On August 19, the Securities and Exchange Commission announced that it will transition from the current EDGAR database to a new system called Interactive Data Electronic Applications (IDEA). The interactive data filings of reporting companies are expected to be available on the SEC website through IDEA beginning late this year.
The SEC began an interactive data pilot program in 2005 and concluded that interactive data would make financial reporting more useful to investors. While EDGAR allows investors to search for information on reporting companies one form at a time, IDEA will allow investors to search and collate information from thousands of reporting companies and forms at once through the use of interactive data that is formatted in eXtensible Business Reporting Language (XBRL). Interactive data uses computer “tags,” which allow for identification of identical items in all reporting companies’ financial disclosures. For example, each line item and number on income statements will be individually tagged using labels from a standard list, thereby allowing easy searching on the Internet and downloading into spreadsheets and databases, whichwill facilitate comparative analysis by investors and analysts.
The SEC’s proposed schedule is expected to require companies with a worldwide public float over $5 billion to make financial disclosures using interactive data formatted in XBRL for filings that contain financial statements for periods ending on or after December 15, 2008. The proposed schedule would likely require the remaining companies to make financial disclosures using interactive data formatted in XBRL over the following two years.
As the SEC transitions from EDGAR to IDEA, investors will be able to benefit from interactive, IDEA-like features that the SEC says will be “grafted onto EDGAR in the short run.” The EDGAR database will continue to be available as an archive of company filings even after EDGAR is phased out. Investors will also be able to take advantage of IDEA’s advanced search capabilities during the transition period.