[Federal Register Volume 69, Number 190 (Friday, October 1, 2004)]
[Notices]
[Pages 59111-59117]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22035]



  Federal Register / Vol. 69, No. 190 / Friday, October 1, 2004 / 
Notices  

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SECURITIES AND EXCHANGE COMMISSION

[Release Nos. 33-8497; 34-50454; 35-27895; 39-2429; IC-26623; File No. 
S7-36-04]


Enhancing Commission Filings Through the Use of Tagged Data

AGENCY: Securities and Exchange Commission.

ACTION: Concept release.

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SUMMARY: Data tagging provides a method for searching, retrieving, and 
analyzing information through automated means. As part of our 
initiative to improve the filing, information collection and disclosure 
process, we are seeking to determine the impact and usefulness of 
tagged data generally and, more specifically, the adequacy and efficacy 
of Extensible Business Reporting Language (XBRL) as a format for 
reporting financial information. This concept release seeks comment on 
the use of tagged data in certain Securities Exchange Act and 
Investment Company Act filings.

DATES: Comments should be received on or before November 15, 2004.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/concept); or
     Send an e-mail to [email protected]. Please include 
File Number S7-36-04 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number S7-36-04. This file 
number should be included on the subject line if e-mail is used. To 
help us process and review your comments more efficiently, please use 
only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/concept). 
Comments are also available for public inspection and copying in the 
Commission's Public Reference Room, 450 Fifth Street, NW., Washington, 
DC 20549. All comments received will be posted without change; we do 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Questions about this release should be 
referred to Brigitte Lippmann or Steven Hearne, Division of Corporation 
Finance (202-942-2910), Brian Bullard or Toai Cheng, Division of 
Investment Management (202-942-0590), or Eric Schuppenhauer, Office of 
the Chief Accountant (202-942-4400), Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 20549.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Overview
II. Tagged Data as Part of Our Initiative To Improve Analysis and 
Disclosure
    A. Development of Data Tagging at the Commission
    B. Essential Elements of Data Tagging
    C. Impact on Disclosure
III. XBRL and XBRL Tagged Data
    A. Technology Specification
    B. Taxonomies
    C. Presentation and Analysis of Tagged Data
    D. Attestation/Validation of Tagged Data
IV. Information for and Filing of Tagged Data
    A. Information Appropriate for Data Tagging
    B. Filing of Tagged Data
V. Impact on Various Parties
    A. Investors
    B. Registrants
    C. Accountants
    D. Other Parties
VI. General Request for Comment

I. Overview

    On July 22, 2004, we issued a Press Release announcing that the 
Commission was undertaking an initiative to assess the benefits of 
tagged data and its potential for improving the timeliness, accuracy, 
and analysis of financial and other filed information.\1\ Data tagging 
uses standard definitions to translate text-based information, such as 
information contained in Commission filings, into files that can be 
retrieved, searched, and analyzed through automated means. Data tags 
may enable investors and other market participants to more efficiently 
and effectively analyze data from different sources and automatically 
exchange financial information across various software platforms, 
including web services.
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    \1\ Press Release No. 2004-97 (July 22, 2004).
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    Data tagging appears to be gaining prominence as a format for 
enhancing financial reporting data. Substantial progress has been made 
in the private sector over the past five years in developing a data 
tagging language known as eXtensible Business Reporting Language, or 
XBRL.\2\ XBRL is an open source specification for software that uses 
tags to identify and describe financial and other information and 
facilitate the preparation, publication, and analysis of that 
information.\3\ In late 1999, the American Institute of Certified 
Public Accountants, or AICPA, along with development partners from the 
accounting, technical, and securities sectors, launched the XBRL 
initiative.\4\ Today, XBRL International, the consortium developed to 
build the XBRL language and promote and support its adoption, claims 
more than 250 companies and organizations as members.\5\
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    \2\ See http://www.xbrl.org for a more detailed description of 
XBRL.
    \3\ ``Open source'' means that the software can be used by 
anyone without charge and is being developed in an open and 
collaborative setting. ``Closed source'' reporting standards are 
developed for proprietary or private purposes, and the code is not 
publicly available.
    \4\ According to http://www.xbrl.org, the AICPA hosted the first 
meeting of the XBRL Steering Committee in October 1999.
    \5\ XBRL-US is the jurisdiction of XBRL International in the 
United States. XBRL International is made up of companies, 
associations, and agencies involved in providing or using business 
information and XBRL-US is composed of a subset of those 
organizations active in the United States. See ``About the 
Organization'' on http://www.xbrl.org for a discussion of the 
jurisdictions, steering committees and a list of members of XBRL 
International. XBRL International and its local jurisdictions have 
funded the development of XBRL through grants and annual fees 
provided by its members. See http://www.xbrl.org.
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    Financial regulators have begun to assess the potential of XBRL to 
improve the timeliness and accuracy of reported financial information 
as well as the analysis of such information. The Federal Financial 
Institutions Examination Council, or FFIEC, which is the U.S. 
interagency bank regulatory standard-setting body, has undertaken a 
Call Report Modernization Initiative and developed a set of data 
standards using XBRL for the information that financial institutions 
must include in their Call Reports.\6\ Moreover, in June 2004, the 
European Commission demonstrated its interest in the development of 
XBRL by signing a contract with XBRL International to accelerate the 
development and adoption of XBRL in the European Union.\7\
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    \6\ See http://www.ffiec.gov/FIND. The FFIEC originally 
scheduled roll-out of the new XBRL-based data repository for October 
1, 2004. While roll-out has been delayed, the FFIEC is moving 
forward with the initiative and announced that it will target 
implementation for one of the first two Call Report periods of 2005. 
See FDIC Press Release PR-90-2004 (Aug., 2004).
    \7\ See XBRL Press Release ``European Businesses Take Step 
Closer to Efficient Reporting'' (June 24, 2004).
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    Since adopting rules to implement the operational phase of our 
Electronic Data

