TheCorporateCounsel.net

For those of you out there who were hoping that XBRL might just go away, your hopes have been dashed, because the SEC has announced that it will consider adoption of the interactive data proposals at an open meeting next Wednesday. The SEC received over 80 comment letters on the proposals.

Under the proposals that the SEC will consider adopting, interactive data would be required to be submitted in all Securities Act registrations statements (when financial statements are included directly in the registration statement), Forms 10-K and 10-Q, and in transition reports. The proposals would also require companies to provide the same interactive date on corporate websites. The SEC also solicited comment on whether there should be mandatory XBRL submission of executive compensation disclosure and financial information required in Form 8-K and Form 6-K.

One focus of commenters was on liability for XBRL documents, so that will likely be one significant area of consideration for the final rules. Another big concern for the final rules will be the implementation schedule. The proposals contemplated a two year phase-in, with all issuers required to make XBRL submissions beginning with reports for fiscal years ending on or after December 15, 2010. The first group to be phased in – large accelerated filers (foreign and domestic) that use U.S. GAAP and have a world-wide public float above $5 billion – would be required to include XBRL in their next 10-K under the proposed phase-in schedule, so it will be interesting to see if the SEC sticks to that tight schedule in light of the relatively late arrival of the final rules. Some commenters suggested that the SEC require initial XBRL submissions with a 10-Q rather than a 10-K, to ease the pain.

The final interactive data rules will be a nice holiday present for the financial printers, who are all ready to assist with your XBRL preparedness. I have found that despite the long ramp-up to XBRL, there is still a need for a lot of folks involved in the filing process to come up to speed in this area. For more information, please check out our “XBRL” Practice Area.

Internal Control Survey

The other day at John White’s farewell reception, I was speaking with my favorite SEC economist about the SEC’s internal control survey. The survey is now up and running and the SEC is actively seeking information regarding costs and benefits of the rules implementing Section 404 of the Sarbanes-Oxley Act. By using the web-based survey, the SEC’s Office of Economic Analysis will obtain data on recent experiences of companies with Section 404 compliance. Once the data is collected, OEA will analyze the costs and benefits and the SEC will evaluate the effectiveness of its guidance to management on how to conduct an internal control evaluation and the PCAOB’s Auditing Standard No. 5.

Holiday Remembrances

Beyond lighted trees and wreaths, one sure sign of the holiday season while I was at the SEC was the crush of shareholder proposal no-action requests flooding into the Office of Chief Counsel in the last couple of weeks of the year. A significant portion of the 400+ letters that the Staff gets every year all come in right around the same time, making it tough to process all of that correspondence. This is why the Staff always says to try to get your shareholder proposal no-action requests in as early as possible, so you can avoid the “holiday rush.”

This year, there is at least some potential that the giant holiday stack of no-action letters won’t be piled up in OCC, thanks to the new dedicated electronic submission process. As Broc noted a few weeks back, Corp Fin has launched its new electronic interface, and as part of that you can e-mail your shareholder proposal no-action requests to shareholderproposals@sec.gov.

– Dave Lynn