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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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July 23, 2007 12:01 AM ET
Corbis
Extensible business reporting language (XBRL) is being adopted much more quickly in Europe and Asia, where countries are updating their reporting infrastructure. In Europe, compliance with the Basel II requirements is forcing banks to adopt XBRL. England is considering requiring that all corporate tax filings be made in XBRL beginning in 2010. And the European Union this month required banks to file risk reports (similar to call reports in the U.S.) in the interactive format. “They’re way ahead of us,” said Sunir Kapoor, CEO of UBmatrix, which designs XBRL taxonomies. “The biggest impediment [in the United States] is lack of awareness.” Currently, only about 40 to 50 U.S. companies have voluntarily adopted XBRL. Microsoft was the first company to file its 10-K in XBRL format in 2005, but few have followed its lead. (See “Big Yawn So Far for SEC Test,” FW, Oct. 16, 2006.) Voluntary adoption may not be an option for long. As a working group called XBRL US plans to issue new interactive formats for 10-K and 10-Q filings this fall, the SEC is considering regulation requiring all accelerated filers to report using XBRL. The rule is hotly debated at the agency, according to recent speeches by SEC chairman Christopher Cox and commissioner Kathleen Casey, and a proposal may be coming out later this year or early next. “Things are really starting to heat up,” said Amy Pawlicki, who directs XBRL services at the American Institute of Certified Public Accountants. Overseas momentum may add some heat as well. Convergence of U.S. accounting standards with international financial reporting standards (IFRS), for example, may encourage companies to adopt XBRL. Companies filing using IFRS have, by and large, had XBRL formats in place for two years, Mr. Kapoor said. Another push could come from Basel II. As U.S. banks move toward the new reserve requirements, they may be required to file risk summaries in XBRL, as their European counterparts recently were. “I’m not sure what kind of carrot would entice them to go with XBRL,” said Mike Rohan, CEO of Rivet Software, which markets XBRL technology and has pushed for XBRL usage to replace some Sarbanes-Oxley compliance requirements. In a June letter to the SEC and the Public Company Accounting Oversight Board, Mr. Rohan suggested that XBRL could replace the internal audit provisions of SarbOx by having the SEC directly screen and review financial statements. Some companies have concerns that the technology is too expensive and time-consuming to adopt. Ms. Pawlicki said the costs generally are not too great and have shown a quick return on investment for those who have adopted the technology. For example, the cost to implement the technology on a 10-K filing—without application to footnotes—is a flat fee of $20,000 at Rivet. Costs can be as low as $1,000, according to XBRL US. XBRL adoption by federal agencies could also help spur use by corporations. Currently, the SEC and the Federal Deposit Insurance Corporation are the two federal agencies that have adopted XBRL for their own use. The SEC is revamping its EDGAR system to allow interactive filings, a multimillion-dollar effort that some see as a precursor to mandatory XBRL usage down the line. “Their actions speak almost as loudly as their words,” Mr. Kapoor said. “Everything seems to indicate the SEC is on a path for a greater mandate for XBRL.” Mr. Kapoor said his company has been in talks with the Internal Revenue Service and the Treasury Department to install interactive data platforms for certain programs. IRS officials have spoken publicly in past years about a potential pilot project to view transactions for tax liabilities before they are booked as tax revenue, essentially pre-approving such transactions. Such projects would utilize XBRL to allow the IRS to retrieve and analyze the information quickly before issuing approvals to taxpayers. IRS spokesman Robert Marvin declined to comment on any pilot projects or other initiatives involving XBRL at the agency. FW
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