To help the public better evaluate potential investments, the Securities and Exchange Commission (“SEC”) published a final rule requiring public companies and mutual funds to use interactive data in financial reports.  Interactive data are computer tags that function like electronic bar codes, individually labeling items of information presented in a document.  When employed in a financial report, information tagged as interactive data can be easily searched, downloaded and analyzed in comparison with interactive data from other companies.  Companies will be required to provide financial statements in interactive data format using eXtensible Business Reporting Language (“XBRL”) in their SEC filings and on their corporate websites.  These requirements will be phased in beginning in 2009.

The final rule can be found on the SEC’s website at http://www.sec.gov/rules/final/2009/33-9002.pdf.

What is interactive data?

Interactive data identifies particular pieces of information that are included in income statements or balance sheets.  These computer-tagged pieces of information can then be segregated, downloaded into spreadsheets and searched more easily on the Internet.  The interactive data format allows users to isolate the information that they want to see and quickly compare it to information from other companies.

What is the goal of the change?

According to the SEC, interactive data will assist users in making investment decisions.  Rather than reviewing lengthy SEC filings, identifying relevant information and manually transferring it to another format, investors, analysts and others will be able to analyze and compare interactive data more efficiently and at a lower cost.

What does interactive data look like?

Numerous companies in the SEC’s pilot group have already begun voluntarily submitting their periodic filings in interactive data format using XBRL.  Investors can get a firsthand idea of interactive data’s capabilities by accessing these filings on the “Interactive Financial Report Viewer” (http://viewerprototype1.com/viewer) on the SEC’s website (www.sec.gov).

When will filers be required to utilize interactive data in SEC filings?

Filers will be required to begin submitting reports using interactive data between 2009 and 2011, on the following schedule:

Filer	Deadline to Begin Using Interactive Data
Domestic and foreign Large Accelerated Filers using U.S. GAAP with worldwide public common equity float greater than $5 billion	Quarterly Report on Form 10-Q or Annual Report on Form 20-F or Form 40-F containing financial statements for fiscal periods ending on or after June 15, 2009
All other Large Accelerated Filers using U.S. GAAP	Quarterly Report on Form 10-Q or Annual Report on Form 20-F or Form 40-F containing financial statements for fiscal periods ending on or after June 15, 2010
All remaining filers using U.S. GAAP	Quarterly Report on Form 10-Q or Annual Report on Form 20-F or Form 40-F containing financial statements for fiscal periods ending on or after June 15, 2011
Foreign Private Issuers with financial statements prepared in accordance with IFRS	Annual Report on Form 20-F or Form 40-F for fiscal periods ending on or after June 15, 2011

A filer’s first interactive data submission, regardless of filing type, will have a 30-day grace period.  This will permit companies to file their interactive data as an amendment to the original filing within 30 days after the earlier of the due date or filing date of the related report.

Recommendations

Public companies should determine the date upon which they will be required to include interactive data in their public filings and corporate websites and plan for the additional procedural steps accordingly.  Companies can “tag” data internally using commercially available software or outsource the task to financial printers or other third parties.  As a result, compliance will likely involve costs, such as software upgrades or employee training.  Accordingly, companies should determine how implementation will impact their compliance calendars and budgets and begin planning for such changes and expenses.