The SEC recently pulled out all the stops in marketing its “landmark” announcement that the XBRL taxonomy for U.S. financial reports using GAAP is ready to be tested by third parties–but not the general public quite yet–with an intended completion date of December 5th.  (When their work is finished, XBRL tags will allow investors and analysts easily to download financial reports filed with the SEC into spreadsheet software like Excel.)  It certainly is quite an achievement that the team that has worked closely with the SEC Staff has managed to get this project moving so quickly.  This development follows last week’s announcement that the SEC has made the source code for its Interactive Financial Report Viewer available for free use by the market.

This is all to the good.  However, I am a bit concerned about the Chairman’s remarks that rules could be proposed this Spring, and adopted as early as next Fall, mandating the use of XBRL.  A change this big–and this technical–takes time, particularly if our historical experience with Edgar is any indication.  (Perhaps it was an omen that the SEC’s press conference yesterday was delayed by half an hour due to technical glitches.)

It is comforting to know that, over the last year, 8,300 U.S. financial institutions have been using XBRL to submit their quarterly Call Reports to banking regulators.  My faint memory of Call Reports is that they are fairly simplistic compared to U.S. GAAP, but it’s still comforting to know that there is some XBRL experience out there beyond several dozen pilot volunteers.

During his remarks, Chairman Cox waxed about a mythical Sally Q spending more time with her kids because XBRL saved her research time.  I understand his point, but I don’t really view XBRL as a substitute for reviewing SEC filings.  We all know that two companies with identical situations might well report completely different numbers for a particular line item because each selected a different accounting treatment.  Reading the financials in their full context will continue to remain important.

In the end, I think XBRL will have a bigger impact on issuers’ ability to put together their financials internally.  Yes, there might be cost savings, but implementing XBRL will also have costs.  The real change here might be a more streamlined, efficient process for gathering the data that makes up a company’s financials.