|Weekly News Digest
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SEC Approves Requirement of Interactive Data for Financial Reporting
The U.S. Securities and Exchange Commission (www.sec.gov) has voted to require public companies and mutual funds to use interactive data for financial information, which has the potential to increase the speed, accuracy, and usability of financial disclosure and eventually reduce costs for investors. With interactive data, all of the facts in a financial statement are labeled with unique computer-readable "tags," which function like bar codes to make financial information more searchable on the internet and more readable by spreadsheets and other software. Investors will be able to instantly find specific facts disclosed by companies and mutual funds and compare that information with details about other companies and mutual funds to help them make investment decisions.
For public companies, interactive data financial reporting will occur on a phased-in schedule beginning this year. The largest companies who file using U.S. GAAP with a public float greater than $5 billion will be required to provide interactive data reports starting with their first quarterly report for fiscal periods ending on or after June 15, 2009. This will cover approximately 500 companies. The remaining companies who file using U.S. GAAP will be required to file with interactive data on a phased-in schedule over the next 2 years. Companies reporting in IFRS issued by the International Accounting Standards Board will be required to provide their interactive data reports starting with fiscal years ending on or after June 15, 2011.
Companies will be able to adopt interactive data earlier than their required start date. All U.S. public companies will have filed interactive data financial information by December 2011 for use by investors.
The SEC earlier this year unveiled its new financial reporting system—IDEA (Interactive Data Electronic Applications)—to accept interactive data filings and give investors faster and easier access to key financial information about public companies and mutual funds. The new IDEA system is supplementing and eventually replacing the agency’s 1980s-era EDGAR database, marking the SEC’s transition from collecting forms and documents to making financial information itself freely available to investors. (For more information, see http://newsbreaks.infotoday.com/wndReader.asp?ArticleId=50361 and http://newsbreaks.infotoday.com/nbReader.asp?ArticleId=18423.)
Investors can begin seeing this new information at http://idea.sec.gov. For participants in the SEC’s Voluntary Filer Program, investors can find clearly labeled buttons taking them to a company or mutual fund’s voluntary interactive data submissions. As soon as companies and funds make their mandatory interactive data submissions to the SEC, their financial information will be immediately available to investors through the SEC’s IDEA system as well as on the websites of companies and funds disclosing the data.
Source: U.S. Securities and Exchange Commission
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