The SEC's IDEA: replace EDGAR.

• Author: Swartz, Nikki
• Position: UP FRONT - Securities and Exchange Commission - EXtensible Business Reporting Language - Electronic Data Gathering, Analysis, and Retrieval system

The Securities and Exchange Commission (SEC) has announced plans to require that all publicly traded U.S. companies and mutual funds prepare their financial filings using a new interactive system that allows the information to be viewed and analyzed online as never before.

Within two years, The Washington Post reported, the SEC will require all corporations and mutual funds to file using a technology called eXtensible Business Reporting Language (XBRL) with the first wave beginning in December. The agency also plans to replace its Electronic Data Gathering, Analysis, and Retrieval system (EDGAR), which is its current document-based system for collecting, analyzing, and retrieving data, with an Internet-based platform, Interactive Data Electronic Applications (IDEA).

Advocates said the new system will save companies money because it makes preparing disclosures faster and easier. For example, EDGAR lists data in blocks of text. Financial statements for one company in a single year can total hundreds of pages and be fife with legalese and business-speak. There can be pages and pages of footnotes alone. Searching for financial details can be tedious.

Under IDEA, however, filers will make their data interactive by "tagging" financial line items, such as a company's net income, with unique identification codes. The Post said they can do this manually by inputting the data into a computer program, they can hire a company to do the tagging through automation, or they can use a computer program to convert data into tags.

XBRL resembles the retail barcode system. Once tagged, line items can be read by computer programs, just as scanners read bar codes. The result is a universal language of "interactive data" that can be read across different systems and applied to various uses, for instance, downloaded into spreadsheets or reorganized in databases.

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Technology experts say filing with interactive data cuts costs, but start-up expenses may be a few thousand dollars. Still, once a template is established, those costs decrease because future data is simply added to the existing code. There are also savings from not having to print all the pages associated with the current filings. The technology also makes it harder for companies to...