JUST in time for the weekend, the US Securities and Exchange Commission (SEC) today posted the full text of the proposed rules for mandatory XBRL filings for domestic and foreign public companies.
The proposed rules (embedded below) apply to domestic and foreign public companies that prepare their financial statements according to U.S. GAAP, and foreign firms using IFRS as issued by the IASB. XBRL filings would have to be provided on a company’s website and as an exhibit to the filer’s Securities Act registration statements, annual reports, quarterly reports if applicable, and transition reports.
There are few surprises from what we already know but here are a few key pieces of new information:
- The proposed rules would not require foreign private issuers that prepare their financial statements in accordance with a variation of IFRS as issued by the IASB to provide XBRL.
- Foreign private issuers that provide financial information in Form 6-K or any financial information prepared with non-US GAAP that must be reconciled to US GAAP in the foreign private issuer’s Exchange Act reports will not have to be provided in XBRL.
- The SEC is proposing that the interactive data itself generally would be subject to a “liability regime similar to that governing the current voluntary program.” However, they also propose that “viewable interactive data as displayed through software available on the Commission’s Web site… would be subject to the same liability under the federal securities laws as the corresponding portions of the traditional format filing.” (Update, June 3, 2008: See Broc Romanek at thecorporatecounsel.net’s post for more on the liability regime)
- There’s no additional requirement for an auditor attestation or senior officer certification of XBRL data.
- There is no requirement for companies to provide their XBRL data on their corporate websites in a human readable format. The raw data will suffice.
I found the discussion about costs particularly good. A lot of thought has gone into trying to figure out the potential costs and time required, especially around the second-year requirement for detailed tagging of footnotes and schedules. My earlier estimates that the second year would double or triple the costs were about right.
However, it does strike me as just a little obscene that we are going to pay someone with accounting credentials $250 an hour to essentially apply labels to stuff. I know it’s not like applying price stickers to boxes of cookies in a supermarket, but it’s not rocket science either. We’ll have to see what market forces come up with, and hopefully the software can improve enough to automate more of the tagging.
Obviously, at 143 pages there is a lot of information to go through, so this is just a quick summary of things I noticed skimming through. I’ve embedded the proposed rule using Scribd below. If it’s too small to read on your screen, click on the window icon in the top right of the embedded viewer to open a full-screen version. You can download the SEC’s PDF here: http://www.sec.gov/rules/proposed/2008/33-8924.pdf
The SEC is asking for comments to be received before August 1, 2008. They can be submitted online.