[[Page 59112]]

Gathering, Analysis and Retrieval system, or EDGAR, we have continually 
sought to make EDGAR more useful to investors. XBRL provides a 
sophisticated system of data tagging that may offer an opportunity to 
improve the transparency and enhance the analysis of information filed 
with us. Throughout this release, we solicit comment on many issues to 
help us determine whether identifying or tagging specific information 
would improve the accuracy of, access to, and timely analysis of the 
information that registrants are required to include in their filings 
under the federal securities laws. We are seeking comment from 
investors, registrants, accountants, and any other parties that may be 
affected by the use of XBRL or other data tagging technologies in 
Commission filings. Commenters need not respond to all of the questions 
raised in this release--we welcome comment letters addressing some or 
all of these questions.
    In a companion release also being issued today, we are proposing a 
voluntary program that would allow registrants to furnish financial 
information tagged using XBRL as an exhibit to specified Securities 
Exchange Act of 1934 \8\ and Investment Company Act of 1940 \9\ 
filings, enabling Commission staff to further evaluate the use of XBRL 
tagged data.\10\ If, based on the public comment we receive in response 
to this release and our experience with the proposed voluntary program, 
we decide to propose rules relating to data tagging outside of the 
voluntary program, we will issue a subsequent proposing release that 
describes the specific requirements and provides an opportunity for 
public comment.
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    \8\ 15 U.S.C. 78a et seq.
    \9\ 15 U.S.C. 80a-1 et seq.
    \10\ Release No. 33-8496 (September 27, 2004).
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II. Tagged Data as Part of Our Initiative To Improve Analysis and 
Disclosure

    Investors, large and small, seek out and analyze information about 
companies in which they have invested or in which they are considering 
investing. In response, many registrants, in addition to required 
filings with us, make information available to the public through 
dedicated sections of their Web sites, investor conference calls, Web 
casts, press releases, and earnings releases. Other parties provide 
services that aggregate and analyze registrant information and 
disseminate that information via e-mail, specialized software, and the 
Internet. While electronic media have increased the accessibility of 
registrant information, that information is generally not available in 
a format that investors and other users who wish to perform technical 
data analyses can easily download and process using software 
applications or Web services. In order to analyze financial 
information, these users of the information generally must either copy 
data from financial documents into spreadsheets or rely upon data that 
has been copied or otherwise extracted and summarized by third-party 
sources. In addition, if material financial information is contained in 
the narrative of a filing, such as in Management's Discussion and 
Analysis,\11\ Management's Discussion of Fund Performance,\12\ or in 
the notes to a registrant's financial statements,\13\ users of the 
information may have to search through filings to retrieve the 
information they need to perform technical data analyses.\14\ These 
activities may take time, result in additional cost, and cause errors 
through the inaccurate compilation of data.
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    \11\ Item 303 of Regulation S-K [17 CFR 229.303].
    \12\ Item 22(b)(7) of Form N-1A [17 CFR 239.15A and 17 CFR 
274.11A].
    \13\ 17 CFR 210 et seq. and 17 CFR 229.302.
    \14\ Examples of these users include, among others, financial 
analysts, investment advisors, institutional investors, mutual 
funds, and others who routinely use software and other technical 
tools to analyze companies, to compare specific companies to indices 
or peer groups, or to screen groups of companies for specific 
characteristics. The analyses performed by these users can have a 
significant impact on the capital markets due to the amount of funds 
managed by such users and the number of investors who rely on their 
advice. Making tagged data more accessible to users who perform 
technical data analyses will affect all investors, large or small, 
including investors who do not directly use the tagged data.
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    We are considering the potential for the use of tagged data in 
registrants' EDGAR filings to improve the timeliness and accuracy of 
financial information included in those filings and to facilitate the 
analysis of such information. As part of our evaluation, we are 
requesting comment on the essential elements of data tagging, the 
impact of data tagging on disclosure, and its impact on users of the 
financial information included in Commission filings, as well as the 
type of information and specific filings that may be appropriate for 
data tagging. We are also exploring specific aspects of XBRL as a data 
tagging technology. While we are not aware of a more developed tagging 
technology for business and financial information than XBRL, we are 
requesting information and comments on other tagging technologies that 
may be used.

