The Securities and Exchange Commission may soon permit filings to be submitted using the Extensible Business Reporting Language, an XML-based markup language for tagging data in financial statements. The SEC is considering letting companies use XBRL to file financial data beginning with the 2004 calendar-year-end reporting season.
XBRL augments formats such as HTML and PDF, both of which are accepted by the SEC and processed by its online reporting system, Edgar. The SEC will assess over the next several months the advantages and potential impact of XBRL on the Edgar system and on systems used by providers of financial information. "Technical feasibility is important both for us and people creating files," says Corey Booth, CIO at the SEC.
Using XBRL eliminates the duplication of effort needed to prepare documents in different formats such as HTML or PDF. Uniquely, it also enables structured queries such as "What were depreciation expenses for 1999?" But XBRL is harder to use than HTML, for example, requiring the creation of style sheets for turning electronic documents into a readable format. Financial-software providers are addressing this and other issues, such as embedding XBRL into financial-accounting systems, Booth says.
The SEC has tested XBRL sporadically in the past few years; in 2002, it accepted XBRL-formatted documents from financial publisher R.R. Donnelley, which filed forms on behalf of Morgan Stanley and Microsoft, which requested the test. Says Booth, "Microsoft and Morgan Stanley wanted to do it; they're early adopters of XBRL."