The SEC voted Wednesday to adopt new rules that would require public companies to provide an XBRL version of their SEC filings. Under the new rules, the 500 largest U.S. public companies and foreign private issuers listed with the SEC would be required to provide financial information using XBRL beginning June 15, 2009. Smaller companies, depending on their size and filing status, would begin reporting in XBRL in 2010 or 2011, with all public companies filing in XBRL within three years.
Although the final rules have yet to be released, remarks made by SEC staff at Wednesday’s open meeting indicated that XBRL data, which the SEC calls “interactive data,” would be required to supplement—but not replace—a company’s traditional electronic filing formats (ASCII or HTML) for annual and quarterly reports, transition reports for a change in fiscal year and reports that contain updated or revised versions of financial statements. The XBRL version also would be required to be posted on the company’s corporate Web site, if it maintains one.
The first effective date, which would apply only to approximately 500 domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public float above $5 billion, would be for fiscal periods ending on or after June 15, 2009. The June 15, 2009, effective date anticipated in the final rules is six months later than the SEC had proposed in May.
Final effective dates for smaller companies were not mentioned at the meeting. However, SEC staff remarks indicated that the SEC intends to use the same type of three-year phased implementation schedule that was proposed in May. Under the May rules proposal, the second group would include all other large accelerated filers (with public floats below $5 billion that file under U.S. GAAP) and would begin filing in XBRL approximately a year later. All remaining companies using U.S. GAAP and all foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB would be subject to the same requirements in year three.
The SEC estimated in its May proposal that the average annual out-of-pocket cost to filers in the first three years would be $129 million and more than 1 million hours of labor. On an individual basis, this works out to an average of approximately $27,000 and 247 labor hours per filer, according to SEC estimates.
The SEC will allow filers limited liability for their XBRL filings. The limited liability will phase out over a two-year period for each company, according to prepared remarks made at yesterday’s open meeting by Mark W. Green, senior special counsel for the SEC’s Division of Corporation Finance. “The limited liability provision would terminate completely on Oct. 31, 2014,” Green said.
“XBRL data files would be excluded from the officer certification requirements under the Exchange Act rules,” Green said. “And issuers would not be required to obtain auditor assurance on their interactive data exhibits.”
—Matthew G. Lamoreaux is a senior editor for the JofA. His e-mail address is firstname.lastname@example.org .