This past Friday, January 30, the SEC posted its final rule on XBRL, making XBRL reporting mandatory for US companies over a 3-year phase-in period based on company size. The official title of the rule is "Interactive Data to Improve Financial Reporting", as can be seen in the SEC News Digest.
According to the SEC this new rule is aimed at "improv[ing] the usefulness of financial information to investors by requiring domestic and foreign companies to provide to the Commission a new exhibit with their financial statements, including the footnotes and schedules to the financial statements, in interactive data format. Interactive data will supplement, but not replace or change, disclosure using the traditional electronic filing formats in ASCII or HTML. Interactive data will be required with a filer's annual and quarterly reports, transition reports, and Securities Act registration statements, and on its corporate web site, if it maintains one. The requirements will be phased in, beginning later this year with approximately 500 of the largest companies."
Whenever the SEC says "Interactive Data" it really means to say XBRL. The phasing-in begins this year with public companies that fall into the large accelerated filer category and have a worldwide public common equity float above $5 billion - those companies will need to provide their financial statements in XBRL starting June 15, 2009. The second phase is for all accelerated filers irrespective of their float, and those need to file XBRL financial statement one year later, starting June 15, 2010. All other public companies then follow in the summer of 2011.
This is an exciting new development, as it will provide much greater transparency for financial data and give investors and analysts better tools to analyze and aggregate financial data, since XBRL can be processed, transformed, and reused easily - just like any other XML dialect.
It will also be exciting to see new tools that will allow software developers to create XBRL content easily, since XBRL has such broad applicability beyond just the realm of regulatory filings. Being able to interchange financial reporting data within larger organizations in a standardized format has huge potential benefits.