Bill narrowly rejected in suspension vote on second day of 114th Congress
XBRL US is pleased that the U.S. House of Representatives did not pass H.R. 37 “Promoting Job Creation and Reducing Small Business Burdens Act” in its current form, under suspension of the rules on January 6, 2015. The Act included provisions that would exempt companies with revenue under $250 million from filing in XBRL format. The aim of the bill was to reduce public company costs, however a study by the AICPA and XBRL US shows that an XBRL exemption would result in savings of only $10,000 per year for most small reporting companies. Additionally, the unintended consequence of the XBRL exemption would be to raise the cost of capital for small companies versus large by making it more expensive for investors to extract and analyze small company data.
Public companies have been required to file with the U.S. Securities and Exchange Commission (SEC) in XBRL (eXtensible Business Reporting Language) format since 2009. XBRL formatting makes public company financial data more timely, more easily extracted and analyzed, and less costly than traditionally formatted financial data. The study finds that the cost for small companies (per the SEC definition of a small company), averages $10,000 per year. 70% of small companies in the study spent $10,000 or less per year on XBRL formatting. The study was conducted by analyzing cost data for 1,299 companies that outsourced XBRL report production to 14 separate XBRL service providers around the country. Further details will be reported in the AICPA study which will be published next week.
“The proposed bill was truly designed to help small companies, but results from this new study demonstrate that the burden imposed by XBRL is much smaller than many believed,” said Campbell Pryde, CEO of XBRL US, “And making public company data less accessible would only increase their cost of capital versus large companies, thereby reducing small company access to the capital markets.”
About XBRL US
XBRL US is the non-profit consortium for XBRL business reporting standards in the U.S. and it represents the business information supply chain. Its mission is to support the implementation of XBRL business reporting standards through the development of taxonomies for use by U.S. public and private sectors, with a goal of interoperability between sectors, and by promoting XBRL adoption through marketplace collaboration. XBRL US has developed taxonomies for U.S. GAAP, credit rating and mutual fund reporting under contract with the U.S. Securities and Exchange Commission and has developed a taxonomy for corporate actions. For more information, go to http://xbrl.us.