A. Development of Data Tagging at the Commission

    We have relied upon data tagging to identify and extract 
information from our EDGAR system since its inception.\15\ In 1984, the 
EDGAR pilot program required registrants to include tagged data in 
document headers to assist in accurately organizing filings.\16\ These 
tagged headers used SGML, Standard Generalized Markup Language, to 
segregate data about the filing and the registrant from the underlying 
text. SGML tagging allowed us to automatically perform basic 
validations, store tagged data, and process filings. Following our 
adoption of EDGAR, we required electronic filers to furnish Financial 
Data Schedules as exhibits to their filings containing financial 
statements.\17\ The Schedules required registrants to provide and tag a 
specified set of financial information essentially identical to certain 
items included in registrants' financial statements.\18\ We permitted 
registrants to ``furnish'' rather than file the tagged financial data 
included in the Schedules, thereby limiting registrants' liability with 
regard to the tagged data.\19\
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    \15\ Release No. 33-6977 (Feb. 23, 1993) [58 FR 14628].
    \16\ See Release No. 33-6977 and the EDGAR Filer Manual.
    \17\ Id. The Financial Data Schedule requirement initially was 
to become effective on November 1, 1993. The effective date was 
delayed, however, until September 1, 1994 to provide additional time 
to establish the EDGAR system's capacity to accept and process the 
Schedules. Release No. 33-7072 (July 8, 1994) [59 FR 36258].
    \18\ Release No. 33-6977.
    \19\ Id. The rules required electronic filers to furnish the 
Schedules, but did not deem them ``filed'' under the federal 
securities laws. Though the Schedules remained subject to the anti-
fraud provisions of the federal securities laws, electronic filers 
that submitted Schedules were not otherwise liable under the federal 
securities laws to the extent their Schedules contained data 
accurately extracted from their financial statements and the 
underlying financial statements were not materially false or 
misleading.
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    As part of an initiative to modernize and improve EDGAR in the late 
1990s, we decided to eliminate the requirement to furnish Financial 
Data Schedules.\20\ While registrants were required to furnish the 
Schedules until the end of 2000, the requirement was eliminated due to 
concerns over the reliability and usefulness of the tagged data 
included in the Schedules. The problems with the reliability of tagged 
data appeared to result primarily from the fact that data tagging was 
not fully integrated into the

[[Page 59113]]

financial reporting process, creating difficulties for some registrants 
in determining which Financial Data Schedule tags to use for particular 
financial statement items.\21\ In contrast, if, in the future, we 
required registrants to tag financial information using technology such 
as XBRL, we expect that such tagged information would become an 
integral part of the financial reporting process. Further, we 
anticipate that if we ever required the tagged data to be part of the 
registrant's official filings, it would become subject to all relevant 
liability provisions of the federal securities laws.
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    \20\ Initially, Financial Data Schedules were removed from 
investment company registration forms in 1999. Release No. 33-7684 
(May 17, 1999) [64 FR 27888]. The Schedules were subsequently 
eliminated from all Commission rules and forms, including Form N-
SAR, in early 2000. Release No. 33-7855 (Apr. 24, 2000) [65 FR 
24788].
    \21\ Release No. 33-7684. In determining to eliminate the 
Schedules, we also noted that the Schedules were adopted primarily 
for the staff's use and that the staff increasingly relied on 
outside sources for the information provided by the Schedules. While 
acknowledging the concerns of some commenters who used the Schedules 
to analyze registrants, we determined to eliminate the requirement.
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    The initiative to modernize EDGAR was not limited to adjusting the 
Schedule requirement; it also sought to make better use of improved 
technology. As part of the initiative, we began to accept filings 
submitted to EDGAR using HTML, HyperText Markup Language.\22\ By 1999, 
HTML had become a widely accepted standard for tagging data and text to 
present information on the Internet, and we began accepting filings 
using HTML with the expectation that HTML would eventually replace 
ASCII, American Standard Code for Information Interchange, for most 
filings.\23\
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    \22\ Id.
    \23\ Id. HTML provides a superior standard for the presentation 
of information and promotes the concept of a single-use document, in 
which filers are able to avoid creating separate documents for 
dissemination to investors, posting on their Web sites, and 
submission to the Commission.
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    Since the EDGAR modernization initiative in the late 1990s, market 
participants have further developed and are continuing to improve data 
tagging technology. Today, data tagging primarily relies on XML, 
eXtensible Mark-up Language, and other XML-based standards. XML is a 
versatile, open source standard developed to assist in the automatic 
processing of data and to define and name data and text through 
tags.\24\ XML tags give data an identity and context and organize it in 
a format that can be more easily read by software programs and analyzed 
across multiple companies and time periods.\25\ In order to continue 
and expand on the benefits provided by tagged data, the EDGAR system 
changed document header tagging from SGML to XML in May 2000.\26\ Since 
then, we have increased our use of XML for internal processing as well 
as for the document headers filed on EDGAR and Section 16(a) \27\ 
beneficial ownership reports.
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    \24\ See http://www.w3.org/XML and http://www.xml.org.
    \25\ Tags are standardized through the development of 
taxonomies, which are essentially data dictionaries that describe 
individual pieces of information and mathematical and definitional 
relationships among the pieces, identify text labels, and refer to 
authoritative sources for that information. See discussion in 
Section III.B. of this release.
    \26\ EDGAR Release 7.0 marked our initial use of XML to present 
header information in XFDL, Extensible Forms Description Language, a 
derivative of XML using certain tags dedicated to screen 
presentation and validation, rather than SGML format.
    \27\ 15 U.S.C. 78p(a).
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    XML-based standards currently are being developed and used for a 
variety of data tagging purposes, such as FIXML, Financial Information 
Exchange Markup Language, to tag transaction-specific data, MDDL, 
Market Data Definition Language, to exchange market information 
regarding financial instruments, and XBRL to tag business and financial 
reporting information. XBRL allows users to prepare, publish in a 
variety of formats, exchange, and analyze information such as that 
contained in financial statements prepared in accordance with Generally 
Accepted Accounting Principles in the United States (``GAAP'').\28\ 
XBRL has been developed to allow tagging of all of a company's 
financial information, allowing it to extend from a standard set of 
tags to meet its particular reporting needs. The extensions are able to 
connect back to, and collapse into, the more general, standard tags 
provided for all registrants, thereby mitigating a concern noted with 
respect to Financial Data Schedules, that data would be placed under an 
inappropriate, general tag.\29\
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    \28\ See http://www.xbrl.org.
    \29\ See the discussion of XBRL in Section III.B. where 
taxonomies and extension taxonomies are more fully discussed.
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B. Essential Elements of Data Tagging

