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SEC to require online financial reports from companies Washington
The Securities and Exchange Commission plans in the coming months to require that all publicly traded U.S. companies and mutual funds prepare their financial filings using a new interactive system that allows the information to be viewed and analyzed online as never before. "We're adding a new dimension," said David Blaszkowsky, the SEC's director of interactive disclosures. Within two years, the SEC will require all corporations and mutual funds to file using a technology called XBRL (extensible business reporting language) with the first wave beginning in December. This transition coincides with the agency's plan to replace its document-based system for collecting, analyzing and retrieving data, known as EDGAR, with an Internet- based platform, IDEA, short for Interactive Data Electronic Applications. While advocates say the new system will eventually save companies money because of the speed and ease of preparing disclosures, some critics complain about the initial expenses of making the transition, a burden that is particularly unwelcome during an economic slowdown. To illustrate the system during a recent interview, Blaszkowsky sifted through volumes of financial information with a few clicks of his mouse, extracting data from several companies and creating a multicolor bar graph to compare the figures. Then he exported the data into an Excel spreadsheet. What took Blaszkowsky only seconds could have cost hours for a reader of current SEC filings. "The centerpiece of our regulatory approach is giving investors the information they need to make wise decisions," said SEC Chairman Christopher Cox. "We have an opportunity to exponentially improve the way we perform that mission." EDGAR lists data in blocks of text. Financial statements for one company in a single year can amount to hundreds of pages and be laden with legalese and business-speak. There can be pages and pages of footnotes alone. Searching for financial details can be a chore. Under the new system, filers will make their data interactive by "tagging" financial line items, such as a company's net income, with unique identification codes. There are three ways filers can do this: manually, inputting the data into a computer program; hiring a company to do the tagging through automation; or using a computer program to convert data into tags. Once filed in this format, financial disclosures would look like current balance sheets and other financial statements, with a list of line items on the left and their respective values across from them. But by clicking on an item, a user could get a definition, for example. The line items could also be downloaded, searched and analyzed in myriad ways . The SEC is analyzing suggestions and making tweaks to the proposal. The agency expects final approval in the fall. As the proposal stands, compliance would be phased in over two years for companies. The 500 largest companies would need to comply starting Dec. 15. The data would become available to the public in early 2009. A second group, about 1,200 companies, would have until Dec. 15, 2009. All other companies would have until the end of 2010. [Source: Denver Post]
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