Written by Matt Kelly     Posted on October 28, 2008

Matt Kelly is editor-in-chief of Compliance Week, a magazine and online newsletter on corporate governance, risk, and compliance. Prior to his role at Compliance Week, Kelly was a reporter and contributor on corporate compliance and technology issues for magazines such as Time, Boston Business Journal, eWeek, and numerous other publications.

Occasionally the technology of XBRL gets a giant boost forward. The recent XBRL International conference in Washington, D.C., was not one of those times.

For months, XBRL officials had promoted the conference as the denouement of a great movement, when XBRL enthusiasts who had wandered corporate corridors for years would finally arrive in the promised land. Christopher Cox, chairman of the U.S. Securities and Exchange Commission, was to be the keynote speaker on the first day of the conference — and there, everyone knew and nobody spoke publicly — he would unveil a final rule to mandate XBRL reporting in the United States.

Then Cox canceled. No final rule came forth. And I, like so many others at the conference, went back to wander the corridors. Mostly to bug the vendors for some free pens.

It’s hard to describe exactly how much of a letdown the XBRL conference was. Without Cox, the collective conversation meandered back to the same old topics hashed over since I started attending XBRL International events three years ago: the great untapped potential of XBRL technology, and Corporate America’s utter lack of interest in tapping it until the SEC requires companies to do so. The same old faces were singing the same old songs, and that’s about all.

Of course, you can’t fault Cox for canceling and putting XBRL on the back burner. With the U.S. financial system in shambles, the SEC chairman has more important demands on his time (mainly, getting called on the carpet by Congress almost every week). Either Cox and his staff need more time to develop a full final rule, or they can’t devote enough time to a final rule — because critics in Congress and elsewhere will immediately crucify Cox for fiddling with XBRL while Wall Street burns.

Either way, the end result is no rule. And without that mandated motivation, XBRL will go nowhere in the United States.

Now speculation is turning to whether the SEC will enact a final rule at all, and the answer may well be “no.” The XBRL rule originally proposed five months ago called for the 500 largest public U.S. companies to start filing XBRL-tagged financial statements in the spring of 2009. At the time, most financial reporting folks familiar with XBRL thought that deadline was at least theoretically possible — if the SEC’s final rule explained all the details about validation, auditor assurance, errors, grace periods, and so forth. If the SEC could deliver that final rule by, say, an international XBRL conference in mid-October, the schedule would be tight but still feasible.

Now we’re staring at November, the end of the fiscal year for most large companies, and the end of the White House administration that happened to put Chairman Cox in office. Cox’s own tenure will probably end on January 20, 2009. And we have no rule.

Cox has now become the bureaucrat who cried XBRL once too often. Quite simply, nobody believes the final rule will come before he leaves office, and nobody is particularly worried about it. One school of thought is that the SEC will pass a final rule that requires compliance starting with quarterly reports sometime in fiscal 2009, rather than the annual report for 2008. Another theory is that Cox will unveil a roadmap for XBRL adoption and let his successor decide specifically when to put it into force. Some do still believe the SEC will stick with its promised timetable to mandate compliance with fiscal years that end on or after Dec. 15, 2008 — but those folks are quickly becoming the crackpot fringe.

Me? Like lots of other SEC watchers, I’m starting to wonder whom a President-elect Obama will name as the next SEC chairman, and what that person’s priorities will be. I don’t know that XBRL will be one of them.

Add to Del.icio.us | Digg this

This entry was posted on Tuesday, October 28th, 2008 at 7:58 am and is filed under General, . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.