    In order to be able to tag and use tagged data for disclosure and 
analysis, a data tagging system must include:
     The technology to administer the tags--a technology 
specification that provides the system's core concepts and language;
     Standard definitions to describe the tags--a set of tags 
agreed upon by users and preparers of information that give data an 
identity and context by providing an unique label to each specific data 
element; and
     A means of presenting and analyzing the tagged data--
software programs that process the tagged data for presentation and 
analytical purposes.
    Data tags can be applied through fixed field technology or through 
actively pairing data and tags. Fixed field technology requires 
preparers of information to provide data in a specialized form or 
template. Using fixed field technology, preparers fill out a form and 
each cell within the form is assigned a tag by the filing system. In 
this way neither preparers nor users actively participate in tagging 
the data. Our electronic filing system for Section 16(a) beneficial 
ownership reports relies in part on the use of fixed field technology 
to tag data.\30\ An alternative approach requires preparers of 
information to actively pair data in a filing with tags, based on 
standardized definitions that have been agreed upon by both preparers 
and users of information.\31\ This provides preparers with the 
opportunity to apply a greater degree of professional judgment 
regarding the items to be tagged. The proposed voluntary program would 
allow the submission of financial information using XBRL in reliance on 
an active pairing approach.
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    \30\ Section 16(a) beneficial ownership reports lend themselves 
to this type of data tagging since the underlying forms are highly 
structured. See Release No. 33-8230 (May 7, 2003) [68 FR 25788] 
(mandating electronic filing and Web site posting of Forms 3, 4, and 
5).
    \31\ In XBRL, these definitions are known as taxonomies.
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    Questions for Commenters:
     What are the advantages and disadvantages of using the 
active pairing approach as compared with the fixed field technology 
approach? Are there Commission filings, in addition to Section 16(a) 
beneficial ownership reports, that would better rely on fixed field 
technology? If so, which filings or forms would best use that 
technology?

C. Impact on Disclosure

    Investors frequently analyze information reported by registrants 
when making their investment decisions. We are considering whether and 
how tagged data would affect registrants' disclosure and the way 
investors use that disclosure. Until now, data tagging of financial 
information has generally occurred after a registrant has prepared its 
disclosure, as was the case with Financial Data Schedules. When third-
party financial data providers tag data, the tagging is based on the 
registrants' reports filed with us. Using data tagging technology, 
information can be tagged by registrants at the source, improving the 
efficiency of the financial reporting process. Provision of such tagged 
data by registrants may

[[Page 59114]]

increase the quality of that disclosure and better facilitate analysis 
of disclosure. The tagged data may enable registrants, as well as 
investors and regulators, to more easily examine the component parts of 
financial statement line items and view elements of the line items that 
are found in the notes to the financial statements. Registrant tagged 
data may also generally improve the ability to search for and locate 
particular data items by simply calling up the specified tags.
    While tagged data has the potential to improve transparency and 
enhance analysis, the use of tagged data could result in investors' 
receiving less detailed disclosure. Any use of data tagging, no matter 
how detailed, might have the effect of causing registrants and users to 
focus on the tagged data and miss information that is not tagged or 
fail to take into account the aggregate or cumulative effect of the 
tagged information. Further, if registrants were to prepare and file 
their financial data based on a set of standard tags, they could limit 
their disclosure to the classifications under the standard tags, 
failing to disclose more detailed information that might otherwise have 
been presented. Data tagging using technology such as XBRL may mitigate 
this concern because, unlike Financial Data Schedules that were limited 
to a set of specified tags, XBRL is capable of being extended to 
provide more detailed information than that provided in a set of 
standard tags.
    Questions for Commenters:
     What effect would tagged data have on the ability to use 
and analyze registrants' disclosure? Is the provision of tagged data in 
Commission filings preferable to the current system?
     Would tagged data have an effect on the quality of 
disclosure in Commission filings?
     Can the usefulness of disclosure be improved in ways other 
than the application of tagging technologies? For instance, are there 
alternative solutions (e.g., software products) that reliably 
facilitate analysis of the text-based information contained in filings 
today?

