Other than acknowledging that the Securities and Exchange Commission has proposed a mandatory XBRL filing rule for reporting companies, and then outlining the compliance deadlines for that rule, the tech press hasn't said much about what that rule will require. So when a client alert on the proprosed rule from the law firm of White & Case hit my inbox Thursday, I paid attention.
The alert, written by firm partner Colin Diamond, not only lists the various compliance deadlines for the new rule, it also lays out the SEC estimates of additional time required to meet them in the first year and then in subsequent years, and addresses the different options companies have for achieving compliance. Here are a few highlights:
Companies subject to the rule can go about achieving compliance in a couple of different ways, Diamond told me in a recent interview
[I]f you look at the SEC survey against other surveys that have been done -- in particular, one by Merrill Corp., the financial printer - the estimated amounts of time seem to vary significantly between those companies that are doing the tagging in house and those that are outsourcing it. Not surprisingly, the amount of time is significantly higher for those that are choosing to do the tagging in house....
...[I]n the survey by Merrill of the limited number of companies that have done this, the split between doing it in house or outsourcing it was approximately 50-50. And there's a certain percentage in the middle that did a combination of both approaches.
The determining factor between in-house tagging and outsourced tagging, at this point, it seems, is cost. Diamond continues:
[T]hey're going to have to measure the in house cost. It may not be an out of pocket cost, but there's going to be a cost in terms of time and resources... Do they have the resources internally to devote to learning how to tag and to going through that exercise? It's not overwhelming, but it's clearly hundreds of hours, most likely, for the first time they're going to do this.
The takeaway: Even if you're not the largest of accelerated filers, start preparing now. The more you know before you have to comply, the better off you will be.