XBRL - Voluntary Financial Reporting on the EDGAR System
Data tagging, in formats like XBRL or “eXtensible Business Reporting Language,” is gaining popularity as a way to enhance financial reporting.
By using computer codes to "tag" different kinds of data in financial reports, the information companies file with the Commission can be made much easier to find and analyze. For example, specific items in a financial statement, such as net income or gross sales, are given computer-readable labels. At the same time, the task of preparing the reports can be automated for the companies who file them.
Interactive data relies on standard definitions to "tag" various kinds of information, turning SEC financial reports that have previously been text-only into documents that can be retrieved through computer searches, and analyzed in a variety of spreadsheet programs and analytical software. The data can also be more readily used to compare companies’ financial performance, and better identify “outliers” that could represent attractive investment opportunities – or increased risk of misstatements or fraud.
The use of interactive data, if widely adopted, could dramatically enhance the usefulness of reported financial information. Consumers of the data would be able to use it more easily and effectively. Potentially, computer-tagged data could provide real-time operational information for business managers. And its instant availability could dramatically streamline and accelerate the collection and reporting of that same financial information to the SEC and the public.
On February 3, 2005, the SEC adopted rule amendments formally establishing the XBRL Voluntary Program. This new program allows for the voluntary submission of XBRL documents as exhibits to certain periodic reports and investment company act filings. For now, this is a voluntary program, to allow filers, the SEC, and the users of SEC reports to test the process. For filers, this means an opportunity to assess the benefits and costs of using interactive data. For the SEC, it means evaluating the Commission's ability to process and store documents in Extensible Business Reporting language, or XBRL -- the computer language used in the SEC pilot program that makes interactive data possible. For users of SEC reports, it will afford an opportunity to consider the value added from interactive data, as well as to pilot various software applications to take advantage of the new flexibility in using the information.
Additional information about the SEC’s XBRL voluntary program is available at: http://www.sec.gov/spotlight/xbrl.htm.http://www.sec.gov/answers/xbrl.htm