Strange Bedfellows: Newt Gingrich and XBRL Software Community
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Gingrich urged a House subcommittee on Capital Markets to fully fund an XBRL development project being championed by the Securities and Exchange Commission (SEC), claiming that its estimated $3.5 million price tag is well worth the gains it will give investors, businesses and regulators by expanding the ability to quickly gather and interpret financial data.
Separately, Cartesis, a developer of business process management and analysis software, entered into an alliance with Edgar Online, the operator repository of financial reports filed with the SEC, that lets Cartesis customers access XBRL-tagged data in that repository to do their own sophisticated analysis.
XBRL, which stands for Extensible Business Reporting Language, tags specific items in financial reports, allowing them to be instantaneously accessed and collated by the companies preparing the reports and by the analysts and regulators, like the SEC, reviewing them. Gingrich called on the committee to support the added funding that SEC Chairman Christopher Cox has said is needed to further develop the taxonomy technology that facilitates the tagging.
“Given the dramatic economic benefits that will accrue to the U.S. from the comparatively small cost of this project, as well as the long term enhancement of the competitiveness of our capital markets, supporting this effort with federal dollars is well justified,” Gingrich said.,
Totally removed from Gingrich’s speech in Washington, Cartesis in Stamford, Conn., announced a formal partnership that will integrate its Cartesis 10 software with the EDGAR database and allow users to extract XBRL-tagged data from other companies and compare it with their own companies’ data to perform benchmarking, create key performance indicators, and run what-if business scenarios. That other company data, which are all public records,is extracted using an XBRLp-based system developed by Edgar online.
Commenting on the Cartesis-Edgar alliance information technology, industry analysts International Data Corp. (IDC) affirmed that XBRL is a key element in advanced financial analysis. Kathleen Wilhide, an IDC research director, said, "Information integrity and transparency is more important than ever, and the ability to consolidate and analyze financial information is mission critical.”
Gingrich, in his speech, cited a report from the American Enterprise Institute think tank which says that the United States, the birthplace of XBRL, risks falling behind in financial analysis capability because European countries are adopting XBRL at a faster pace.
The United Kingdom has been especially more progressive. For example, its government last month said it plans to mandate the use of XBRL for all company tax returns due after March 2010, according to an announcement posted on the xbrl.org/us Web site of XBRL-U.S., a group of businesses, including accounting firms, advocating adoption of the technology.
The SEC has been urging companies to report in XBRL for more than a year. But at last count, less than 50 companies are doing that.