SEC Chairman Cox Announces Landmark Progress in Providing Instant, User-Friendly Access to Financial Reporting Information for Investors
FOR IMMEDIATE RELEASE
New York, N.Y., September 25, 2007 - The promise of investor-friendly financial reporting moved closer to reality today as Securities and Exchange Commission Chairman Christopher Cox announced the completion of all work on developing data tags for the entire system of U.S. generally accepted accounting principles. The announcement came at a New York press conference attended by Chairman Cox, whose agency has strongly supported the use of data tags in financial reporting by U.S. public companies.
"This is a great step toward making SEC reporting easier for registrants and easier to understand for every investor," said SEC Chairman Christopher Cox. "I commend the remarkable efforts of the XBRL US project team for their leadership in the private sector in perfecting this globally accepted technological means for exchanging financial data, and also the Financial Accounting Foundation and the Financial Accounting Standards Board for the expertise in U.S. GAAP that they contributed to this project."
What colloquially is termed "interactive data" is the use of computer-coded "tags", written in the XBRL computer language, that each correspond to a unique accounting concept. The use of the tags makes it possible for investors, analysts, and others to download financial reports filed with the SEC directly into spreadsheets in Excel and other popular software, and to use other web tools and specialty software to do instant financial comparisons across entire industries. The SEC has committed to transform its vast database of financial information, nicknamed EDGAR, into interactive data format.
For over two years, the SEC has permitted public companies to file their financial reports with the agency in interactive data format, as part of a pilot program. Recently, the market capitalization of companies participating in the voluntary program topped $2 trillion. The collection of data tags being used for current filings on the SEC's EDGAR system, however, is relatively simplistic, using approximately 2,500 unique elements. That has required many companies to write their own custom tags, called extensions, to accurately represent their statements.
The work that was completed today has mapped every element of the entire system of U.S. Generally Accepted Accounting Principles, administered by the Financial Accounting Standards Board in Norwalk, CT, to a unique data tag. The achievement of this milestone means that public companies can more easily tag their financials. And it brings automated financial reporting to the SEC — as well as increased usability of financial statement for investors — one step closer to reality.
A review for GAAP compliance by the FAF (Financial Accounting Foundation) is nearing completion, and critical stakeholder groups including analysts, public company preparers and software providers will be reviewing the draft taxonomies first, before a broad-based public review is initiated.