III. XBRL and XBRL Tagged data

    XBRL is an XML-based standard for use in business and financial 
reporting that was developed and is supported by XBRL 
International.\32\ We are aware that XBRL data tagging initiatives are 
currently underway in a number of regulatory contexts, including 
initiatives by the FFIEC in the United States, the Financial Services 
Authority in the United Kingdom,\33\ and the Australian Prudential 
Regulatory Authority.\34\ Our proposed voluntary program to accept data 
tagged using XBRL as an exhibit to Commission filings would permit us 
to evaluate the XBRL technology specification, the standard taxonomies, 
and the types of extension taxonomies used by registrants and assess 
the feasibility of XBRL tagged data in Commission filings. While the 
voluntary program would only encompass registrants' financial 
information, taxonomies also could be developed to include labels for 
other non-financial information.
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    \32\ We are not a member of XBRL International and have not 
served in an oversight role over XBRL International or its 
development of XBRL.
    \33\ See Financial Services Authority Press Release No. FSA/PN/
031/2004 (Mar. 31, 2004) and Policy Statement No. PSO 4/9 (Mar. 
2004).
    \34\ See http://www.apra.gov.au.
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    Although we are seeking comment on the ability of XBRL to add value 
to Commission filings, we are interested generally in the ability of 
data tagging to meet our objectives and are interested in receiving 
comments on alternative XML-based or other languages that we should 
consider. When commenting on other languages, please address the same 
general questions that we have outlined below for XBRL. Specifically, 
please address whether standard taxonomies have been developed, how 
they are maintained, who is responsible for updating the taxonomies, 
and whether extensions or some other mechanism can be used to allow 
flexibility in providing detailed financial information.

A. Technology Specification

    XBRL International has developed XBRL specification 2.1 using XML 
and other World Wide Web Consortium specifications.\35\ XBRL 
specification 2.1 was released in December 2003 and is the foundation 
upon which the consortium and third parties are currently developing 
software and taxonomies.\36\ According to XBRL International, XBRL 
specification 2.1 will remain current until at least December 2005.\37\ 
XBRL specification 2.1 is an open standard, available on a royalty-free 
basis allowing software providers to use the technology specification 
to develop XBRL-enabled products.\38\ In the event that the technology 
specification changes, XBRL International has stated that it would 
propose changes to the specification and make those proposed changes 
available for public comment.\39\
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    \35\ See XBRL International, ``XBRL International White Paper: 
Improving XBRL Implementation & Interoperability, The Case for XBRL 
2.1 Today'' (Mar. 23, 2004). According to the Web site, XBRL 
specification 2.0 was released by XBRL International in December 
2001 and subsequently refined based on experience with the 
specification.
    \36\ Id.
    \37\ Id. XBRL International has expressed its intention to 
develop modules to improve the ability of XBRL to transition data 
prepared in prior versions of the specification and run more complex 
validation routines.
    \38\ See http://www.xbrl.org/Specification/XBRL-RECOMMENDATION-2003-12-31+Corrected-Errata-2004-04-29.doc for details relating to 
the specification.
    \39\ See http://www.xbrl.org/Specifications.
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    Questions for Commenters:
     Is the XBRL specification 2.1 sufficiently developed to 
support the tagging of financial information? Explain whether the 
specification provides an effective and efficient means for tagging 
data in Commission filings.
     Although XBRL specification 2.1 is an open standard 
available on a royalty-free basis, are there limitations on the ability 
of filers, software providers or others to freely use the 
specification?

B. Taxonomies

    An XBRL taxonomy is a standard description and classification 
system for business reporting and financial data. Tags consist of:
     Specific financial data, such as the line items presented 
in the financial statements; and
     Words or labels, such as headers in the notes to the 
financial statements.
    For example, a taxonomy may include a tag for the balance sheet 
line item ``inventory'' as well as tags for inventory's component 
accounts, ``raw materials,'' ``work in process,'' and ``finished 
goods,'' which often are disclosed in the notes to the financial 
statements. Any item that is tagged can be retrieved and analyzed 
across multiple registrants and time periods by using software. In 
addition to being readily accessible for financial analysis, by using 
software, tagged information can be retrieved and formatted in any 
desired presentation, such as a traditional balance sheet and income 
statement or as a chart or graph.
    XBRL-US, the jurisdiction of XBRL International in the United 
States, has developed the United States Financial Reporting Taxonomy 
Framework.\40\ The taxonomy framework provides the foundation on which 
others can build taxonomies to meet their specific reporting and 
analytic needs. On September 20, 2004, using the taxonomy framework and 
XBRL specification 2.1, XBRL-US proposed for public comment three 
comprehensive industry-level

[[Page 59115]]

