US auditors worry about XBRL costs

Auditors want the Securities and Exchange Commission to adopt a wait and see approach before requiring all US firms to file financial statements using new technology.

The Center for Audit Quality sounded a note of caution about universal acceptance of XBRL, extensible business reporting language, following SEC’s announcement yesterday that 500 of the largest public companies would begin filing their financial data this way in early 2009.

Executive Director Cindy Fornelli said: ‘It is imperative the Commission seeks input during the three-year phase in period from preparers about their experiences and the related costs, and from investors about their experiences and the related benefits. These insights would allow the SEC to make a more informed decision about whether broadly mandating XBRL is likely to generate benefits in excess of costs.’

XBRL electronic tags are like bar codes and can be attached to each piece of financial data. The SEC has been running a voluntary pilot programme with more than 70 companies filing their financial data in XBRL. It wants all companies to file their report this way by 2011.