Introduction to Interactive Data
MARK STORY: Hello, and welcome to the first in a series of podcasts produced by the Office of Interactive Disclosure of the Securities and Exchange Commission, or the SEC. My name is Mark Story and I will be your host of today’s inaugural podcast. This is the first in a series of podcasts designed to introduce people to interactive data, or what some people call “XBRL.” The Office of Interactive Disclosure at the SEC heads up our interactive data efforts.
Before beginning, I need to let you know that the views we express today are our own and not necessarily those of the Securities and Exchange Commission, of its Chairman, of its Commissioners, or of my colleagues on the staff. Those of us who work at the SEC are all required to add that disclaimer whenever we speak publicly.
Moreover, this will be the first in a series of podcasts about the new world of interactive data. We encourage all questions and comments. If you have one about interactive data generally, please send it to our email address: Ask-OID@sec.gov. That’s A-S-KO-I-D@sec.gov.
With that out of the way, let me introduce my colleague, the Director of the Office of Interactive Disclosure at the SEC, David Blaszkowsky.
David Blaszkowsky: Hello, Mark and thanks for having me.
MARK STORY: David, let’s get right to the point. Words like “interactive data” and “XBRL” are in the financial and investment news a lot these days. Can you give us a brief explanation of what these terms mean?
David Blaszkowsky: Certainly. I guess that I could start by saying that, just a few weeks ago, The Motley Fool ran an article about interactive data entitled "The Most Important Shareholder Initiative in a Decade." Many believe that interactive data represents the future of financial reporting for filers, analysts, and investors. The phrase "interactive data" sounds a lot like an effort to avoid using the original terminology, which of course we all know was — and is — "XBRL." It sounds complicated and technical and not very much fun — like the sort of thing only the geeks who spend their spare time programming in C++ would like.
Using the power of Internet-based technology, interactive data promises real, tangible benefits for both public companies and investors. In the world of financial reporting, "interactive data" is made possible through the computer language, XBRL, or eXtensible Business Reporting Language. XBRL is currently in partial or full use in more than 13 countries around the world.
MARK STORY: Ok. So let’s start with what is behind the term, “interactive data,” or XBRL. What does it mean, and what does it represent?
David Blaszkowsky: It’s simple, really. XBRL is just a set of rules for attaching identifying codes to iteMark Story of financial information. In the jargon of interactive data, these identifying codes are called "tags." Think of it as bar-coding for financial information. It's that simple.
Of course, once identifying codes have been attached to each item of financial information in a company's SEC filing, computer software can search for and retrieve any of those iteMark Story simply by searching for the corresponding tag — and do the same with hundreds or thousands of other filings more or less instantly.
And, of course, once software has collected information in this way from a filing — or a lot of filings- users can do all the wonderful things software can do with the data it has identified: make graphs, charts, tables, plots, summaries, calculations, lists — whatever is useful to a user.
Now let's make that a little more concrete. After all, it's always easier to understand an example. I said XBRL is a just a set of rules for attaching identifying codes to iteMark Story of financial information.
MARK STORY: So how does it work?
Suppose a financial statement has a line item called "assets." And suppose the value of assets is shown as $1 million. Tagging that value in XBRL just involves putting a code called an "opening tag" immediately in front of the $1 million number plus a code called a "closing tag" immediately after the number.
Most people will never need to know what the codes look like. After all, only computers, not humans, are supposed to read the codes. But the whole thing is less intimidating once you know how simple the codes really are.
MARK STORY: So what happens to the financial data when it gets tagged?
David Blaszkowsky: Through software, interactive data is transmitted to the SEC. Then through an interactive data viewer, interested parties can get real-time access to financial reports, in many cases within minutes of public companies filing them with the SEC.
MARK STORY: So how will interactive data benefit the companies who file, or the people who read financial statements, like investors or analysts?
Interactive data means giving investors quicker access to the information they want in a form that's easily used; helping companies prepare the information more quickly and more accurately; and helping knowledge capital keep up with financial capital, as both flow more quickly around the world.
Today, financial information publishers offer a wealth of data about stocks, bonds and mutual funds. Unfortunately, investors who seek specific information directly from the source must often manually search lengthy corporate annual reports or lengthy mutual fund documents. Even if these documents are online, they are often digital blobs with limited search capability. Meanwhile, companies use thousands of spreadsheets and untold hours to manually convert information from their internal systeMark Story into government-prescribed formats. Whether it's the individual investor or an employee at a financial publisher who's poring over a company report, the need to search for and extract particular information in such documents can be time consuming.
Interactive data pinpoints the facts and figures trapped in today's often lengthy disclosure documents, allowing investors to immediately pull out exactly the information they want, and instantly compare it to the results of other companies, performance in past years, industry averages - however the investor wishes to slice and dice the data. As more companies embrace interactive data, sophisticated analysis tools now used by financial professionals could become available to the average investor. Meanwhile, for the financial pros and financial publishers, analyzing companies could become cheaper and easier, as inputting and re-keying costs are lower and resources are freed to focus on creating better analytical tools. As with any conversion from manual to automated processes, replacing document-based reporting with data-based reporting also promises tremendous cost savings to any company that undertakes it.
MARK STORY: So a clear benefit for investors and analysts will be quickly getting the information that they need, in near real-time format?
David Blaszkowsky: Exactly.
MARK STORY: What about the companies who have to file using interactive data? Will it be more difficult for them?
David Blaszkowsky: Public companies currently file financial statements with the SEC in either ASCII or HTML. These types of filings produce data, but do not offer the degree of flexibility to view, compare, or manipulate data as is offered in XBRL. Using interactive data technology could enable public companies to shift resources away from cumbersome manual reporting to an automated approach that saves time and money and produces more standardized, accurate results.
MARK STORY: So how can people get more information about interactive data and XBRL?
David Blaszkowsky: There are a number of ways to get information, depending upon your interest in interactive data. If you are a corporate filer, there has been an extensive comment period on what is called the “taxonomy,” or the collections of financial and business reporting terMark Story that public companies can use to create their own financial statements in XBRL format. All of these taxonomies, which represent the input of thousands of comments, are available on the XBRL US Web site at www.xbrl.us/Pages/us-gaap.aspx. XBRL US is part of XBRL International - a not-for-profit consortium of approximately 500 companies and agencies worldwide working together to build the XBRL language and promote and support its adoption.
If you are interested in viewing the financial information that has been filed by companies in XBRL, you can visit the SEC Web site at www.sec.gov/xbrl. There are several interactive data viewers on this page that help demonstrate how interactive data can bring a financial statement to life.
MARK STORY: Thanks, David. This concludes The Securities and Exchange Commission’s Office of Interactive Disclosure Podcast #1. Remember that this is the just the first in a series of podcasts about the new world of interactive data. We encourage all questions and comments. If you have one about interactive data generally, please send it to our email address: Ask-OID@sec.gov. That’s A-S-KO-I-D@sec.gov.
Be sure to check back soon as we will be responding to listener inquiries in coming podcasts. For David Blaszkowsky, this is Mark Story saying “thanks for listening.”