As expected (and reported earlier), the SEC has put forth a timetable that leads to the required use of XBRL in the preparation of financial statements.
XBRL, of course, stands for eXtensible Business Reporting Language. It’s a language that helps companies electronically communicate their business and financial data to investors, analysts and other people who need that information. Skeptics exist, but supporters are convinced the technology could revolutionize the financial-reporting process.
Either way, XBRL is now a mandate, with the SEC proposing a three-year timeframe for adoption. “The plan,” writes CFO.com’s Alan Rappeport, “initially would require companies with market capitalization of more than $5 billion —- about 500 firms total -— to make disclosures in XBRL format beginning in the fiscal periods ending in late 2008. They would become public in that format in early 2009. The following year, all other companies that file their statements using U.S. generally accepted accounting principles would have to follow suit. In the third year of the proposal, international companies that file with the SEC using international financial reporting standards would also be required to file in XBRL format.”
The sooner the better, according to this AICPA whitepaper. Titled “”The Shifting Paradigm in Business Reporting and Assurance,” the paper claims that private and public companies alike will benefit from the adoption of XBRL and Enhanced Business Reporting.
“The current reporting and assurance model does not effectively meet user needs in today’s global markets,” said Alan Anderson, chair of the AICPA’s Assurance Services Executive Committee. “We wrote this paper to highlight changes in the global business environment and help organizations understand and appreciate emerging reporting needs.
What’s your take on XBRL and this new era of business reporting?
Learn more at the ExpoXBRL will be discussed in detail during a session at the first-ever Maryland Business and Accounting Expo, slated for June 17-18 at the Baltimore Convention Center. Get details about the Expo here, then register here.