taxonomies for tagging financial information:
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    \40\ For more information see the discussion on http://www.xbrl.org under Technical Information relating to the US 
Financial Reporting Taxonomy Framework.
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     Commercial and industrial companies;
     Banking and savings institutions; and
     Insurance companies.\41\
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    \41\ See http://www.xbrl.org.
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    These standard taxonomies were developed by XBRL-US based on input 
from accounting firms, technology companies, and other participants in 
XBRL-US that have financial reporting knowledge.\42\ Neither the Public 
Company Accounting Oversight Board, the Financial Accounting Standards 
Board, nor the Commission participated in the taxonomy development. 
While the content of the standard taxonomies is based on GAAP and 
registrant disclosure practices, the taxonomies are not intended to be 
accounting standards or to require changes to current accounting 
standards or the content of reported information.\43\ In developing the 
taxonomies, we understand that XBRL-US considered the following:
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    \42\ For more information see the discussion on http://www.xbrl.org under Technical Information relating to the United 
States Taxonomies and the Explanatory Notes to each of the US GAAP 
taxonomies.
    \43\ See http://www.xbrl.org/faq.aspx#33.
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     Disclosure indicated in various financial reporting 
checklists prepared by the AICPA and major national accounting firms;
     Disclosure in sample financial statements included in 
accounting and auditing industry guides published by the AICPA; and
     Disclosure frequently found in financial statements filed 
by registrants.\44\
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    \44\ See note 42 above.
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    XBRL-US also has under development additional industry-specific 
taxonomies, including taxonomies for investment companies, broker-
dealers, and oil and gas companies.\45\
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    \45\ According to XBRL-US, standard taxonomies are generally 
developed by national jurisdictions, such as XBRL-US, and sent to 
XBRL International for comment. While XBRL International does not 
have a required notice and comment period and is not bound to 
consider comments, we understand its practice includes the 
circulation of a working draft of a standard taxonomy to members of 
XBRL International for a 30-day comment period and, once revised, 
the publication of a working draft on its Web site for a 60-day 
public comment period. While this practice could change, XBRL 
International has indicated that it will actively publicize and 
solicit public comment on the specification 2.1 taxonomies. Public 
comment is solicited on the Web site and comments are made available 
on request, but are not published. More information is available at 
its Web site at http://www.xbrl.org.
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    In order for the standard taxonomies to provide the market with 
useful tagged data, the standard taxonomies must provide an appropriate 
level of detail for financial statement presentation and analytic 
purposes. The taxonomies' tags, definitions, and classifications also 
must conform to established standards (i.e., GAAP and Commission 
rules). For example, a taxonomy would contain inaccuracies if ``raw 
materials,'' ``work in process,'' and ``finished goods'' were not 
classified as components of ``inventory'' or their definitions did not 
conform to GAAP. If additional tags are needed to satisfy a 
registrant's specific data requirements, a registrant using XBRL would 
be able to expand the standard taxonomy through what is known as an 
extension taxonomy.\46\ Extension taxonomies enable any registrant or 
group of registrants to refine the standard taxonomy by creating 
additional tags to fit their particular circumstances. If a group of 
registrants all require similar additional data elements, an extension 
taxonomy could be created for the group or a new standard taxonomy 
could be developed.\47\ Where a data element does not have a 
corresponding tag included in the standard or extension taxonomy, that 
item would not be able to be retrieved, analyzed or separately 
presented as a line item in the financial statements.
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    \46\ See the discussion of Technical Information relating to the 
US Financial Reporting Taxonomy Framework and the US GAAP Commercial 
and Industrial extension taxonomy at http://www.xbrl.org.
    \47\ Id.
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    Questions for Commenters:
     What should the Commission's role be in taxonomy 
development? How could the taxonomies be assessed to determine whether 
they include the disclosures required by GAAP and Commission rules?
     Are the standard taxonomies sufficient for registrants to 
submit data tagged using XBRL without extensions? If not, should 
standard taxonomies be expanded to make extensions unnecessary? If 
standard taxonomies were expanded to make extensions unnecessary, would 
the standard taxonomies still be manageable, efficient and useful?
     What would be the advantages or disadvantages of 
permitting registrants (either individually or as part of an industry 
group) to develop, use, and submit their own extensions? If registrants 
were permitted to use their own extensions, would it result in better 
financial reporting with greater detail than reliance solely on 
standard taxonomies? Is there any potential that investors could be 
confused or misled by registrant-developed extensions?

C. Presentation and Analysis of Tagged Data

    Data tagged using XBRL consists of tags paired with values in a 
computer readable document, known as an instance document. Software 
programs are able to read an instance document, analyze and manipulate 
the data, and display it in a desired format. For example, a style 
sheet can render an instance document into a traditional balance sheet 
and income statement or into a chart or graph. Other software programs 
are able to use the instance document and analyze the data.
    Questions for Commenters:
     Would it be preferable for registrants to develop and 
submit their own style sheets to render tagged data into a specific 
format or for the Commission to provide a standard style sheet? Why or 
why not?
     What is the appropriate level of detail to be provided in 
rendered financial statements? What standards should be established to 
ensure a sufficient level of detail in the rendered financial 
statements?
     Are software analytical tools sufficiently developed to 
analyze the data? What are the fundamental features of such tools?

D. Attestation/Validation of Tagged Data

    Under a tagged reporting system, it is important that filers 
properly tag items included in the standard and extension taxonomies. 
If items are not tagged properly, financial information generated from 
the instance document could be misleading or inaccurate and the ability 
to perform analysis on the tagged data could be impaired. An example of 
forms of accountant attestation that can be performed on tagged data is 
in the AICPA's interpretation to Section 101 of the Statements on 
Standards for Attestation Engagements titled, ``Attest Engagements on 
Financial Information Included in XBRL Instance Documents.''\48\ 
Specifically, this interpretation sets forth procedures an accountant 
should consider when engaged to examine and report on the accuracy and 
completeness of an XBRL instance document.
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    \48\ See Interpretation No. 5 of Chapter 1, Attest Engagements, 
of Statement on Standards for Attestation Engagements (SSAE) No. 10: 
Attestation Standards: Revision and Recodification (AT Section 101), 
as amended, available at http://www.aicpa.org/members/div/auditstd/announce/XBRL_09_16_03_FINAL.htm. Its interpretation has not 
been adopted by the Public Company Accounting Oversight Board as 
part of their auditing standards.
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    Questions for Commenters:

[[Page 59116]]

     If we require or accept tagged data in Commission filings, 
should accountants attest to the accuracy and completeness of the 
tagged data? If so, what form should such an attestation take?

