The Securities and Exchange Commission plans to decide on Wednesday whether to require publicly traded companies to data-tag their financial statements. The vote will come in the waning weeks of the Bush administration, and perhaps also of Christopher Cox’s leadership. The SEC chairman has indicated he will leave the commission before his term expires in June.
The proposal is a significant one for Cox, as he has used every opportunity to publicly promote the concept of “interactive data” and modernization of SEC filings through the use of XBRL, or extensible business reporting language. Earlier this year, he called technology the 21st century’s answer to disclosure and transparency. “Interactive data will let the sun shine in as never before,” he said. During Cox’s tenure, the regulator has been testing XBRL in various types of filings including those of volunteer public companies, such as Microsoft and PepsiCo.
Commissioners will vote on a proposal first introduced in May, providing a timeline for phasing in companies of all sizes over three years. If it passes, companies will have to turn their traditional, static financial statements into an interactive, more easily searchable format. CFOs balked at the aggressiveness of the schedule, which would require the largest companies to start using XBRL for fiscal periods after December 15, 2008, followed by smaller companies a year later.
Many of the commenters to the proposal who objected to the SEC’s timeline suggested the commission instead make the first batch of mandated XBRL filings due for 10-Qs filed after June 2009, a more likely scenario considering the timing of the SEC’s vote. The initial group of about 500 companies required to use data-tagging under the proposal have market caps of more than $5 billion.
Before making their vote next week, commissioners will decide whether their final timeline addresses worries that software vendors won’t be able to keep up with the increased demand for XBRL help. They may also address the debate over auditor assurance; the initial proposal did not require auditors to check that companies have tagged data correctly.
The SEC is also scheduled to vote Wednesday on the Public Company Accounting Oversight Board’s request for a 9-percent budget increase for 2009. The vote will likely pass as the SEC staff is involved in the PCAOB’s budget preparation. Last year, the commissioners unanimously voted for a 6-percent increase after grumbling about the higher pay for the PCAOB board members.