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On December 18, 2008, the United States Securities and Exchange Commission (SEC) made a final decision to mandate public companies to file financial statements via the eXtensible Business Reporting Language (eXtensible Business Reporting Language (XBRL)).  The mandates phase in as follows:

 

  1. Public companies that file using US GAAP accounting rules and who have a $5 billion or larger public float are required to file via XBRL starting with their first quarterly report for fiscal periods ending on or after June 15, 2009.
  2. The mandate for smaller public companies that file using US GAAP phases in over the subsequent two years.
  3. Companies that file using IFRS must file with XBRL starting June 15, 2011.
The SEC announcement is available in the form of a press release and a video of Christopher Cox, who was Chairman of the SEC at that time.  The new rules were published in the Federal Register on February 10.

 

Chairman Cox’s analysis of the implications of this mandate is quite interesting.  He goes far beyond pointing out the usual advantages of efficiency that standards promote.  He sees the use of XBRL as a critical step in making financial markets more open.  The SEC is making filed data available to the public through a Web site that includes search tools.  The regulators envision a new era where investors, regulators, analysts, and researchers will have much more information about public companies, searchable in far more ways, than ever before.

 

The SEC will require filers to put the data on their Web sites, and, more interestingly, will permit third party Web sites to provide this public information, perhaps digesting and re-packaging it in novel ways.  The hope is that this “data disclosure” regime will help to restore confidence in financial markets and help counteract the tendency of markets to fail to sense the build up of unsustainable bubbles.

 

On February 18, SAP announced availability of the SAP® BusinessObjects™ XBRL Publishing Application by UBmatrix .  Read the announcement for details about this application, which is integrated with the SAP® BusinessObjects™ Planning and Consolidation application, the SAP® BusinessObjects™ Financial Consolidation application, and SAP® Business Suite software.

 

The implications of these developments is an emerging reality in which regulatory authorities, public companies, and enterprise software vendors comprise a specialized business network that is being transformed by digitization via XBRL.  In previous Business Networks: Powered by Business Suite 7 and Standards and whitepapers, I have explained the macro-economic and technical forces making standards-based digital business networks increasingly crucial to modern commerce.  SAP’s release of the new XBRL publishing software is an important milestone in the development of this business network.

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