US House of Representatives Bill HR 5054, Small Company Disclosure Simplification Act of 2018, debated in context of the exemption, if enacted, granted to the emerging growth companies (Newly public companies with revenue below a specified threshold limit) and on temporary basis, certain small companies for the requirement of use of XBRL for SEC filing.
Investor Perspective
With the availability of Structured data, Investors and Analysts can not only research a greater number of companies but can also take a closer deep look of the companies in which they already interested or following, which in turn, provides better and effective investment making decisions.
Structured data is a way of highlighting key information in the financial reporting. It makes the process much easier for regulators and investors to retrieve and analyse this data.
Greater efficiency with higher-quality investment decisions is a win for capital markets. The availability of structured data could also bring bigger and better opportunities in small to midsize companies by making it easier and less costly for potential investors to assess these companies.
Is the Information Being Used?
There is a view by some opponents that small companies investors do not use their XBRL files for analysis and decision making process for investment purpose, hence such small companies should be exempt from reporting in XBRL format.
In a report conducted on basis of the EDGAR log file dataset, it has been found that usage of XBRL files has been more than non-xbrl files by the users and investors. The results suggest that small company investors not only access XBRL files but also prefer them in comparison to non-xbrl files when both are available to download for a filing.
It provides a direct measure of user access and serves as evidence of the use of small and midsize company XBRL files by investors and others.
Misconceptions about Cost
Misconceptions regarding the compliance costs of XBRL are widespread. The costs that companies, large and small bear in preparing and filing their financial information in a structured format are largely dependent on how Companies financial executives view XBRL mandates: as a simple compliance requirement (Outsource Services) or as a business reporting filing considering XBRL document as their financials (In-house process).
Cost reductions can be achieved by bringing the structured reporting process in-house and starting the financial reporting tagging within the companies from the beginning of the report-assembly process.