SEC's Cox - XBRL conversion doesn't need an audit

By Karey Wutkowski

WASHINGTON, March 19 (Reuters) - Companies that adopt an interactive data format for regulatory filings will not need an additional audit of the conversion of their financial data, the head of the U.S. Securities and Exchange Commission said on Monday.

SEC Chairman Christopher Cox, speaking at a round-table discussion on XBRL, or extensible business reporting language, said that subjecting the conversion of raw financial data to extra scrutiny could mean "crib death" for the project.

"We need to think of it very differently from the way companies prepare their numbers," he said.

Cox has been encouraging companies and mutual funds to report financial data using XBRL tags, which allow investors to more easily analyze the information in spreadsheet programs.

Companies such as General Electric Co. (GE.N) and Microsoft Corp. (MSFT.O) are already participating in a voluntary pilot program. The SEC has not yet proposed a date to make XBRL mandatory, and some companies have expressed concern about XBRL's maturity and implementation costs.

Andrea Stegall, vice president of corporate governance compliance at South Financial Group Inc. (TSFG.O), said she was "very relieved" by Cox's statement that companies do not need auditors to sign off on the way data is tagged for XBRL.

Companies are facing greater scrutiny and regulation costs under the post-Enron Sarbanes-Oxley Act, which requires many of them to report on the quality of their internal controls over financial reporting.

At the round-table discussion, representatives from companies participating in the pilot program said the financial costs of using XBRL have been minimal.

Larry Salva, chief accounting officer at Comcast Corp. (CMCSA.O), said the costs for the first year of using XBRL in Comcast's quarterly statements totaled about $5,000.

The next step in the project is to create more electronic tags so that other information, such as the management discussion and analyses, can be tagged for XBRL.

Rob Blake, a vice president at XBRL US Inc., said a more complete revised taxonomy, or dictionary of electronic tags, will be ready by the beginning of the fourth quarter.

But Cox said it is important for companies to start moving forward with the tagging process.

"Technology moves too fast," he said. "If we tell technology it can't improve, it won't."

Last year, the SEC announced plans to eventually convert its existing EDGAR system, which receives about 700,000 filings annually from publicly traded companies, to an XBRL-based system.