January 19, 2010

The SEC has mandated new formatting rules regarding financial statements for publicly-traded companies.

On January 30, 2009, the SEC adopted rules that would require companies to provide to the Commission financial statements in XBRL (extensible business reporting language) format, as well as posting to corporate websites (if companies maintain websites). These rules will apply to domestic and foreign companies using U.S. GAAP and to foreign private issuers using International Financial Reporting Standards as issued by the International Accounting Standards Board. These rules are effective April 13, 2009.

How does XBRL work? Patrick Quinlan, president of Denver-based firm Rivet Software, explains: “Rivet develops software for XBRL creation and viewing and web-based financial aggregation, analysis, and publishing solutions. We built the SEC rendering engine that allows XBRL-based financial reports to be viewed on the SEC website. Look at XBRL as a UPC code. When a supermarket scans it, they know the product; when they received it; the expiration date; what they paid for it and what they will charge the consumer. When you look at an XBRL filing with the SEC and scan over a number, it will describe in exact detail what that number means.”

The XBRL data will be required, as an exhibit, with a company's annual and quarterly reports, transition reports, and Securities Act registration statements as well as reports on Form 8-K or Form 6-K that contain revised or updated financial statements.

IMPACTED DISCLOSURES:

The tagged disclosures will include companies' primary financial statements (including balance sheet, income statement, statement of comprehensive income, statement of cash flows and statement of owners equity), footnote disclosures, and financial statement schedules. The disclosure in XBRL format will be submitted as an exhibit along with the traditional electronic filing formats in ASCII or HTML.

PHASE-IN:

The final rules will require a three year phase-in schedule beginning with a company’s first quarterly report on Form 10-Q, or annual report on Form 20-F or Form 40-F, that contains financial statements for fiscal periods ending on or after:

June 15, 2009 - the proposed rules would apply only to domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public float above $5 billion (determined as of end their 2nd fiscal quarter of the most recent fiscal year), which is estimated to cover approximately 500 companies.

June 15, 2010- all other domestic and foreign large accelerated filers using U.S. GAAP would be subject to interactive data reporting (public float above $700 million determined as of end their 2nd fiscal quarter of the most recent fiscal year).

For additional information:

-XBRL

-SEC

-Rivet Software
 

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