John Wonderlich, Sunlight’s program director, writing at the Open House Project Google Group, tipped me off to an encouraging development. Late last week, Nextgov reports, the SEC (Securities and Exchange Commission) passed a rule requiring public companies and mutual funds to use a standard electronic format to publish financial data. The expectation (and hope) is that this move will bring more transparency and oversight to corporate balance sheets and earnings. The agency is requiring companies to start using XBRL (extensible business reporting language) when filing financial disclosures. They are also requiring companies to publish the information on both the SEC’s Web site and their own corporate site.
XBRL allows computers to tag and identify data, making financial disclosures searchable, accessible and easier to understand. This will allow investors, regulators and investigators to look at the data faster and more easily, meaning they could possibly find things that don’t look quite right in corporate financial statements.
“(The SEC’s ruling) heralds a new era for business communications as XBRL offers the potential to revolutionize how financial data is transmitted and analyzed,” stated Scott Mozarsky, chief strategy and development officer, PR Newswire . “In our estimation, the integration of XBRL will create significant productivity gains and offer benefits for everybody who utilizes financial data in their occupation or daily lives, from analysts, portfolio managers and corporate officers to individual investors and the media.”