* Small companies wary of costs, time for XBRL compliance
* SEC says XBRL levels playing field for retail investors
* 8,000 companies face June 15 deadline
* EDGAR Online, financial printers benefiting
By Dena Aubin
NEW YORK, May 2 U.S. companies are racing to
meet new "bar-code" requirements for financial reports, even as
some chafe at the regulatory mandate aimed at helping investors
analyze and compare results more quickly.
The U.S. Securities and Exchange Commission has already
made it mandatory for about 2,000 of the largest companies to
report financial statements in a computer code known as XBRL,
which has been likened to bar-coding used by retailers.
With XBRL, the smallest investors will be able to get
information as quickly as the largest hedge funds, down to a
fraction of a second, according to supporters of the
About 8,000 smaller companies have to start using XBRL --
or eXtensible Business Reporting Language -- for reporting
periods after June 15, and experts say there has been a
last-minute push as the deadline approaches.
While it has been hailed by backers as a revolution in
financial statements, many small companies have been reluctant
to take on XBRL due to cost and time constraints.
"We expect the panic to peak around the third to fourth
week of May when people realize that the SEC is not going to
defer this, and, 'Oh my God, we have to get it done,'" said
Daniel Roberts, chief executive of raas-XBRL, a company that
provides XBRL services.
The true value of XBRL may become clear when more companies
are reporting with the codes, giving analysts enough data to
compare entire industries. Once each bit of company data has a
machine-readable tag, numbers that now get buried in mountains
of footnotes can be quickly culled.
"It's free and it's highly granular data," said David
Blaszkowsky, who heads the SEC's interactive data effort. "This
is as good as it gets out there."
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XBRL is expanding around the globe, with China, Japan,
Britain, Australia and many others using the technology.
Many U.S. companies, however, are questioning the
usefulness of XBRL. Companies that have already posted XBRL
data on their websites saw just slight interest from investors,
according to a survey last year by Financial Executives
International, a group representing corporate finance
"They're doing all this, but how is the marketplace going
to use it?" said Sean Denham, a partner at audit and consulting
firm Grant Thornton. "The jury's still out."
The XBRL requirements will leave less time for companies to
refine financial reports and make changes, said Linster Fox,
chief financial officer at Shuffle Master SHFL.O, which makes
equipment for casinos.
"As an investor, I respect what they're doing and I like
the idea that the information will be easier to analyze," he
told Reuters. "As a person having to actually perform it, it's
an extra burden."
Some companies asked if they should bear the cost of XBRL.
"Our first-hand observation is that the time and expense
for registrants to comply with these requirements have gone far
beyond what anyone expected," Douglas Chia, assistant general
counsel at Johnson & Johnson (JNJ.N), wrote to the SEC last
fall. He urged the agency to look into whether the changes will
benefit mostly XBRL service providers.
The technology has spawned a growth industry among
financial printers, software providers and other companies that
specialize in SEC filings.
EDGAR Online Inc EDGR.O, a major player, said in March
that its XBRL filing revenue in 2010 jumped 54 percent from
2009 to $6.4 million, nearly a third of its total revenue.
Calls from companies about XBRL jumped about fivefold in
recent weeks at Federal Filings LLC, a filing agent, said Chief
Executive Eric Hopkins.
Many small companies delayed preparing for XBRL, hoping the
SEC would give them a reprieve, as it did with some provisions
of the 2002 Sarbanes-Oxley reform act, he said.
One of the most controversial provisions of XBRL is
detailed tagging of footnotes. Companies can tag each footnote
as a block the first year they use XBRL, but every number in
the footnotes has to be tagged separately the second year.
That requirement takes effect for hundreds of companies
this year and for more than 8,000 smaller companies next year,
"and my prediction is that we are going to hear a howl of
pain," said raas-XBRL's Roberts.
Companies can do their own tagging, but most are hiring
outside help, experts said. Those that wait too long may have
to pay up as demand surges, said Hopkins of Federal Filings.
"I'm not saying they should panic, but a little more
urgency would probably be a good thing," he said.
(Reporting by Dena Aubin; editing by John Wallace)