SEC sets deadline for electronic filing of financial data

IDG News Service - The U.S. Securities and Exchange Commission has finalized a set of deadlines by which companies must file financial data in XBRL (Extensible Business Reporting Language), a data-markup language increasingly used in the U.S. and Europe.

The largest 500 companies must send their second-quarter 2009 reports in XBRL, effective April 13. By June 2010, 1,800 accelerated filers must do the same, with 12,000 other public companies required to use the format by June 2011.

XBRL is a system of tags used to identity certain types of data that can be interpreted uniformly by different software programs, offering a standardized way to handle complex data. The SEC said the move to XBRL will create more transparency in reporting financial data.

"The new rules are intended not only to make financial information easier for investors to analyze, but also to assist in automating regulatory filings and business information processing," the SEC wrote in its final ruling (download PDF) published in Tuesday's Federal Register.

The advantage of XBRL is that it is machine-readable, and computers can use the tags to pull out comparable data from different companies from their filings. It saves a person from having to read through financial reports to find specific data, since companies typically have different styles of presenting their data.

XBRL was developed from XML, a standard for tagging data. The language is supported by about 500 organizations that are members of XBRL International.

Although XBRL has a list of standard tags, the SEC is allowing for exceptions because companies have flexibility in how they present their financial information according to U.S. reporting standards.

In those cases, companies can create a so-called extension, such as when a company has traditionally reported "operating revenue" when the standard XBRL label is "net revenue."

"A company may choose to tag its own financial statements using commercially available software, or it may choose instead to outsource the tagging process," said the SEC.