SEC announces XBRL mandate: all systems go!

It’s here: the mandate for XBRL to become an official filing process, alongside EDGAR, for listed companies in the US. 

The SEC announced this in a long-awaited roundtable today, 17 December 2008.  The IDEA system was launched today too. This has followed on the completion of the US GAAP taxonomies. 



Immediate impact: 
Companies that are listed in the US (even foreign-owned) will have to begin a process of filing in XBRL in addition to current EDGAR requirements. It will not replace EDGAR at first, and will have to be placed on the company website (if it has one). Mutual funds will have to do same for risk-return summaries.

This is a phased approach, beginning with companies with a worldwide float of over US$ 5 billion and a december year -end. There will be limited liability, the same as in the voluntary filing program. If you satisfy these requirements, talk to your EDGAR vendor tomorrow.

The big picture
XBRL software vendors will see some consolidation in the market; I believe an influx of developers from the consumer-centric web 2.0 world  may find that XBRL combines their aspirations of mashups and service oriented achitecture, and financial analysis apps will experience a steep innovation curve.

At the same time, SAP and other ERP vendors will escalate XBRL within their products, for internal analysis and risk management presented in visual fashions.

Foreign markets will see the world’s biggest endorsing XBRL unconditionally, and rush to complete their taxonomies.

There is likely to be too much credit given to XBRL in the early , pre-and post inauguration days: it is not a panacea, but currently it looks like the best idea going. The ultimate aim, though never stated, is 24-7 disclosure: from the General Ledger to the markets

After weeks of speculation and false starts, it became clear that this would be a political decision. The lack of oversight in Wall Street and Washington is clearly an ethical and governance issue, but it has become clear that XBRL could go a long way to allow for better analysis, rapid decisions and early warning systems. It may not be the sherriff, but it’s the sherriff’s mustang.

About Derek

My key interests are online investor relations, websites, social media, enterprise 2.0 and intranets, and XBRL. Speak to me if you need a solution in any of these disciplines, or follow my knowledge links on this site and others. Find me on Twitter, LinkedIn or in recent conversations.