The Wall Street Journal-20080212-Politics - Economics- SEC Urged to Ease Push to -Tag- Corporate Fiscal Data
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Politics & Economics: SEC Urged to Ease Push to 'Tag' Corporate Fiscal Data
Full Text (445 words)WASHINGTON -- A private advisory committee to the Securities and Exchange Commission urged SEC Chairman Christopher Cox to slow down his effort to "tag" corporate financial data.
The panel voted yesterday to issue an interim report calling for changes in U.S. accounting and financial reporting, and stuck with its recommendation for a slow approach to data tagging.
It is unclear whether the recommendation will make much difference to the SEC chairman, a promoter of data tags. Data-tagging technology, which some liken to bar codes for financial information such as net income, makes it easier to find and compare corporate results.
Data tagging proved to be the only area of dispute for the 17-member advisory panel, which voted to issue its preliminary report to Mr. Cox and seek public comment on it. A final report is due in early August, soon after a second advisory panel on accounting releases its own package of recommendations to the Treasury Department.
Changes backed unanimously by the SEC advisory panel call for basing U.S. accounting rules on transactions and activities, avoiding special treatment for any particular industry. Supporters say such an approach would simplify U.S. accounting and make results more comparable from one industry to another.
Corporate restatements of previously issued financial results should be limited to meaningful errors, not small ones, the advisory group also recommended.
Some panel members also expressed fear that auditors' scrutiny of data tags could prove to be costly, generating a backlash similar to when companies faced a big spike in fees for audits of internal financial-reporting controls in the wake of the Sarbanes-Oxley Act of 2002.
In addition, the advisory committee said companies and their outside auditors should get more protection against lawsuits or SEC enforcement actions in cases where they exercised "reasonable" professional judgment. That proposal has come under criticism from some consumer groups who say it provides a liability shield for auditors.
Barbara Roper, head of corporate governance at the Consumer Federation of America, said she would like to see some congressional review of the committee's recommendations, since the recommendations are taken seriously by the SEC.
"I think we could move more quickly and may do so," SEC corporation- finance division director John White said at the advisory-committee meeting, which took place by telephone.
At Mr. Cox's urging, several dozen companies are voluntarily providing quarterly and annual reports to the SEC using computer- language technology called XBRL -- or eXtensible Business Reporting Language and more casually known as data-tagging software.
However, the advisory committee recommended that any requirement for all public companies to submit tagged reports should start with just 500 of the largest U.S. companies and then be phased in gradually.
