Soon after Corey Booth became CIO of the Securities and Exchange Commission in 2004, he told InformationWeek that one of his top goals was to adopt new data-tagging formats that could help the agency spot shady filings and help investors make better business decisions. It's been a slow road, but the SEC took another step toward better financial reporting on Tuesday by launching a prototype of a public-facing application to help investors, companies, and the finance sector see and analyze such data.
Called Interactive Financial Report Viewer, the Web-based application reads filings that make use of the Extensible Business Reporting Language, or XBRL. An XML-based marking language for financial information, XBRL has been relatively slow to be adopted outside of the banking industry, where the FDIC mandates its use for more than 7,000 banks.
SEC chairman Christopher Cox says the adoption of XBRL will help companies eliminate filing errors, give them better reporting tools for internal control purposes, and make filing financial data cheaper.
Cox says he's confident many more companies will move to filing XBRL data soon. "It could take off by next year," he said in a teleconference today. "There's no question where this is headed, and I have a feeling we're getting close to a tipping point." Cox says he expects efforts to define rules for tagging XBRL data to be completed by next year. Those include $5 million being spent by the SEC and $3.5 million by the Federal Accounting Standards Board.
However, he says the SEC has no plans to make XBRL mandatory, as the Shanghai, China, stock exchange recently has. Companies make about 700,000 filings on the SEC's current text-based Edgar system every year, and last year the public used it for 375 million searches. So far, only 32 companies enrolled in a voluntary program have data represented in the Interactive Financial Report Viewer.
Along with the SEC's new program, this week marks the annual get-together of the companies that make up XBRL International, which creates and tweaks the XBRL standard. Several companies, including Hitachi America and Edgar Online, announced new software to convert, edit, review and analyze XBRL data.