SEC Awards 'XBRL' Contracts
The Securities and Exchange Commission on Monday announced it has awarded four contracts worth a total $54 million for its program meant to make the information that companies are required to disclose in SEC filings easier for the public to find and understand.
The development of interactive data for corporate filings is one of several technology initiatives pushed by SEC Chairman Christopher Cox.
The use of so-called XBRL, or extensible business reporting language, will "revolutionize" the system for public companies making the required periodic financial reports, Cox told a news conference. It will replace the agency's Edgar online reporting system, in place since the 1980s, which he described as essentially "an electronic filing cabinet" that stores paper filings in electronic form.
With the current system, many professional firms, institutions and individuals that use Edgar data buy it from third-party preparers, which use automated systems to read the forms and put the information into usable formats. The process can put errors into the data, according to the SEC.
The move to interactive data using XBRL computer language, which will take about a year to complete, also will result in an immediate price cut to Edgar subscribers of about 37 percent, he said.
Rather than treating financial information as a block of text -- as in a standard Internet page or a printed document -- XBRL language provides a unique identifying tag for each individual item of data, such as company net profit, for example.
That will enable users to extract specific information more easily from SEC filings, run calculations and aggregate data as desired. Company revenue, for example, could be tracked over several years without having to open up and review multiple filings.
"The new system will make it easier both to file information with the (SEC) and to use it," Cox said. "For investors and analysts, it will represent a quantum leap over existing disclosure technologies."
Companies won't be required to use the new data system. But they will be encouraged to do so because it will make it cheaper and faster for them to make regulatory filings, Cox said. More than two dozen companies already have committed to use the system, according to the agency.
The new contracts are:
-- A $48 million contract to Keane Federal Systems Inc. to convert the text-based Edgar system into one using interactive data that will allow real-time searches, and permit investors and other users to compare data from company to company.
-- Keane's partners on the contract include Microsoft Corp., BearingPoint Inc., EMC Corp., Rivet Software, Akamai Technologies Inc. and Vistronix Inc. The contract includes an initial three-year term with three additional one-year options.
-- A $5.5 million contract to XBRL US Inc. to complete the writing of computer codes used to "tag" the information in companies' financial reports.
-- Two contracts totaling $500,000 to Rivet Software and Wall Street on Demand to provide new interactive tools for investors on the SEC's Web site.
For example, investors will be able to download not just SEC forms but specific data within the forms.