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Casey Urges International Cooperation on the Development of XBRL Technology

At a recent XBRL conference in Munich, Commissioner Kathleen Casey emphasized the SEC's support of the development and adoption of XBRL technology on a global basis, but was unable to predict when the SEC would make its use mandatory in the U.S. She pointed out, however, that the Commission has made significant progress on creating the infrastructure needed to support the official use of XBRL, and warned that companies that do not embrace XBRL run the risk of being left behind. Casey's remarks to the international XBRL conference are posted on the SEC's Web site.

She said that as international financial reporting standards ("IFRS") continue to be adopted around the world, the need to develop a robust XBRL taxonomy for IFRS has taken on increased importance. Just as IFRS need to be interpreted and applied consistently across borders, so must XBRL technology, she said. Consumers of financial data in the interactive data age should not have to worry about whether a company's data is based on the Dutch customization of the base taxonomy or the Spanish version, she noted.

Casey noted that the team developing the XBRL taxonomy for U.S. GAAP is working closely with the team developing the taxonomy for IFRS. Alignment of technology and content is critically important, she said. Five years from now when it is likely that companies will be filing financial reports using XBRL and will be free to use either U.S. GAAP or IFRS, the SEC and other preparers and users of financial data should not need to build separate technologies customized to handle filings based on divergent U.S. GAAP and IFRS taxonomies, she said. If left unchecked, these differences could exist, she noted.

In addition, preparers and users of the taxonomies ought to be able to expect the same levels and depth of content and supporting data with their taxonomy, regardless of the accounting standards it represents, she noted. If one taxonomy is more comprehensive than the other, then the resulting data will not be readily comparable, she said.

The SEC fully supports the alignment efforts and is cooperating closely with both taxonomy teams, Casey said. The SEC is committed to ensuring that XBRL remains a truly international, stateless, open source standard, she added.

Casey believes that it is important for international securities regulators to share information as they develop XBRL technology. She noted that the Tokyo Stock Exchange just launched a pilot XBRL program for listed companies on its way to full XBRL reporting by all companies in 2008. In the U.K., Parliament has mandated XBRL's future use for all company tax filings with the Customs and Revenue department, and beginning in November, the Singapore Accounting and Corporate Regulatory Authority will have processes in place to accept XBRL financial statements. As governmental authorities around the world develop XBRL programs, the need for global coordination is extremely important, she said.

Casey compared the advantages of XBRL to the way that the Internet has transformed investors' access to and understanding of financial data. XBRL will make it easier for individual investors to obtain and analyze information about the public companies and mutual funds they are considering for investment, she said.

She believes XBRL will result in benefits that go beyond making more financial information available in a user-friendly format. By improving the quality and accuracy of information, XBRL has the potential to improve the accuracy of financial statements, improve audit quality and drive down issuer costs, she said. XBRL also addresses increasing concerns about accounting complexity through its potential to accelerate the development of a set of global accounting standards, Casey said.