As 2008 came to a close, the Securities and Exchange Commission voted to require publicly traded companies to file their financial statements in an XML-based format known as eXtensible Business Reporting Language, or XBRL. It's a move that's designed to increase the speed and accuracy with which companies make required financial disclosures as well as to increase the accessibility of that data for investors and analysts.

In the current economic environment, especially given the recent discovery of Bernard Madoff's shenanigans, there's no doubt that improved access to company information will be more than appreciated by investors and others who watch the Wall Street goings-on. But what does XBRL filing mean for the companies subject to the new rule? Whether it's called "just another reporting requirement " or something from which businesses will be able to derive substantial benefit depends on one's perspective.

Not surprisingly, the SEC's chief accountant, Conrad Hewitt, says, "Accounting is the business language of the world. Interactive data has the potential to greatly enhance that language, making it easier, more informative and more readily available."

Greg Zegarowski, a certified public accountant and president of Financial Leadership Corporation, says interactive data made possible by XBRL will "revolutionize" the way business information is communicated. "Smaller companies that might not have the media exposure or coverage would have greater opportunity to have their data analyzed. And not just by data aggregators, but by individual investors, or potential investors," he says.

Philip Moyer, president and CEO of EDGAR Online, agrees. But he clarifies that the transition will happen in phases. First, because the SEC is requiring it, the response to XBRL is simply, "Let's go report." Then it will be, "Hey, my reporting [costs and labor] has decreased because I'm reporting the same information to several different regulators." Finally, companies will begin to see how they can make use of XBRL internally to their benefit.

That said, how companies move from traditional filings to XBRL filings so they can get to the "Let's go report" step depends on each company's available resources and level of comfort in working with the technology, according to Michael Ohata, a managing director for KPMG's Advisory Services. Those who are uncomfortable with the technology, or those who just don't have the time or the staff to devote to the process will more than likely choose to outsource all or part of their XBRL work to providers like EDGAR Online.

The SEC originally estimated that it could take approximately 100 hours and as much as $25,000 for companies to prepare their first XBRL filings if they're doing so in house. By contrast, Moyer says his company and others like it can help companies create those first filings a matter of hours, at a low cost. "We didn't want people to get hung up on the idea that it had to take them 100 hours to create these filings. There are companies like ours that make this low cost and easy," he says. Zegarowski, though, would caution those choosing to outsource the process: "[Outsourcing] it in no way relieves the company from being involved in the process and having to review and sign off on the process. You cannot outsource your responsibility, nor would you want to."

On the other end of the spectrum are companies that are comfortable with the technology and have the resources to build their own XBRL filings. In terms of staff time, Ohata says it will take roughly 120 hours to complete the first filing. And though he did not offer hard numbers, he said the financial outlay for an XBRL project can be broken into two categories: tool costs and training costs.

Ohata also emphasizes that successfully using XBRL involves more than just "converting" traditional data into a new format. It's important to remember that the goal is to standardize the information in the reports to make it reusable.

Once the initial filing is done, everyone agrees that a relatively rapid increase in reporting efficiency will occur. Subsequent filings will only take a couple of hours apiece to complete. As Zegarowski points out, "Once the first one is done, you can create a template that you can just drop the information into for the next one." Even companies that are reporting to different regulators will see the difference because the information stays the same.

Longer term, companies will be able to leverage XBRL internally to make their accounting systems more efficient. For instance, Zegarowski says, "there's a taxonomy that's been in development for several years called XBRL Global Ledger, which can be used to represent data at the transactional level. Not only financial data, but also, for example, sustainability metrics." Ohata has the same idea. He says, "If you look at XBRL as a data format, it really plays well into thinking about how companies can begin to use data standards such as XBRL within systems and how data standards fit into their overall reporting processes across systems and make those systems more efficient."

Getting everyone on the same page, though, isn't going to happen overnight, and the SEC has wisely decided to phase-in the XBRL reporting requirements. The largest public companies that file using U.S. Generally Accepted Accounting Principals (U.S. GAAP) will be required to use XBRL data starting with the first quarterly reports for the fiscal year ending June 15, 2009. Smaller companies using U.S. GAAP will be phased in over the next two years, the SEC says, and companies that file using International Financial Reporting Standards will be required to use XBRL data to report on fiscal years ending June 15, 2011, and later.