The Securities and Exchange Commission has announced the launch of a pilot program that will consolidate financial statements submitted by public companies using the eXtensible Business Reporting Language (XBRL) into databases that can be more readily accessed by the public.

Under the new program, data that companies provide in structured formats will be combined and organized into structured data sets and posted for bulk downloads on the SEC’s website for use by investors and academics. The data sets, including financial statement data from XBRL filings initially, will be expanded in 2015 to include data in footnotes to the financial statements.

In 2009, the SEC began requiring U.S. public companies to report their financial statements in the machine-readable XBRL structured data format. Under the new initiative, the SEC’s Division of Economic and Risk Analysis will organize it into combined data sets on the SEC’s website in formats other than XBRL. The data posted will be as reported by filers, with no changes made to the information. 

The pilot program builds on efforts related to the use of structured data in corporate reports, including a staff assessment of custom tag rates in XBRL exhibits issued in July. 

“The announcement is more consequential than it might appear,” a statement from the Data Transparency Coalition, a group that advocates for the publication of government information as standardized, machine-readable data, says.

A blog post by the group, opines that: “XBRL should have been the start of a complete modernization of the SEC’s disclosure system. It should have transformed the U.S. capital markets. But it wasn’t and it didn’t.”

Among their concerns is that the SEC “made it very hard for investors… to use the structured-data financial statements.” Each XBRL financial statement is published on the SEC’s EDGAR website separately and to make proper use of the data, investors and tech companies must assemble thousands of separate files into a database.

The SEC also continued to collect the traditional document version of each financial statement alongside the new data version. This duplication has led both companies and SEC staff to “view the XBRL version as an added compliance burden and a supplemental exhibit that is distinct from the truly important, if old-fashioned, disclosure document it accompanies.” The group points out that the SEC itself doesn’t use XBRL data to check the math underlying financial statements, its attorneys and accountants still print out the financial statements and use calculators.

The announcement by the SEC goes a long way to resolving these concerns, the group says” “By making the corporate financial data it receives more readily accessible, no database assembly required, the SEC will facilitate more use by investors, companies, and innovators,” it wrote.

The Data Transparency Coalition has the following suggestions for the SEC in 2015:

Publish the rest of its existing XBRL-formatted financial statement data beyond balance sheets and income statements.

Switch from documents-plus-XBRL to inline XBRL, allowing companies to submit a single version, both human-readable and machine-readable, thereby reducing compliance costs.

Better enforce the quality of existing XBRL-formatted financial statements to encourage trust and use.

“Until the SEC incorporates XBRL data quality into its regular review process, and addresses errors as part of comment letters from the Division of Corporation Finance, data quality will remain questionable,” the group wrote.

 

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