IV. Information for and Filing of Tagged Data

    In a companion release, we are proposing a voluntary program to 
permit certain registrants to furnish financial information using XBRL 
in order to evaluate data tagging of financial statement information in 
general and the use of XBRL in particular.\49\ In this release, we are 
considering the more general question of the usefulness of tagged data 
formats, like XBRL, in electronic filings and reports made by 
registrants under the federal securities laws. As part of our 
evaluation, we are considering whether tagged data should supplement 
text-based filings, currently provided in either ASCII or HTML formats, 
or replace them. The proposed voluntary program is the first step in 
evaluating this technology and determining its usefulness to investors. 
After reviewing the comments on this release and the proposed voluntary 
program release, we will consider whether to implement the voluntary 
program to permit electronic filers to furnish financial statement 
information using XBRL as an exhibit to certain Exchange Act and 
Investment Company Act filings on EDGAR.
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    \49\ Release No. 33-8496.
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A. Information Appropriate for Data Tagging

    It is our understanding that it is possible for all information 
contained in Commission filings to be tagged. We wish to determine 
which information in those filings is most appropriate for such 
tagging. Currently, the standard taxonomies developed by XBRL-US 
provide tags and related definitions for registrants' financial 
statements, notes to the financial statements, industry guides and 
certain elements of management's discussion and analysis.\50\ In the 
future, registrants may be able to tag not only particular line items 
from their financial statements and the notes to the financial 
statements but also relevant data from the body of a filed document 
(e.g., executive compensation, fund performance information, beneficial 
ownership, legal proceedings, and risk factors).
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    \50\ See the discussion under Technical Information relating to 
the United States Taxonomies at http://www.xbrl.org.
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    Questions for Commenters:
     What information contained in Commission filings would be 
appropriate for tagging? Only the financial statements? The financial 
statements and the notes to the financial statements? Should 
management's discussion and analysis or management's discussion of fund 
performance also be included? Should Commission industry guide 
information be included? Should financial schedules be included? What 
about other information included in the periodic or current reports or 
other information collected by the Commission? Please provide an 
explanation for the information that you believe is appropriate for 
tagging.
     Are there specific industries for which data tagging would 
be easier to implement or the tagged data would be more useful?
     Should we consider tagging investment company information 
other than financial statements, such as the prospectus fee table or 
the table of sales loads and breakpoints? Should we consider tagging 
registrant or depositor financial statements for insurance company 
separate accounts issuing variable insurance products?

B. Filing of Tagged Data

    If, after reviewing the comments on this release and the proposed 
voluntary program, we determine that the use of XBRL tagged data in 
Commission filings is in the interest of investors, we will need to 
determine how the tagged data should be provided and treated for 
liability purposes. Under the proposed voluntary program, we are 
considering whether to permit electronic filers to ``furnish'' rather 
than file the exhibit containing their XBRL tagged financial 
information, providing electronic filers with limited relief from 
liability under the federal securities laws.\51\ We have proposed this 
limited relief due to the experimental nature of the voluntary program 
and to encourage registrants to volunteer to provide XBRL tagged data 
with their filings. We expect that the voluntary program will allow us 
to gather and analyze data and make conclusions regarding the 
feasibility and desirability of using XBRL tagged data in Commission 
filings. Experience with a voluntary program would better enable us to 
evaluate data tagging and determine whether to propose additional data 
tagging rules for electronic filers.
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    \51\ See Section IV. E. of the XBRL Voluntary Financial 
Reporting Program on the EDGAR System Proposing Release. Release No. 
33-8496.
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    Any additional data tagging rules would be developed in a series of 
steps based upon our experience with the voluntary program. We may 
determine to extend the acceptance of voluntary filings of tagged 
information indefinitely, in which case we would need to determine 
whether to accept the tagged data as an alternate official filing 
similar to the approach used in accepting either ASCII or HTML, or to 
accept documents using tagged data as an unofficial part of the filing, 
similar to the way we currently accept PDF files.\52\ We also may 
determine to require registrants to file the tagged information as 
their sole official filing. In any event, we would consider the 
liability that should attach under the federal securities laws to 
promote the reliability of tagged information provided by registrants.
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    \52\ See Release No. 33-7684 and Release No. 33-7855.
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    Questions for Commenters:
     If we were to extend the acceptance of voluntary filings, 
would it be preferable to accept documents using tagged data as an 
alternate official filing similar to our current approach of accepting 
either ASCII or HTML formats? Would it be preferable for us to accept 
documents using tagged data as an unofficial part of the filing, 
similar to what is currently done with PDF files?
     Should tagged data be applied to only certain types of 
forms? If so, which forms? Should tagged data be applied only to 
periodic reports? If so, should it be applied only to annual reports on 
Forms 10-K \53\ and N-CSR? \54\ Should application extend to quarterly 
filings on Forms 10-Q \55\ and N-Q? \56\ Aside from periodic reports, 
should it be applied to information filed or furnished on Form 8-K? 
\57\ Should it be applied to reports by investment companies on Form N-
SAR? \58\ Should tagged reporting for investment companies be different 
than for operating companies?
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    \53\ 17 CFR 249.310.
    \54\ 17 CFR 249.331 and 274.128.
    \55\ 17 CFR 249.308a.
    \56\ 17 CFR 249.332 and 274.130.
    \57\ 17 CFR 249.308.
    \58\ 17 CFR 249.330 and 274.101.
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     What are the specific implications for the use of tagged 
data in filings made pursuant to the Securities Act of 1933?\59\ Would 
using tagged data affect an issuer's ability to access the market or 
the timing of its offerings? If so, how?
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    \59\ 15 U.S.C. 77a et seq.
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V. Impact on Various Parties

    We are requesting comments on how various parties may be affected 
by a decision to pursue data tagging in Commission filings, including 
the impact on: investors, registrants, accountants, and other parties 
generally

[[Page 59117]]

involved in the financial reporting process.

