Interesting press release from Congressman Keith Ellison from Minnesota opposing efforts to repeal the use of XBRL for better public company financial statement disclosure using a machine-readable format for instant data analysis by the US SEC and the public /investors to protect their pension funds etc.
The US SEC using XBRL for its “Robocop” operation to prevent future Enrons and Madoffs as reported in the Financial Times because the data is in a machine-readable format.
The US House earlier this week voted to dismantle the XBRL transparency/ accountability platform set-up by US SEC Commissioner Christopher Cox former Republican Congressman from Orange County, California.
US SEC Republican Commissioner Cox stated in his speech launching XBRL:
“At the SEC, we're excited about the way that interactive data is already providing us with the capability of real-time reporting and real-time analysis. And in the days ahead, across the Commission's thousands of professional staff in a dozen offices throughout the country, it will free up human capital to perform the subtle analyses and make the careful judgments that machines can't replicate.
Interactive data will do the same for millions of analysts, business journalists, investment professionals, and individual investors across the country, and around the world — not to mention the companies that use XBRL themselves, who will have the benefit of real-time financial reporting for an endless variety of internal management control purposes.”
As Congressman Ellison states in his press release:
“If we learned anything from the financial crisis, it is that we need to strengthen regulatory oversight over capital and financial markets, not weaken it. The Encouraging Employee Ownership Act would create unnecessary and burdensome requirements, and take valuable resources away from the Securities Exchange Commission that allow it do its job effectively.
“While I oppose the entire bill, I take specific issue with Title IV, known as Small Company Disclosure Simplification. This provision would force the Securities Exchange Commission to move from an interactive, searchable format to a paper-based system. Moving away from Extensible Business Reporting Language (XBRL) would be a huge step backward.
“XBRL is already in place and the SEC can provide access to corporate financial data faster, in more detail, and at a lower cost. We shouldn’t be forcing one of our most important regulators back into a paper-based system, especially in 2016.
“We should protect investors and support the stability of our economy. The Encouraging Employee Ownership Act fails to do either of those things.”
This House approved legislation now heads to the US Senate Banking Committee for review. Let’s hope both sides of the isle can come together to keep this important tool in the hands of the US SEC to continue to protect investors and detect and possible prevent fraud.
We can not afford to have the US SEC look at a public companies financial statements for fraud once every five years as mandated after the Enron crisis and before XBRL. We need to have the US SEC use tools like XBRL that provide the public immediate analysis in a machine-readable format – not going back to paper and using an army of Phd Accountants to shift through hundreds of papers of information and complex footnotes to understand the financial condition of a company.
Stay tuned… Meanwhile this same elected officials moved forward with XBRL for government reporting under the DATA Act but want public company disclosure to go back to paper… Not a way to run the government…
Let members of the of the US Senate Banking Committee know that you support transparency and accountability to protect investors and support the capital markets creating jobs and driving innovation. Without this transparency investor confidence will continue to be a problem.