The House of Representatives passed legislation that includes an exemption for 60 percent of all public companies from the Securities and Exchange Commission requirement to submit interactive financial statement data using XBRL.
H.R. 37, titled “Promoting Job Creation and Reducing Small Business Burdens Act,” represents a “major setback” to the transparency of data in financial regulation, says Hudson Hollister, executive director of the Data Transparency Coalition, an advocate for more government use of digital data. “The primary purpose of the SEC is to oversee our capital markets to promote fair dealing and the disclosure of important market information, and to prevent fraud,” he said in a statement. “The House of Representatives just approved a measure that will make that job harder.”
Rep. Robert Hurt’s Small Company Disclosure Simplification Act, which is included in the H.R. 37 package, contends smaller public companies are unfairly burdened by the XBRL requirement, so it exempts issuers with revenues below $250 million from filing their financial statements in XBRL. The SEC told Congress such an exemption would eliminate more than half of public company financial data from the repository of interactive financial statement data that is growing because of XBRL.
As Congress approved the exemption, the American Institute of Certified Public Accountants and XBRL US revealed their survey findings that show nearly three-fourths of the smallest public companies pay less than $10,000 to provide interactive financial statement data to the SEC through XBRL. In a survey of 14 XBRL filing agents who provide XBRL tagging and filing services to one-third of all public companies with revenues below $75 million, XBRL US and the AICPA learned that 69 percent of those smallest companies paid $10,000 or less annually to outsource the creation and filing of their financial statements in XBRL.
The survey says fewer than 20 percent of those smaller companies paid between $10,000 and $20,000, and only 8 percent paid more than $25,000. The largest number of companies in the survey, more than 200, paid between $4,000 and $6,000 for their XBRL services.
In discussing the results with vendors, ACIPA and XBRL US said they learned that companies paying higher annual fees typically had more complex financial statements and rush charges associated with last-minute changes to the filing. “Some service providers add additional services like reviews, or rush charges,” says Campbell Pryde, president and CEO of XBRL US. “In addition depending on the industry some filings can be more time consuming.” A real estate investment trust with a lot of properties can double the level of tagging, he says, as can a development stage enterprise that has to report every issuance since starting.