Now that regulators have set the clock for a timetable by which all U.S. public companies will eventually report financial results in eXtensible Business Reporting Language (XBRL), many questions remain. At the top of the list are how much the effort to create such interactive corporate documents will cost and what happens should smaller companies miss their deadlines. The deadlines vary according to company size. Once the 60-day comment period ends, the Securities and Exchange Commission, which endorsed the rule unanimously on May 14, wants the largest 500 accelerated filers (those with a worldwide float of more than $5 billion) to begin using XBRL tags on their key SEC filings and on documents on their Web sites for all fiscal periods ending on or after Dec. 15, 2008. Some 76 companies are already doing this on a voluntary basis. The remaining public companies would be required to follow suit over the next two years, with the smallest ones having until 2011. In their first year, companies would be expected to use only block tags.

In later years, footnotes would also have to be interactive. Commissioner Kathleen Casey has expressed concern about the challenge the new rule might pose for smaller companies, but she was assured by David Blaskowsky, head of the SEC's new Office of Interactive Disclosure, that the experience in Japan, which had required even smaller companies to start reporting using XBRL, had shown such problems to be minor. He said most smaller companies in Japan had realized labor savings of 20% in the first year, and that those companies that had difficulties reported that they expected no problems in year two. While most expect the switch to interactive filing to be a boon for corporate filers and investors, Cindy Fornelli, executive director of the Center for Audit Quality, cautions that the SEC needs to seek input from preparers and investors during the phase-in to determine "whether broadly mandating XBRL is likely to generate benefits in excess of costs." She adds: "We applaud this move, but any time you make a radical change like this, you need to be alert to unintended consequences."

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