Interactive data: is the SEC's priority your priority? Experiences from executives in four of the more than 40 companies in the SEC's voluntary program for XBRL filing are quite positive. They give some compelling reasons to get involved now, rather than wait for it to be mandated.

• Author: Heffes, Ellen M.
• Position: Reporting: XBRL - Securities and Exchange Commission, extensible business reporting language - 3M, Xerox Corp., The Dow Chemical Co. and Microsoft Corp.

Will Christopher Cox's legacy be that he was the one who transformed the U.S. Securities and Exchange Commission's (SEC) financial reporting system to an interactive model? It seems that if Commissioner Cox gets his way, history will indeed record his tenure as the time when financial statements were made easier to access by analysts and ordinary investors.

However, if he wants this distinction, he'd better hurry. Since commissioners are political appointments, with less than two years left in the current administration, Cox could be out of a job following the 2008 national election. And there's still much work to do to ready the system and get the 12,000-14,000 registrants onboard.

Steps taken recently by the SEC and others indicate the languishing project is indeed being fast-tracked--through the cohesive efforts of a combination of regulators, vendors, users and preparers.

For one, the SEC announced last September it awarded three separate contracts totaling $54 million to upgrade its 1980s "vintage public company disclosure system from a form-based electronic filing cabinet to a dynamic real-time search tool with interactive capabilities." By moving to interactive data using eXtensible Business Reporting Language (XBRL), the SEC will be joining the Federal Deposit Insurance Corp., the Federal Reserve and the Comptroller of the Currency, which already require banks to use it for submitting Quarterly Call Reports to banking regulators. About 8.200 U.S. financial institutions did so in the past year.

An additional $500,000 was awarded to two software companies to "provide a new generation of 'interactive' investor tools on the SEC's website." The tools will be made available to the public free of charge, and the SEC hopes to accelerate the development of ever-more sophisticated software applications to, as it says, "unleash the power of interactive data."

Additionally, last year, U.S. public companies were invited to participate in the SEC's pilot voluntary reporting program and report their base financials (balance sheets, income and expense and cash flow statements) in XBRL. Originally, 17 companies joined the program; that number has now grown to more than 40.

Discussions with executives from four companies in the pilot project, all FEI members, reveal mixed reviews on the usefulness of XBRL in its early stages. They entered the volunteer program to take advantage of incentives offered by the SEC, as well as to help originate the taxonomies. Bottom line, however, they know it's something that is likely imminent. In the following, the executives tell their stories:

Peggy Smyth, Vice President and Chief Accounting Officer, 3M

Filed first three quarterly financial statements for 2006; will be adding the fourth.

JOINING THE PILOT: 3M first considered XBRL in 2000, when a software company explained its benefits. At that time, the company decided to take a wait-and-see approach. Fast forward five years or so, and we decided in early 2006 to participate in the voluntary pilot program.

THE PILOT PROGRAM: We view this as a very exciting technology, and thought the pilot program would enable us to gain some valuable upfront experience instead of trying to catch up later on. We appreciated the significant flexibility that the SEC offered to participate--no filing deadlines, not being required to have the financial statements certified, enhanced liability protection and review of 10-Ks, etc.

We believe that our participation in the volunteer program provides significant benefits to the investing community. It demonstrates 3M's culture and our commitment to technology and innovation.

THE PROCESS: There were significant upfront costs and conversion processes, which could be incurred internally or outsourced. The biggest investment in time is getting up to speed with the technology, exploring the alternatives for implementation, selecting to do it in-house or outsource, mapping our financial statements...