A. Investors

    Registrants provide their financial data in EDGAR text filings. As 
a result, anyone wishing to translate that data into spreadsheet or 
database software in order to analyze the data must either copy the 
data into a more usable form or purchase a subscription from a third-
party financial data provider that has already tagged the data. If the 
data is purchased from a third party, the data provided may have been 
modified from the information filed by the registrant in order to 
conform it to the third party's database system.
    Tagged data provides financial information in a format that is more 
readily usable for standard quantitative financial analysis. Investors 
and other parties who are interested in using tagged data to calculate 
financial ratios, compare companies to peers or indices, or otherwise 
use software to perform sophisticated technical analyses are likely to 
prefer tagged data provided directly by the registrant. Even investors 
that do not use the tagged data may receive better access to registrant 
information based on the provision of the tagged data to those parties 
who will undertake the detailed technical analysis and disseminate 
their results.
    Questions for Commenters:
     What are the likely impacts of the provision of tagged 
data by registrants on financial analysts, institutional investors, or 
individual investors?
     Would the provision of tagged data by registrants result 
in time and cost savings to investors, such as through reduced data 
entry or formatting?

B. Registrants

    In order to create a data tagging system, a registrant likely would 
incur expenses for software creation or acquisition, software 
customization and other start-up costs, such as training personnel and 
hiring consultants. While technology specifications, such as those 
provided by XBRL, are often in the form of an open standard that is 
available at minimal or no cost, registrants may need to upgrade their 
systems to use the new software, customize the open standard, or add 
extensions. Registrants may, however, benefit from the provision of 
tagged data to investors by improving the transparency of the 
information and investors' access to information for analytical 
purposes. This may, in turn, result in broader analyst coverage, 
increased liquidity of registrants' securities, and decreased price 
volatility.
    Further, some registrants already may have acquired internal 
financial reporting software with data tagging capabilities. According 
to the Financial Executives Research Foundation, those registrants may 
be able to use that existing software to improve their internal 
financial reporting and controls by enhancing transparency of financial 
information and integrating disparate systems.\60\
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    \60\ See, e.g., Financial Executives Research Foundation, Inc., 
Everything You Wanted to Know About XBRL but Were Afraid to Ask: A 
CFO's Guide (2003) and Financial Executives Research Foundation, 
Inc., Corporate Reporting and the Internet--Understanding and Using 
XBRL (2002).
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    Questions for Commenters:
     Are current accounting or reporting software programs able 
to tag data? Are the programs able to tag data using XBRL?
     What impact would data tagging have on a registrant's 
financial reporting process? What additional costs would a registrant 
incur to tag their financial reporting data?
     What would be the advantages and disadvantages of 
requiring small business issuers to tag data in their Commission 
filings? Should we exempt small business issuers from any data tagging 
initiatives? Alternatively, should small business issuers be given more 
time than larger issuers to transition to the use of tagged data?
     What would be the advantages and disadvantages of 
requiring foreign private issuers to tag data in their Commission 
filings? Are the implications different if the foreign private issuer 
reports using home country Generally Accepted Accounting Principles or 
International Financial Reporting Standards with a reconciliation to 
U.S. GAAP? Should we exempt foreign private issuers from any data 
tagging initiatives? Alternatively, should foreign private issuers be 
given more time to transition to the use of tagged data?
     What would be the advantages and disadvantages of 
requiring investment companies to tag data in their Commission filings? 
Are there types of investment companies that should be exempt from any 
data tagging initiatives? Alternatively, should certain investment 
companies be given more time than other investment companies to 
transition to the use of tagged data?

C. Accountants

    Data tagging may be integrated with internal accounting software 
packages, performed by third parties, or performed manually. In order 
to tag data and audit tagged data technology, internal control 
procedures and related audit procedures may need to change. Accountants 
may be affected by such changes due to the types of incremental 
assurance that they may be required to provide with respect to tagged 
data included in Commission filings.\61\
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    \61\ See also the discussion and questions in Section III.D. of 
this release.
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    Question for Commenters:
     What effect, if any, would the use of tagged data have on 
the quality of and the time required to conduct audits and test 
internal controls?

D. Other Parties

    Currently, many registrants use intermediaries, such as financial 
publishers and filing agents, to assist them in making their EDGAR 
filings. These intermediaries ensure that the filing is properly 
formatted and transmitted. Registrants similarly may choose to rely on 
third parties to assist them with data tagging. Other companies convert 
EDGAR filings into a database format, offering services to standardize 
disclosures, calculate financial ratios, filter and sort financial 
data, as well as provide data in a tagged format. If we were to require 
the submission of tagged data, the scope and value of the services 
provided by financial publishers, filing agents, data aggregators, and 
other parties may be affected.
    Question for Commenters:
     What effect, if any, would the submission to and 
availability of tagged data on EDGAR have on other parties?

VI. General Request for Comment

    Any interested person wishing to submit written comments on any 
aspect of the concept release, as well as on other matters that might 
have an impact on our consideration of the use of tagged data in 
Commission filings, is requested to do so.

    By the Commission.

    Dated: September 27, 2004.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-22035 Filed 9-30-04; 8:45 am]
BILLING CODE 8010-01-P