The Securities and Exchange Commission’s (SEC) newest effort to attract companies to use the EXtensible Business Reporting Language (XBRL) data tagging technology, developed by an accounting industry- led group, is finding greater success than its past effort.
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Seventeen companies have agreed to file their financial statements in XBRL-tagged documents under the second such XBRL pilot the SEC has sanctioned in the past year. A pilot, launched last April, has attracted only nine company participants, despite being open for membership in a span when the SEC has several times publicly hailed XBRL as a major advancement in financial reporting.
The list of participants in the new pilot is impressive, with companies that include 3M Co., Bristol-Meyers Squibb, Dow Chemical Co., Xerox Corp. XM Satellite Radio Holdings and publisher R.R. Donnelly & Son. SEC Chairman Christopher Cox said he was pleased “with the range of industries,” adding that “their leadership will help shape how” XBRL and other so-called interactive data technologies are used.
XBRL is the business report version of EXtensible Markup Language (XML) which tags individual items within documents so that they can be immediately accessed. XBRL makes it easier for reporting companies because data tagged for one report can be automatically retrieved and inputted into other documents, and it allows investors, analysts and regulators, such as the SEC, to instantaneously locate, collate and review the report data they require.
The 17 companies in the pilot will submit their reports in XBRL for one year and report on their experiences, and in exchange the SEC will give them expedited reviews of their registration statements and annual reports. Last April, the SEC began allowing companies to voluntarily submit their reports using XBRL for an unlimited time span, but offered no incentives; membership in that volunteer program is still open.
The SEC is very interested in gaining widespread use of XBRL. Its current request for proposals for new management of its EDGAR database of financial reports requires that the new manager be capable of converting the system to an XBRL base. However, the SEC cannot mandate all public companies to use XBRL until the technology becomes more widely used.
The general perception has been that XBRL was having a hard time gaining market acceptance based on the limited number of users in the first pilot program. But, the tide may be turning; in addition to the larger enrollment in the new pilot, XBRL last week got its first bit of noteworthy coverage in The Wall Street Journal as one of the items featured in a March 22 story about how Cox is trying to advance the commission’s technology capabilities.
Companies interested in joining the new pilot group should visit http://www.sec.gov/spotlight/xbrl.htm or contact Jeffrey Naumann in the Office of the Chief Accountant (email@example.com) or Brigitte Lippmann in the Division of Corporation Finance (firstname.lastname@example.org).
The SEC said it extended the registration deadline for the newest pilot from early February to mid-March, to give applying companies more time to prepare. Spokesman John Heine denied published reports a few weeks ago that claimed the deadline was extended because the program had attracted only six volunteers as of early February.