XBRL and section 408 of Sarbanes Oxley

Bill Zoellick

Daniel Roberts of Grant Thornton used part of his time during last week's panel presentation to argue that there is indeed such a motivation. Roberts acknowledged all of the official reasons for the SEC voluntary program--testing technology features, uncovering software available for data tagging, finding out how mature the taxonomies are, discovering how deeply data will be tagged, assessing the amount of effort required to tag the data, and--of course--assessing the utility of the tagging for the SEC. However, in Roberts' view these official reasons leave out the BIG reason that the SEC needs XBRL. According to Roberts, the SEC needs XBRL so that the agency does not end up buried in a mountain of paper (or PDF or HTML -- which are largely the same thing when it comes to analyzing financial reports) and with keeping the SEC out of trouble with Congress.

According to Roberts, the SEC now receives a million pages of newly filed information every day. Given this enormous stream of data, the SEC is currently able to review the financial statements from only about 18% of the companies submitting filings each year. Roberts directed attention to the language of Section 408 of the Sarbanes Oxley Act, which reads, "In no event shall an issuer required to file reports under section 13(a) or 15(d) of the Securities Exchange Act of 1934 be reviewed under this section less frequently than once every 3 years." If the SEC is currently doing only 18% of the companies a year, and they are required to review every company no less frequently than every three years, well ... do the math.

Further, given the outcry from companies having difficulty meeting SEC deadlines under the Sarbanes Oxley Act, Roberts said that it was highly unlikely that the SEC would want to report back to Congress with the news that the SEC, itself, was not able to meet the requirements of the Act.

Peter Derby, Managing Executive for Operations and Management at the SEC, talk about the SEC's XBRL initiative at the 11th International XBRL conference

Extensible Business Reporting Language