more detailed financial information than ever before.

IDEA is the latest in a string of significant announcements that have come out of the SEC including, XBRL mandate and the guidance on web disclosure and RegFD. There have already been a number of posts regarding this announcement and it seems to be well covered by the financial media (see bottom of IR Web Report’s post - SEC unveils IDEA — and that’s all it is). 

During the webcast Chris Vickerson, our CTO was involved in FT Alphaville’s liveblog  discussion and also had one of his question answered by Christopher Cox.  After the web cast the SEC home page was updated with a significant focus on IDEA. From the link on the home page there is an overview of IDEA that I’ve summarized below (emphasis is mine):

IDEA will at first supplement and then eventually replace the EDGAR system, which will become an archive of SEC filings made prior to the new era of financial reporting in interactive data format. The SEC has formally proposed requiring U.S. companies to provide financial information using interactive data beginning as early as next year, and separately has proposed requiring mutual funds to submit their public filings using interactive data.

The decision to replace EDGAR marks the SEC’s transition from collecting government-prescribed forms and documents to making the information itself freely available to investors in a user-friendly format they can readily use. Instead of sifting through one form at a time in EDGAR and then re-keyboarding the information to analyze it, investors will be able to utilize interactive data to instantly search and collate information to generate reports and analysis from thousands of companies and forms through IDEA.

The ease with which interactive data will make financial information more readily available also is expected to generate many new Web-based services and products for investors. IDEA’s launch represents a fundamental change in the way the SEC collects and publishes company and fund information — and in the way that investors and the markets will be able to use it.

Although there was nothing materially new announced during today’s webcast (no new technology or application were shown), IDEA is an important when viewed in the context of how disclosure is going to evolve over the next 5 years. The timetable to full maturity is 5 years out, and while it is being phased in EDGAR will remain an important component of the financial disclosure system. However, if we fast forward to market adoption of XBRL and IDEA there will be many new ways that companies will create and distribute disclosure to the market and there will be all sorts of new applications and methods for investors to benefit from this data. It certainly is an exciting time for our industry and we are very pleased to see the leadership Christopher Cox has shown in bringing the SEC into the age of the Internet.

Some Additional information on Interactive Data:
http://www.sec.gov//spotlight/xbrl.shtml

This past Friday SEC Chairman Christopher Cox announced the launch of the “Financial Explorer” on the SEC Web site to help investors quickly and easily analyze the financial results of public companies. Financial Explorer paints the picture of corporate financial performance with diagrams and charts, using financial information provided to the SEC as “interactive data” in eXtensible Business Reporting Language (XBRL).

Financial Explorer is easily the most impressive XBRL based application that we have seen to date. It does a great job of taking the complex explanation of XBRL and puts it into an easy to read format. Using the XBRL data from each issuer the Financial Explorer generates key financial ratios, graphs, and charts. Information including earnings, expenses, cash flows, assets, and liabilities are all displayed graphically and can easily be compared across competing public companies.

Below is an example of Microsoft’s latest filing (to date, there have been 307 such filings from 74 companies).

The software takes the work out of manipulating the data by entirely eliminating tasks such as copying and pasting rows of revenues and expenses into a spreadsheet. That frees investors to focus on their investments’ financial results through visual representations that make the numbers easier to understand.

Aloca’s Income statement can be found here. Note the small chart icon that represents year over year results, a nice touch that significantly improves the readability of the statement.

“XBRL is fast becoming the universal language for the exchange of business information and it is the future of financial reporting,” said Chairman Cox. “With Financial Explorer or another XBRL viewer, investors will be able to quickly make sense of financial statements. In the near future, potentially millions of people will be able to analyze and compare financial statements and make better-informed investment decisions. That’s a big benefit to ordinary investors.”

Financial Explorer is open source, meaning the code that runs it is free to the public. As interactive data becomes broadly accepted there will be many more applications like Financial Explorer that will help investors and issuers communicate more efficiently and more effectively than ever before.

Is your company filing in XBRL or considering it? Let us know what you think by leaving a comment below.

Technorati Tags: Q4 Web Systems, Q4, Investor Relations, IR Web Sites, Corporate Disclosure, XBRL, Interactive Data, Corporate Reporting, Financial Reporting

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) Read the complete Post.

In case you’re not familiar with XBRL – it stands for eXtensible Business Reporting Language. The idea behind XBRL is simple. Instead of treating financial information as a block of text - as in a standard Internet page or a printed document - it provides an identifying tag for each individual item of data. This is computer readable. For example, company net profit has its own unique tag. Read the complete Post.