By Erica Edgar
Yesterday in a vote of 51-5 the House Financial Services Committee passed the Small Company Disclosure Simplification Act, introduced by Robert Hurt (R-Virginia) along with Congresswoman Terri Sewell (D-Alabama). According to Hurt, Bill H.R. 4164 (http://hurt.house.gov/index.cfm/sponsored-legislation1) streamlines regulations for small public companies and remove the disincentive for companies to access capital in the public markets.
The basics of the bill:
- Issuers with total annual gross revenues of less than $250 million or Emerging Growth Companies would cease to file XBRL, until the later of:
- the date that is five years after the date of enactment of this Act; or
- a determination by the Commission, by order after conducting the required analysis required by the SEC, and it is determined that the benefits of filing for this group of issuers outweigh the costs.
The bill requires the SEC to revise its cost-benefit analysis to ensure a better understanding of the disproportionate costs this regulation is having on small companies. In addition the bill requires that no later than one year after the date of enactment of this Act the Commission shall provide a report to the Committee on Financial Services which includes:
- the progress in implementing XBRL reporting within the Commission
- the use of XBRL data by the Commission officials
- the results of the analysis required above
- and any additional information the Commission considers relevant for increasing transparency, decreasing costs, and increasing efficiency of regulatory filings.
So will this help small companies or HURT them? My 2 cents…it HURTS. Not only does it hurt small companies in the long run by delaying the inevitable, but it’s a setback for XBRL as a whole. XBRL.US has estimated that this would exclude roughly 61% of companies currently filing XBRL today….yes, I said 61%!
Why is it that Congressman Hurt never mentions in the bill the automation that’s been (and will continue) to be created with the SEC being able to automate their review of public companies, or the thousands of jobs that have been created in the XBRL industry? Instead of moving backwards in our XBRL efforts, let’s move forward by creating higher quality software programs, analytic tools and education! Let’s continue to create new jobs by finding innovative, cost-effective ways to implement XBRL. It’s unfortunate in my mind that many still don’t see the true benefits that XBRL can have – not only for public companies, but for private companies, government agencies and the like…
I’m disappointed that this bill made it through, and I truly hope that all registrants who are comfortable expressing their concerns over this legislation to reach out by writing letters, posting on social media site and other public forums….don’t let this HURT the XBRL movement.