“SEC Requires Use of Interactive Data for Financial Reporting”
On January 30, 2009, the Securities and Exchange Commission (the “SEC”) released its final rule requiring public companies and mutual funds to provide financial information in their public filings using interactive data, by means of a software language known as “XBRL.” The SEC approved the new rule (the “XBRL Rule”) in a four to one vote on December 17, 2008, but did not formally release it until after Mary Schapiro, the new SEC Chairperson appointed by President Obama, took office on January 27, 2009. The XBRL Rule was published in the Federal Register on February 10, 2009, and will take effect on April 13, 2009.
The XBRL Rule is designed to make it easier for investors and regulators to examine and compare financial information for public companies, down to individual financial statement line items. Because each individual element in a financial statement will be labeled with standardized computer-readable tags (e.g, cash, interest, net income, etc.), investors will be able to quickly locate and compare specific factual information disclosed by companies and mutual funds.
This Stroock Special Bulletin summarizes the XBRL Rule and its potential implications for public companies, investors and consumers of such interactive data.