XBRL (eXtensible Business Reporting Language) is a technology that allows data from the SEC Edgar website to be downloaded directly to a user’s computer. For example, when analyzing a company’s financial statements, a user will no longer have to re-enter the data into a spreadsheet; it will be directly accessed.  

In order to emphasize the new focus on interactive data capabilities, the SEC will be changing the name of their EDGAR database to IDEA:  Interactive Data Electronic Applications.

XBRL reporting involves creating a separate data file, to be attached to your regular SEC filings. This data file will be required for any filing including financial statements: Primarily your 10-K, 10-Q’s, and registration statements that include financials.  Creating this data file is not a simple process.  Though there is a variety of software now available to help with this process (and more and better software is becoming available all the time), the process still involves a high degree of familiarity with SEC accounting rules. 

The SEC has provided for a phase-in period for XBRL filing. The first required filing is the Form 10-Q due after:

June 15, 2009 for large accelerated filers with public float in excess of $5 billion.

June 15, 2010 for other large accelerated filers.

June 15, 2011 for all other filers.

• Within the phase-in period above, there is a two-step process:

• In the first year of XBRL filing, the financial statement will be detail tagged, and the footnotes and disclosures will be “block tagged” (tagged as a section of text).

• In the second year of XBRL, the footnotes and other disclosures will be “detail tagged,” so that each individual disclosure within a given note will be tagged appropriately.  Note that this second year requirement may result in more work than the first year.

June 15, 2011 is a long way off.  Unless you are a large accelerated filer, we recommend that you begin to get familiar with XBRL now; however, we also advise you to wait until 2010 before you devote significant resources to your actual XBRL implementation process. The SEC seems to agree: the following is from page 45 of Final Rule 33-9002 “Interactive Data to Improve Financial Reporting”.  These are the long-awaited final rules regarding XBRL reporting, which were released January 30, 2009:

“We expect that smaller companies, which generally are disproportionately affected by regulatory costs, also will be able to provide their reports in interactive data format without undue effort or expense…. We expect that the phase-in will foster the improvement and availability of inexpensive software and that a firmly established phase-in deadline could stimulate the development of such software. We also intend that the third year phase-in for smaller reporting companies will permit them to learn from the experience of the earlier filers. It will also give them a longer period of time over which to spread first-year data tagging costs.”

Unless you are a large accelerated filer, we recommend waiting until 2010 before you commit significant resources to your XBRL process. By that time, we expect that major  improvements will have been made in the software available for XBRL conversion, and that the price of making these conversions will have significantly diminished.

At IncFin, LLC, we feel that we are uniquely qualified to provide high-quality, timely guidance to our clients regarding XBRL reporting.  This is due to two reasons:

• Our deep knowledge of the small public company market;

• Our affiliate company, EdgarEyes, LLC.

By working with EdgarEyes, LLC, we have in-house both the filing expertise and the accounting knowledge required in order to provide a complete XBRL solution.