The financial XML mandate: XBRL meets the SEC

XBRL is one of the most interesting XML schemas, and the use of the eXtensible Business Reporting Language is probably going to become required by publicly traded companies.

The U.S. Securities and Exchange Commission is meeting today to discuss whether to mandate the use of XBRL to file their financial disclosures. This program has been going on, in a volunteer way, since April 2005.

The results of this trial have been outstanding: the reports are easier to file by companies, easier to interpret by the SEC, and easier to understand by analysts, regulators and shareholders.

For example, the SEC now has a “Financial Explorer” up on its Web site. According to the SEC, the application’s “interactive data pinpoints all of the facts and figures trapped inside dense financial documents. It allows you to immediately get the information you want, and instantly work with it. For example, you can compare this year’s information to performance in past years (both through raw numbers and visual diagrams) or drill down into how a company arrived at a given number – however you wish to slice and dice the data.”

Earlier this month, the SEC finalized its taxonomy for U.S. generally accepted accounting principles. With that done, today’s SEC meeting is set to discuss whether to require that companies file their financial statements using XBRL – and if so, what the schedule will be for implementing a transition to XBRL-only filings.

In their next meeting, on May 21, the SEC will consider whether mutual funds will have to file their risk/return summaries in XBRL as well.

If you work for a publicly traded company, and you’re not up to speed on XBRL – it’s time to hit the books.